Vehicle loans for cars, motorcycles, trucks, tractors, and other automobiles are among the most common types of loans people seek out. It’s almost impossible to live in the modern world without a vehicle, and cars can be needed for both personal and professional reasons, getting us from point A to point B each and every day.
A lot of people don’t necessarily have the funds saved up to afford to buy cars outright, so they turn to loans. When you apply for a car loan from a regular provider, they’ll take a look at your credit score and make a snap decision on whether or not to approve your application based on that magic number.
Fortunately, bad credit loan providers do exist, and they’re often the best way for people with bad credit to get the money they need for big purchases like a car. Lots of different bad credit loan providers can be found all around Canada, and they work very differently to standard loan providers, despite offering similar services.
As mentioned above, a standard loan provider will look at your credit score in order to determine whether your application will be approved or rejected. They rarely take other factors into account. A bad credit loan provider, however, will look at many additional factors to judge each case on an individual basis. Examples include:
Net Income – You can share details of your monthly income and expenditure with a bad credit loan provider. If you can prove that you have enough money left over each month which could cover the cost of your loan, this will give you an immediate advantage over securing a loan approval.
Payment History – Your credit score looks at how well you pay off loans and credit accounts, but a bad credit loan provider will go further. They’ll look at how you pay off your bills each month, including energy bills, rent, taxes, and more. If you prove that you’re someone who controls their finances and pays things on time, this is another plus point for you.
Employment Status – Naturally, having a secure job with a steady income is one of the first things that bad credit loan providers are going to look at in their applicants. Showing that you’re employed proves you’ll be getting a monthly income and so should have enough funds to cover your loan repayments.
Essentially, a bad credit loan provider needs to see that you do have enough money each month to meet payment deadlines and that you have a reasonable degree of financial security to cover the costs of your loan installments. If you’re able to show that you have the income needed and are a dependable payer, you can get a car loan quite quickly.
A bad credit car loan can save the day for those with credit scores under 600, but you still need to be cautious. There are some downsides to these kinds of loans, which is why it pays to improve your credit score by making regular payments, using credit cards, and paying off more than the minimum monthly repayments whenever possible.