How to buy a car with a bad credit score in Canada

How to buy a car with a bad credit score in Canada

Posted on September 29, 2022

If you have a bad credit score and need to buy a car, these suggestions are going to help make your life easier.

We have done all of the heavy lifting and distilled the information into a simple-to-follow game plan; if you stick with this game plan, you should be able to get a new car and save money at the same time.

What is considered bad credit in Canada

Terms like “Bad,” “Fair,” and “Good” are vague and ambiguous, but speaking in general terms, if your credit score is under 600, you are considered to have “bad” credit.

This does not mean you are a bad person; the score is just a representation of the information contained in your credit report.

You could have a perfect repayment history, but the amount of debt you are carrying, known as your “credit utilization,” is near or at 100%. Lenders consider this is to be a potential red flag even though you are making at least the minimum payments every month.

TransUnion, Equifax, and You

You should access your TransUnion and Equifax credit reports, its free and will give you some valuable insight into why your credit score is in bad territory.

Are there mistakes in your credit report? These errors will stay inside your report for up to seven years, so you must take care of them asap.

The only way to have errors removed is to go through the dispute channel that is posted on TransUnion and Equifax’s respective websites.

Finding the right car for your needs

Everyone in Canada needs a vehicle to get around; you may be feeling anxious because your bad credit has limited your car-buying options.

There are lenders out there who will give you a chance, but they do not advertise online like other mainstream lenders; the only way you can access these lenders is to go through a dealer network.

The good news is there are dealerships in your area that work with these lenders; you just need to look for firms that offer “second chance financing” or “no credit refused”.

When you have identified the local dealerships that offer bad credit car loans, you should visit them in person and schedule test drives to figure out which vehicle is going to be the right one for you.

While test-driving these vehicles, the dealership will start working on your file and identify which lenders are going to give you a fair shake.

The sooner you reach out to the local dealership, the faster you can drive home in a new car, so why not contact the dealership right now and get things going? It will be the best decision you made in a long time.

Contact Unique Chrysler for help, advice and competitive car finance and leasing.