Finding ideal financing for a new car is not easy, especially if you possess a less-than-perfect credit score. Conventional lenders usually shy away from subprime borrowers because of the potential risk of default. So to compensate for the uncertainty, lenders set fort stringent terms and conditions that borrowers must meet. Car dealerships, in contrast, are more than happy to help individuals with poor credit. If you’re interested in learning how banks and other traditional lending institutions differ from car dealerships when it comes to lending auto loans, read on!
Approaching Banks and Other Conventional Lenders
It’s no secret that borrowers with excellent credit scores have access to the best loan terms. Some can secure car loans with no interest while others can get loans that cover the car’s total value. People who have good credit are also able to get extended warranties, low auto insurance premiums, and much more. In short, it pays to have good credit.
But if you’re shopping around for car loans with a credit score below 620, you’ll face an entirely different experience. Your application will be scrutinized thoroughly—references as well as past and present employers and landlords may be contacted to verify the information you provide. You will have to put down a large down payment because the banks will not want to lend you more than a certain percentage—usually less than 50 percent—of the vehicle’s total value. You will have to get the rest of the money some other way—borrowing from friends and family should be considered before you turn to lenders offering unsecured loans.
Interest rates are always higher for those with bad credit, and sometimes the increases are in the double digits! If you consider fuel costs, taxes, maintenance, and other expenses related to owning a car, you’ll see that costs do add up.
Approaching Car Dealerships like Ours
Not all lenders consider a bad credit score to be a deal-breaker when it comes to providing car loans. At East Coast Financing, we have been providing easy access to Nova Scotia car loans since 2014, and we’ve helped hundreds of Canadians get their dream cars.
We don’t hassle buyers with tons of paperwork—all you have to do is provide proof of income, housing information, and a few other details. Based on the details you provide, we’ll be able to determine a loan amount you qualify for; we’ll also be able to show you vehicles in your pre-approved price range. Payments can be made bi-weekly or monthly, so you should choose a method you can afford. Best of all: there’s no down payment required!