Credit in Canada

Your credit score is an important aspect of everyday life. Since opening a bank account to get a phone line is everywhere. Your credit score has been checked and checked again every time you are applying for a visa, mortgage, car loan, even auto insurance policy. Having a perfect credit score is not the only thing to worry about when applying for a car loan.

There are many other factors such as the relationship between coverage of debt service (ICSD) is the ratio of cash available for debt service interest payments, principal and lease.

It is a popular benchmark used in the measurement of (individual or company) to an entity’s ability to make enough money to cover its debt (including leasing) payments.

The higher the ratio, the easier it is to get a loan. The phrase is also used in commercial banking and can be expressed as a ratio of at least acceptable to a lender, as it may be a condition of the loan or agreement. ICSD breach of an agreement may in some circumstances, an event of default.

This relationship in today’s lending practices is set at 30%, for example, if you’re earning $ 10,000 a month gross income, and currently has $ 3.000 each month to pay existing debt.

The odds are not good when it comes to getting approved for another loan at a good rate of interest, such as 1.7%. But when you enter the sub prime market, or bad credit lenders this relationship may be driven up to accept your application for credit.

Of course, the downside would be paying a higher interest rate or April The annual percentage rate (APR), nominal and effective April April (AER) describe the interest rate for an entire year (annualized), rather than a monthly fee / rate, as applied to a loan, mortgage, credit card, etc. It is a finance charge expressed as a yearly rate.

The terms have formal definitions, legal in some countries or jurisdictions, but in general: The APR is a nominal fee simple interest (one year). The effective APR is the interest rate + compound rate (calculated over a year.)

To increase your chances of approval, they must first pay the debts on his behalf as small as possible. Try to keep the remaining debt (the debt of credit cards) at less than 50%, which will increase your score over time.

Remember that no research on its credit by borrowing if not get approved. You can check your own credit score, this type of research is called “soft coup” that has no effect on your credit.

Only the “blow” or credit card through the research of a business can hurt your score. So remember to keep your debt to a minimum, and good luck on your auto loan.