Kitchener Bad Credit Car Loans

Kitchener Bad Credit Car Loans will get you into the vehicle you deserve, even if you have bad credit, no credit, or have declared bankruptcy.

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Getting a car loan has become a very common method for getting a car in Kitchener.

Car loans make getting into a new ride easier and faster, removing the need to save up tens of thousands of dollars in one go before you can ride around town. Instead, you can split up the cost of your car over several years with monthly repayments.

Getting a car loan approved can be tricky if your credit score and financials aren’t where they should be.

So what do you need to do give your car loan the best shot at being approved?

We’ve identified five essential factors that determine whether your car loan application is successful or not. These may not apply to everyone, but they’re good to keep in mind nevertheless.

Notepad showing calculations for kitchener bad credit car loan

Income

The first essential factor is your Income. All lenders will, as a rule, check to see if you have a steady source of income. It is important that you have at least one regular or sufficient income stream to show that you are solvent enough to make the payments on your car loan in Kitchener.

Another factor that will be considered is your debt-to-income ratio. Your debt-to-income ratio compares how much you owe each month to how much you earn. This will be used to determine how capable you are of paying off your car loan each month. This also factors into how much credit you are offered, since no company wants to extend credit that cannot be paid back. It is important that you manage your finances in a way that your debt is minimal if at all existent. Try to keep your expenses as low as possible compared to your income. This can be done by careful budgeting and need-based spending.

If your income is low compared to your overall debt, you might want to consider holding off on that car loan until you can save up for a down payment. This will lower your monthly repayments and may help you get a lower interest rate.

Credit Scores

Your credit scores are also crucial when considering your Kitchener car loan application. Your credit scores are numerical representations of your past credit trustworthiness compiled by credit bureaus such as Equifax and TransUnion. Lenders may consider a range of credit scores during your application. How your scores differ will depend on the specific scoring-model used.

These scores show lenders how likely it is that you will pay off your debt. In essence, they help lenders calculate the potential risk associated with giving you a car loan in Kitchener. Naturally, the higher your credit score is, the less risk is associated with giving you a car loan. If you have bad credit, there are lenders who specialise in getting these car loans approved. Kitchener Bad Credit Car Loans is one such lender. We negotiate with Canada’s largest banks to secure approvals for bad credit car loans, and we always make getting the lowest possible interest rate our top priority.

Woman filling out bad credit car loan kitchener

Credit History

Your credit history also contributes a great deal to your car loan application eligibility. The longer the history is, the better chances you have. Lenders like to see that you are not a novice in borrowing and returning the money. The more money you have borrowed and returned, the more confidence they will have in your ability to make payments on the car loan that you are applying for.

This is something that cannot be influenced to speed up, as time moves the same pace for everyone. The best thing you can do to improve your credit history is make regular, on time repayments on your credit accounts every month. A Kitchener bad credit car loan is actually a great way to rebuild your credit history, as it is secured with a reputable lender and by making your repayments, you will improve your credit score over time.

Number of Negative Credit Events

Delinquency occurs when an individual’s credit payments are past their due date. While your account may not be reported on until the grace period is over, a delinquency is a red flag to a lot of lenders. The inability to pay the money borrowed at the time that is expected does not sit well with potential lenders. So if you have a lot of late payments, your credit score will likely suffer.

The thing that a lot of people do not understand fully is that a late payment will remain in your payment history for as long as seven years. So If, for example, you are defaulting on a car loan in Kitchener, that record remains for seven years. Late payments are the single largest detractor to your credit score, as payment history makes up to 40% of your score with most credit bureaus. If you are looking to make your car loan application stand out, ensure you are paying all of your credit accounts on time every month to keep your credit score in its best shape.

Credit Utilization Ratio

Potential lenders also take into consideration how much of the money being offered on credit is actually used by you.

On a general note, most lenders are not comfortable with individuals who use more than 30% of the credit offered them. Using more than this percentage makes credit providers skittish concerning your ability to pay back money owed. Credit bureaus have also revealed that credit utilization ratio makes up to 30% of your credit score, so it is wise to keep your total ratio to less than 30%. It is also advised to keep your per-card ratio to below 30%, as this demonstrates good financial sense and reliability.

Having A Hard Inquiry

A hard inquiry occurs when a credit company has to check your credit before determining whether or not you are eligible for a car loan. On its own, there is nothing wrong with a hard inquiry. They are necessary in most credit applications, and while they cause a small dip in your score, they are temporary. However multiple hard inquiries may begin to raise red flags on your car loan applications.

Having many hard inquiries indicates that the individual in question is most likely a hard borrower. Borrowing excessively means that car loan companies are running the risk of you borrowing sums of money that you cannot pay back. Also, multiple hard inquiries in a short space of time indicates a desperate need for credit, which is another warning sign for many lenders.

Secure Your Car Loan

Contrary to public opinion, money matters are not mysteries. People who are good with money are simply people who are aware of it. By being aware of your finances, you regulate all of your expenses, ensure that you save and keep your debt-to-income ratio manageable. You are well on your way to getting that car loan that you want. Applying these six guidelines will most definitely ensure that your Kitchener car loan application is outstanding!