This is how you Buy a Car in Freelton with Bad Credit

This is how you Buy a Car in Freelton with Bad Credit

Posted on January 5, 2022

If you need to buy a car in Freelton with bad credit, you may feel anxious about the thought of being declined for a car loan.

Our Freelton auto loans team are going to show you how the car financing industry works, and how you can get your hands on a new car fast.

Covid changed the car financing landscape

Prior to the pandemic, just about anyone with a job could get a car loan in Freelton with bad credit, but those good times are gone. Lenders have become very cautious because they are worried about taking on non-performing loans.

If you worked as a car loan underwriter and started having borrowers not pay the loans, your employer could fire you. But if you do not approve enough loans then you still lose your job because the car loan provider will go out of business.

What car loan underwriters do to protect themselves is raise the minimum credit score needed for a car loan.

This threshold has been increased from 650 to 680 and will likely continue to rise until the pandemic is over.

Proof of income requirement

Even when you have good credit, the lender has to calculate what is the maximum loan you can afford. The lender will take your monthly income and then using the debt-to-income ratio calculator to find out what 40% of your gross monthly income looks like.

If your current debts exceed 40% of your gross income, even if you have a great credit score, the lender cannot approve the loan.

You should take this opportunity to start paying down your current debts, so you can qualify for a much larger car loan.

Lenders want to see your latest salary slip if you are working a conventional 9-5 job.

If you are self-employed or derive a considerable amount of your income from self-employment, then you must provide copies of your income tax assessments and bank statements.

If you do not provide those documents, the lender is not able to verify your income or approve the loan.

This may seem like a hassle, but it doesn’t take much time and everything can be done electronically, so you don’t have to send in physical copies of your documents.

Getting access to the most competitive car loan terms

The internet may seem like the most logical place to get great car loan in Freelton with bad credit, but you would be wrong. Car loan providers that you find online, are offering you retail interest rates.

If you want to get the most competitive terms, you will need to go through a local car dealership network. The dealership has access to wholesale car loans and can find you a loan, even if you have subprime credit.

The dealership is able to help you fix your credit, and has cars you can buy. With online lenders, you have to find a car first, which is not easy with the chronic shortage of cars throughout Canada.

Do yourself a favor and head over to your local car dealership ASAP, it will be the best call you make all week!

For any questions, concerns, or inquiries. Please don’t hesitate to contact us here! 

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