If you’re in Canada and have bad credit, it can be tough to find a great used car at a reasonable rate. Many used auto dealers will take advantage of people with bad credit, and sell them used cars at exorbitant rates. They may even try to scam you with in-house financing, or underhanded sales contracts.
But there is an easy way to avoid these issues – even if you have bad credit. Simply getting pre-approved for an auto loan is a fantastic idea. Whether you have good credit or bad credit, having pre-approval for your loan from a financial institution has a variety of benefits, which we’ll look at below.
1. Better Leverage When Negotiating With Dealers
The first benefit that loan pre-approval has is leverage. When you’re pre-approved for an auto loan, you have a much better bargaining position with your dealer. They’ll know that you’re serious about buying a car, and that you already have a lender lined up to give you the money required to make your purchase.
Because you’re clearly interested in the car, and you already have the resources to buy it, your dealer is more likely to cut you a deal – whether they reduce the cost of the car, add in some bonus extras, or waive some of the more common paperwork charges involved in the car-buying process.
If you don’t get pre-approved, you’re less likely to be able to negotiate with dealers, as there is no guarantee that you will even be able to purchase a car at a dealership.
2. Removes Uncertainty Of The Loan Process – You Won’t Miss Out On Your Car
If you’ve found a fantastic deal on a used car, you probably want to buy it as soon as possible, and avoid losing out on a great vehicle. However, if you’re not pre-approved for a loan, this may prove to be difficult.
It can take several days – or even weeks, in some cases – for a financial institution to approve you for a loan. So if you start shopping for cars without pre-approval, you might find a great car and then have to wait for approval for quite a while before you can even start the purchasing process.
If you’re pre-approved, you don’t have to worry about waiting around. You can begin discussion of terms and pricing with the dealer immediately, and talk about the specifics of your purchase without waiting for a bank’s approval.
3. You Can Shop Around For Better Interest Rates
This is a very important reason that you should get pre-approved if you have bad credit. Contrary to popular belief, there are many lenders willing to work with individuals who have bad credit. If you have bad credit, your loan is going to have a high APR – that’s just an unfortunate fact.
However, some lenders are more forgiving than others. While a large bank may offer you an auto loan with a gigantic 25% APR, a smaller credit union in your area may be willing to negotiate with you, and give you a loan with a much more reasonable interest rate.
So shop around for a better interest rate. Whether you have bad credit or good credit, you’re sure to find a bank that’s willing to cut you a deal.
4. You Can Create A More Realistic Budget
Pre-approval is also important for buyers with bad credit because it allows them to get a better understanding of their finances, and the budget that they have for a car.
When you know the interest rates that you’ll be paying for an auto loan, it’s much easier to calculate the overall cost of an auto loan, using a variety of online tools.
This is important because if you have bad credit, you have to adjust your budget downwards due to your high interest rate. If you could afford a $10,000 car with a 9% APR, you can probably only afford a $8,000 car with a 20% APR, due to the much higher monthly payments.
Creating a realistic budget for your vehicle is crucial when you have bad credit – because the last thing you want to do is default on your loan, and have your vehicle repossessed.
So get pre-approved, and create a reasonable budget based on your expected APR – and you’re sure to have an easier time making your monthly payments.
5. Smoother Purchasing Process
It’s much easier to purchase your car if you’ve already gone through the necessary steps for loan pre-approval.
You won’t have to worry about bringing in pay stubs, financial information, or other items to your used car dealer if you’ve already been pre-approved by a bank. The car dealer will work with your bank of choice to finalize the contract – all you have to do is sign and drive away.
Need A Used Car With Bad Credit In Canada? Come To Ride Time!
Whether you’re pre-approved or not, Ride Time can offer you great deals on used cars – regardless of your credit score.
If you can give us proof of employment for more than 3 months, a valid Canadian driver’s licence, and you make more than $1,500/month before deductions, we can partner you with one of our 15+ specialized lenders. We’ll offer you a fair deal on a great car – no matter how bad your credit might be – and we can deliver our cars all over Canada.
So don’t wait around. Whether you’re in Winnipeg, or anywhere else in Canada, visit Ride Time today – and get a wonderful deal on a fantastic used car, even if you have bad credit.