People with bad credit often say they don’t apply for a car loan because they think the financing rate will be too high. What if we told you there were some things you could do to increase your chances of securing a reasonable financing rate – even with a low credit score?
When you finance a vehicle you want a low-interest rate and a short loan term because that means most of the money you make in payments will be going directly to the vehicle. This also means less spent in interest. Here are three things you can do to improve your chances of getting a lower financing rate.
#1 The Shorter the Term, the Better
Like we mentioned early, the shorter the car loan term the less interest you end up paying. This also means you are likely to get a lower financing rate. However, only choose a length of loan that fits within your budget. Typically, the shorter the term the higher the monthly payments, so make sure you can afford the payments before you sign on the dotted line.
#2 Build Up Your Credit Score
If you have bad credit, there are some things you can do to improve your score (and you can read about them here). Remember, bad credit shouldn’t stop you from applying for a car loan and it certainly doesn’t mean you can’t get a fair interest rate. Making timely care payments and putting money towards your debts can slowly begin to increase your credit score.
#3 Make a Down Payment
Saving a sizeable down payment for a vehicle shows you are able to budget and manage money effectively. It also reduces the cost of the vehicle which reduces the cost of the loan. That means the interest rate will be lower and you can likely afford a shorter loan. As is the case with loan terms, only agree to a down payment you know you can afford over the long-term.
Bad Credit Customers Can Still Secure Low Car Loan Interest Rates
At Woodbine Nissan, we have experience dealing with all types of credit situations. Maybe you are new to Canada and haven’t had a chance to establish credit yet. Maybe you made a few financial missteps in your youth and your credit is still lower than you would like it to be. Or, maybe you have a big family and you need a vehicle but expenses are tight right now.
Whatever your situation is, our team can help. We have been able to find reasonable and affordable car loans for people in Woodbine and the Greater Toronto Area. If you need a vehicle, don’t let your bad credit stop you from seeking help. To speak with someone today call +1 (416) 748-2900!