Whether you’ve got a minivan or a sports car, owning a vehicle is a quintessential part of Canadian life. If you don’t have one, financing can be an important step towards getting the car that’s right for you. Your chances of being accepted for one will rest upon the health of your credit score, a definite problem if you're part of the estimated twenty percent of Canadians with a non-prime score. But there’s some good news - no matter what your credit situation, there’s likely a financing option for you.
What’s the minimum credit score you’ll need for a car loan?
Generally speaking, lenders are looking for a credit score above the mid-six-hundreds to qualify for the best rates. Any score above six-hundred and fifty and a great chance at getting the best approvals. Don’t let that discourage you, however. Lenders look at a variety of factors in making lending decisions and there are also many alternative lenders who’re often more willing to accept lower credit scores. Dealers are always willing to help borrowers find financing that meets their credit needs.
If your credit score is below six-hundred and thirty, don’t panic, you still have a great chance of getting approved for a car loan. When shopping around, you’ll need to keep an open mind and stay realistic. It’s always important to feel comfortable with the person you decide to work with.
Better credit? Better loan.
The credit score range that you fall into tells you a lot about the financing offers you can expect to receive. Naturally, everyone’s looking for low-interest rates and monthly payments and larger loans. The higher your credit score, the easier it’ll be for you to get those things. A high score also means you’ll find approval quickly and easily.
But just because you have access to lucrative offers it doesn’t mean you should accept them right away. It’s still important to take time to consider your current financial position and future goals. Don’t let a few flattering offers stop you from making smart financial decisions.
How to find the right lender.
Because lenders vary in their credit score expectations, your task is to find the lender that will work best for you. What many borrowers forget is that lending is a two-way street, and lenders have just as much of a right to seek a deal that works well for their financial situation.
If you want to get the best possible deal, ask yourself the following questions when evaluating your lender:
- Are you pressed for time to get approved for financing?
- Do you have bad credit?
- Is convenience important to you?
- Are you willing to shop around for the best possible deal?
- Is this your first car loan and you’re unsure of where to start?
- What are your current and long-term financial goals?
- Do the car loans offered to you align with those goals?
How to improve your credit score and increase your chances for approval.
Before you even apply for a car loan, you should do whatever you can to boost your credit score. You can further increase your chances for approval by researching the loan market and lenders you're interested in applying to. More often than not, choosing the right lender is the first step towards getting approved for the car loan you need.
If you’re interested in improving your credit score before applying for financing, be sure to:
- Check your score to see where you stand.
- Contact a credit bureau to fix any mistakes you may find on your credit report.
- Pay off as much outstanding debt as you can afford.
- Start making regular, full payments towards other debt.
- Save up for a down payment of twenty percent.
- Consider how much you can afford to pay on monthly payments and auto insurance.
While a healthy credit score helps when you're trying to get approval for the loan you need, subprime credit won't exclude you from car ownership. Visit our website and fill out an application today to discover all the ways that Car Loans Canada is here for you.