Low Interest Rates With Bad Credit
Your credit score is a way that dealerships can easily view your past payment history with other loans that you have had in the past. In Canada, your credit score can range from a low 300 to a perfect score of 900. Having a higher credit score will help ensure that you are able to get approved for an auto loan, however, most creditors are still willing to work with those who have a credit score that is below average.
Many people are under the misconception that if they have bad credit, they will be unable to get approved for an auto loan, or if they do get approved, they will be forced to pay high-interest rates. While your credit score does play a role in how much interest you will be charged, having bad credit does not necessarily mean that you will have a high-interest rate.
What is Considered a Bad Credit Score?
This answer can fluctuate greatly depending on what financial institution you are asking. While every lender will have their own standard when it comes to what constitutes as a "good score," generally, any score around 650 is considered to be average. Which means any score below 650 may be considered a poor credit score and any number above 650 is considered to be a good or excellent credit score.
**You can check your credit score for free
What factors Effect a Credit Score
A credit score is just another way for financial institutions to see how consistent you have been in the past with making regular payments. Some people who apply for an auto loan have no credit. While this isn't necessarily a bad thing - everyone started out with no credit at some point - because they are unable to get a good idea of past payment history, some financing centres may consider a no credit applicants to still be "high risk."
For people who di have an established credit history, some of the things that could affect your credit score could include:
- Delinquencies or missed payment
How to Get Low-Interest Rates on a Bad Credit Loan
When a lender looks at your credit score and determines that you may be a high-risk borrower, they typically tend to charge you a higher interest rate. This, however, is not to punish you for having bad credit, this is just a way for the lender to compensate for the risk that they are taking.
If you have a bad credit score, there are a few things you can do to help you get a lower interest rate on a loan. The first thing would be to put a down a good amount of money on the car for the down payment. This will not only help give you more equity in the car, but it will also lower the total cost of the car, which will help to give you a lower interest rate.
Another thing you can do is to get a co-signer with good credit. A co-signer is someone who agrees to help with payments if, for some reason, you are unable to make your payment for that month. If your co-signer has a good enough credit score, it may be able to offset your poor credit score, which would help to lower your interest rate.
Bad Credit Auto Loans in Calgary
If you are looking for a fair and easy auto loan in the Calgary area, contact us today. We have some of the most experienced financing professional in the business that specializes in working with people with various types of credit.