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What’s the minimum credit score to qualify for a car loan?

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What’s the minimum credit score to qualify for a car loan?

Just a few years ago, you would have had to fit very specific criteria to qualify for a car loan. Thankfully things have changed and lenders are now much more appreciative that people come in all shapes and sizes and financial situations. There are still hoops you will have to jump through to be approved but getting a car loan is easier now than ever before.

As a practical minimum, a score of 600 and above gives you the widest range of lenders and car loan deals to choose from. There are still options if your score is lower but the pool of lenders reduces and we may need to look at other options such as bad credit loans, larger down payments, co-signers and other mechanisms. The good news is that regardless of your credit score, you can get a car loan if you work with Car Nation Canada.

Higher the score lower the cost

Lending money is all about risk. The lower the credit score, the higher the perceived risk. Even if you have every intention of paying back every cent, lenders view everything in terms of that risk. A score of 630 and below is regarded as a higher risk than someone with a score of 700 and above. Therefore, the rates charged to that lower risk borrower reflect the lower risk.

As the lender has a higher confidence that they will get their money back with that higher score borrower, they offer lower rates. Conversely, those with less than perfect scores may have to pay more as they are perceived to be a higher risk borrower. It’s an unfair system sure, but it’s the one we have to deal with.

The good news is that lenders are now much more understanding that not everyone fits perfectly into one category or other. The financial crisis showed everyone that people from all walks of life, from any situation or background can fall on hard times or find it tough to keep their head above water through no fault of their own.

One of the few positive legacies we have from that time is that lenders finally realized that there is a person behind the application form and that not everyone can be categorized and sorted so cleanly.

If you’re looking for a good value car loan, Car Nation Canada can help. We deal with a selection of reliable, good quality lenders who appreciate that people come in all shapes and sizes and all financial situations. Whatever your credit score, we are sure we can find you a fantastic deal on your next new car.

Visit your nearest dealership and let us prove it!

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