Poor Credit Car Loans in Canada: Everything You Need to Know

Having bad credit can limit your car buying options. Most people don't have the cash to buy a vehicle outright, so they need financing.

Lenders have become more conservative with their car loan underwriting, so your credit score plays a crucial role in whether you are classified as prime or subprime. Here's how to find a fair priced car loan with poor credit score in Canada

How Poor Is Your Credit Score?

To fall under the subprime category, your credit score needs to be under 600. However, even if your score is below 600, there are ways you can get a car loan.

Sign up to free credit reports with Equifax and TransUnion, there is no cost, but you will need to pass an identification to make sure you are the actual person in the report. It takes roughly 60 seconds to complete this step and be able to review your credit report.

When looking over the credit report, remember that you could have a 650 score with TransUnion but a 580 with Equifax.

There are a few potential reasons why your score is low; one of the most common is errors inside your credit report.

Spend a few moments looking over your report to see whether there are any errors. If there are errors, they will be removed, but you will need to follow the official dispute process listed on the agency's website.

It could take 30 days or longer for these errors to fall off your credit report and the score to update.

Simple to Follow Credit Rebuilding Tips

In school, the majority of us were never taught anything about finance or money management, so credit may seem like a complicated topic.

To rebuild your credit score, you just need to follow these simple suggestions.

Make your payments on time: This is one of the biggest factors that impact your credit score. Make sure you are paying at least the minimum amount due by the due date every month without fail. While you cannot change the past, promise yourself going forward that you will always stay current with your obligations.

Reduce the total amount of debt you are carrying: you are paying high interest to service these debts, and they limit your ability to get a car loan in the future. Try to keep your overall credit utilization rate to forty percent (40%) or lower, and you will start to see your credit score improve.

Finding a Car Loan with Poor Credit Score

Car prices have skyrocketed in recent months due to supply chain bottlenecks. Since your credit is in subprime territory, you may only qualify for a used car loan with poor credit.

The used car market is also experiencing unprecedented demand, so you may find yourself having to pay a premium just to have a car, but you should be able to find something that works for your budget.

Speaking of budgets, do you have your budget defined? One of the main reasons people get themselves into credit issues is not having a budget in place.

You don’t need to feel intimidated; a simple spreadsheet is all that is needed. Just type in all of your income and expenses, subtract the expenses from the income, and if the balance is positive, you are in good shape. Click here to learn more.

Where to Buy a Car With Poor Credit Score

We are going to let you in a little secret on how you can buy a car with bad credit. The only way you will be able to purchase a vehicle is with the help of a dealership that offers bad credit car financing.

However, you should have no issues finding these dealerships, and they will show you how to fix your credit issues so you can get a prime car loan in a few years.

While you work on fixing your credit, the dealership is going to get you approved for a car loan today. The interest rate you will be charged is high, but over the long term, at least you will have a car to drive today.

If you're ready for a car loan in Southern Ontario, we'd love to help with that! simply fill in the form below to get started.