BAD CREDIT CAR LOANS
The most common ways of financing an automobile is with car loan, truck loan or vehicle lease. The loan payments can be for an extended for up to 84 months or 7 years!
When you finance a vehicle using an auto loan, it’s essential to understand how the repayment calculations work. In most cases, the loan and amortization period are the same and the loan will be paid down to $0 when the loan term is completed. Sometimes, however, the loan is for a shorter time period, such as 60 months, with an amortization period of 72 months (i.e. it would take 72 months to pay it to $0). This is done to reduce your payments, but you will be left with a balance still owing when the loan is completed that you must have saved up to pay off at that time or be in a position to refinance it.
You should make sure you understand your repayment terms before getting into any loan agreement as this is a legally binding act.
BAD CREDIT AUTO LENDERS
In recent years, there have been a number of lenders in Canada offering bad credit car loans such as Wells Fargo, HSBC, VFC. These lenders usually finance through dealers rather than dealing with the customers directly. While consumers tend to view these lending companies as the same, there are a number of important differences including:
How much they will finance – including negative equity when you owe more than the vehicle is worth
The payment frequency they will permit – monthly, weekly or biweekly
The age and mileage of the vehicles they will finance
The term and amortization of the loans they offer
The interest rates they charge
Whether a down payment will be required and the amount of that down payment
Every organization also has its own unique approach to how they evaluate an applicants bad credit. Some lenders focus more on credit scores such as a beacon score with little focus on the individual’s job stability. Other lenders drill down more into the type and timing of bad credit the customer has experienced such as bankruptcy, consumer proposal or previous vehicle repossession. This credit assessment helps the kind of approval you will qualify for.
All Canada Cars has long and deep relationships with the bad credit lenders it believes offer the best value, best rates and best terms for its customers. We only deal with loan companies that report back to the credit agencies so you can repair your credit.
FULL FINANCIAL DISCLOSURE
Regardless of which car dealer and/or financial institution you choose for your vehicle financing, you are entitled to “full disclosure” of the loan or lease under the Consumer Protection Act (Ontario). This includes disclosing all information on the amount being financed including the rate of interest and the total cost of borrowing.
If a dealer does not provide this disclosure to you before you are asked to sign a deal, insist on it. You have the power to make and educated and informed choice.
WHAT LOAN COMPANY TO CHOOSE
With All Canada Cars years of bad credit and lender experience, we can assess your personal unique circumstances and credit history. This allows us to match your application with the best lender for your situation with the highest probability of success in achieving your goals on the best possible terms often with $0 down payment. At the end of the day, we try to get you approved on the automobile you really want with a payment you can afford.
Our approach also limits the need to “over shop” your credit by sending your application to multiple lenders. That approach can further damage your credit.
BAD CREDIT LOAN CONCERNS
Sometimes, lenders are willing to offer a loan for a term longer than the vehicle will realistically last. This is especially the case where the vehicle is older with higher mileage or you are an unusually high mileage driver. The longer term, or amortization period, results in a lower payment which may be attractive at first. But you could end up paying on a loan long after the vehicle is no longer road worthy. Or worse, failure to pay on the loan and worsening your credit rating on a car that is no longer running.
With a bad credit auto lease, the payments are lower than for a loan for the same period of time because you are not required to pay for the anticipated future value of the vehicle when the lease is done. Instead you are typically given the option to purchase the vehicle at the end of the lease or you can decide to get a new vehicle