Toronto Car Loans And Good Credit



No car buyer should apply for a car loan unless they have checked your own credit score and credit report first. You should see what information is collected and stored about you, if only to review for identity theft and errors. People with bad credit pay higher auto loan interest rates. It can hurt your job prospects, insurance companies check your credit too.

After all, that is what the car dealers do, so you better know what's wrong before they do. A car salesperson should never know more about your credit than you do.

IF you have a Credit score of 680 or higher, you typically qualify for the lowest prevailing interest rates (as advertised). If your credit score is 600 to 680 you'll pay higher rates like 10%-15% APR (annual percentage rate). If your credit score is below 600, it's difficult to get approval, and below 550 nearly impossible.

Having bad credit can also increase your monthly payments significantly adding thousands of dollars extra interest to the car payments.

Repairing Your Credit

If your credit score is <550, don't apply for new car loans until you learn how to repair your own credit. A good time to do this then would be 6 months before you think you might buy a new car.

To approve your car loan, lenders need to see an established pattern of credit showing you paid your bills on time, no black marks on your credit history, no forgetting to pay your bills, and no paying your bills 30, 60, 90 days past due. Lenders want to see you have a minimum monthly income, which will cover the car, rent, living costs, and more. You need to keep your debt to income ratio below 30%, including your car loan. If you have a part-time or minimum wage retail job, you can forget about a car loan. To improve your credit, get one store or gas card, and one VISA or MasterCard, and pay them off every month. Credit cards with balances about 50% of the approved limit are a warning sign for lenders. (if you have a low limit credit card, offer the bank a security deposit so that they can raise your limit to a higher level). Lenders also want proof that you have been living at the same address for 6 months

Every bill you refuse to pay, doctors bills, credit card payments, loan installments, traffic tickets, bankruptcies, foreclosures, late apartment rent, arrest records, ALL gets reported on your credit report, and it definitely 100% keeps you from getting financing later in life, for 7 years.

Your last auto financing resort is a bad credit auto loan. They get you new car financing from their network of high risk lenders and car dealers with decent online auto loan rates, even with a bankruptcy.

Co-sign loans can help you establish credit

You still can't get approved for that car loan? Many car dealers can do what is known as a co-sign loan, where the loan is in your name, AND ALSO your parents' name, if they sign as the co-signer. This means that the loan is in your name AND your parents name. While it helps establish your credit, if you default on the car loan payments on this type of car loan, your parents then become responsible for your monthly payments, and if neither of you pay up, both of your credit histories take a hit, and they repossess the car. This can prevent your parents from re-financing their house for up to 7 years from now.

One warning about co-sign loans, some real unscrupulous car dealers may say you are getting a co-sign loan, but they trick the cosigner (Mom, Dad) into signing the wrong line of the loan papers and the loan ends up in their name alone, instead of both of your names together. This helps the loan get approved so they can sell the car. Be careful which lines/boxes you sign and always fill in your income box, so the dealer won't fake an income number for you.

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