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Tips for Buying a Car with Low Credit Score

Tips for Buying a Car with Low Credit Score

Canadians who are interesting in buying a car with low credit score have several options that are available to them. To find the option best suited for your situation, you will need to do some preliminary legwork on your end.

 

What is your current credit score?

 

Start by looking over your current credit score to establish a baseline. Credit scores range from 300-900, and most Canadians fall in around the 670+/- range. If your score is 720 or higher, then you are considered to have very good credit. If you have 650 or lower, then you are considered high-risk or sub-prime.

 

Legitimate ways to boost your credit score

 

A note of caution, firms are trying to sell credit repair programs that promise massive increases in credit scores virtually overnight. The adage “if it sounds too good to be true, it probably is” comes to mind. There are no ways to boost your credit score overnight and anyone who promises this may be trying to take you for a ride.

 

The following suggestions are tried and true, so be sure to implement them immediately.

 

Pay your bills on time

 

While it may sound like we are being sarcastic, this is the primary reason that people have a bad credit score. Your payment history is the biggest single influencer on your credit score, so if missed a payment even for a small amount it will bring your score down.

 

Set a calendar reminder so you do not forget to make your payments on time and you would be amazed by how fast your credit score improves.

 

Reduce your overall debt levels

 

Carrying too much debt is the second biggest credit score influencer, what you need to do is look at the balances that you are currently carrying and compare them to the total amount of credit available.  If the percentage of debt to available credit is over 30%, then your score will take a negative hit.

 

Selecting the right car dealership

 

When you have your credit situation sorted, your focus can now shift to finding a local car dealership that can help Canadians when it comes to buying a car with low credit score.  These dealerships will help you identify lenders who can underwrite sub-prime auto loans. (you will not be able to find these lenders online, they work primarily through car dealership channels).

 

Coming up with a gameplan

 

We have established that you currently have some credit issues, but that will not always be the case. What you could do, is set up a plan where you accept the car loan and commit to making the payment on time every month. After one year, your credit score should be high enough to refinance your auto loan at prime rates.

 

You should discuss this strategy with the dealership, they fully understand what it takes to get a prime auto loan and can mentor you throughout the entire process.

 

If you are genuinely interested in buying a car and have credit issues, then follow the tips we have provided, and not only will you be driving a new car but your credit score will improve in the process.

 

If you need help or advice on anything to do with auto loans, contact Car Nation Canada today, we can help!

 

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