Financing A Car When Credit is a Problem
If you have no credit, getting a car loan approval in Barrie can be dicey. But you still have options. But first, it is wise to consider three things.
- You need to be realistic about what kind of vehicle you need. If you have bad, limited – or no – credit, thena car with a lot of add-ons is not the way to go. Do you want the car primarily for family use or commuting to a job? And, if the latter, what kind of commute is it and how important to you is fuel economy? Does your job require you to transport goods? If those “goods” are your children – what kind of seating and safety features do you want?
- What is your budget? One common rule of thumb is that your car payments should not exceed 15% of your take home income. But on top of that you have to add insurance (mandatory in Ontario) and repairs. If you are commuting any kind of distance you’re going to have larger fuel bills. And, bear in mind that bad-credit loans are often for shorter terms, which means higher monthly payments.
- Finally, check your credit history and make sure it’s up to date – and accurate! If there are errors, you have the right to get changes made.
Car Loans – More Things to Consider – and How You’re Protected
You need to think about the future, as well. Will your car needs change? Perhaps you are not commuting now – but may have to in the future. Or maybe you’re planning to start a family. Both will affect the kind of car you need.
Making a higher down payment helps. Many specialty finance agencies will consider trade-ins, as well. You want to avoid “negative equity” in your car – which means it’s worth less than the amount you owe on the car loan. This can happen with a long term payment schedule. And don’t forget that by the end of its first year of driving a new car can be worth 25% less than its original sticker price.
As a borrower, you have rights. Consumer protection statutes in Ontario require that lenders give consumers a disclosure statement before the agreement is signed. This statement must clearly outline the total cost of borrowing, as well as other information.
What is Specialty Financing?
If you have bad credit, it will be difficult to get a loan from a bank or a dealer. Luckily, there are specialty finance companies that are experienced in handling any kind of credit profile or credit situation. With some, beginning the process can be as easy as filling out a quick form online.
Specialty Financers have requirements, including a valid Ontario Drivers License and proof of insurance. Proof of income is required, either a most recent pay stub or three months of bank statements, if self-employed.
It shouldn’t be a hurdle if you are currently in bankruptcy or have been. A down payment is not necessary (though of course it can reduce the size of the loan.) Some companies, such as Auto Loan Services will take Trade-ins as well.
Research, preparation – and a Specialty Finance company. They are the three steps to getting no credit car approval in Barrie.