fbpx

How To Get A Car Loan With Bad Credit

Share on facebook
Share on google
Share on twitter
Share on linkedin

If you have bad credit and want to get a car loan, this could be the most valuable article you will read.

There is a ton of bad information out there when it comes to buying a car in general – especially if you have less than perfect credit. I wrote this article to set the record straight.
 
First off, your credit score does not mean very much to the banks. I have seen consumers with a 500 credit score get approved prime (lowest interest rate) and people with a 780 credit score get flat out declined.
 
Instead of your credit score, banks are more concerned with how you handle your debt load. Here are some of the factors banks heavily take into consideration.
 
1) Credit Utilization
 
Credit utilization is the ratio of your outstanding credit card balances to your credit card limits. It measures the amount of your credit limit that’s being used. For example, if your balance is $300 and your credit limit is $1,000, then your credit utilization for that credit card is 30 percent.
 
Someone who is 100% utilized (or close to), could be having financial struggles and may not be able to take on more debt. Now, if you have a $1,000 credit card and the balance is $1,000, although you are 100% utilized, it’s not a significant amount of credit so it won’t affect things as much.
 
The worst thing is to be over 100% utilization. Most credit cards allow you to go a few hundred dollars over the limit. This can put you at 110%, 120% etc.
 
If a bank sees you over 100% utilization, they will in almost all cases decline you.
 
Make sure to at least pay your credit cards down to under the balances before going to get a loan. (it can take up to 30 days for this to report to the credit bureaus)
 
2) TDSR – Total Debt Service Ratio
 
Your TDSR is your total amount of financial obligations divided by your total gross income. For example, if your total gross income was $10,000 and your total financial obligations (rent/mortgage, credit card payments, cell phone bill, utilities, personal loads, student loans etc.) is $5,000 – your TDSR would be 50%
 
As a general rule, banks like to see your TDSR no higher than 40% (they will make exceptions in some cases)
 
To calculate your TDSR, pull a free credit report (using Credit Karma or another service) and calculate the minimum payments of everything that is reporting. For example – if you credit card has an outstanding balance of $10,000 but the minimum payment is $150, use the $150 payment towards your TDSR.
 
Write our all of your obligations (including rent/mortgage) and use $400 for groceries and other expenses.
 
Divide this number by your total gross income (before taxes and other deductions) and this will give you your TDSR.
 
If this number is above 40%, you may have issues getting a car loan and will need to find ways to lower your financial obligations (pay off cards, get a roommate to share the rent, credit consolidation etc.)
 
3) Past Due on loans/credit
 
If you are past due on your credit cards or loans (especially a car loan) this raises significant red flags to the banks as it shows you are currently struggling. They are unlikely to lend you any more money as if shows you can’t handle your current obligations and won’t be able to handle any more payments.
 
Before you apply for a loan, make sure you are all caught up on your payments (especially car loan).
 
If you can make sure those 3 things are in check, your chances of getting a car loan are very high. Lots of Canadians have previous missed payments and collections, but if everything else is in check, the banks can usually look past those.
 
If you are looking for a new vehicle, I would love to help!  Click here to start
Close Menu

Privacy Policy

Terms
By accessing this web site, you are agreeing to be bound by Terms and Conditions of Use by this web site, all applicable laws and regulations, and agree that you are responsible for compliance with any applicable local laws. If you do not agree with any of these terms, you are prohibited from using or accessing this site.

Authorization
By submitting our application, you certify that all information herein is true and complete. You authorize Driving With Steve and/or our agents/affiliates to obtain any and all credit information from any sources deemed appropriate. By using Driving With Steve and/or our agents/affiliates to communicate with you by phone, email, text or any social media platforms. You can withdraw your consent at any time by notifying us or by using the unsubscribe option on any of our electronic messages. You authorize Driving With Steve and/or our agents/affiliates to provide reports on the status of your application, including information concerning whether you pre-qualify for a loan or not, which lender’s loan offer (if any) you choose to accept, whether your application for credit is denied, and whether you accept a loan from that lender. You authorize Driving With Steve and/or our agents/affiliates to communicate with you by email. You authorize Driving With Steve to sell to one or more person or organization, car dealerships any or all of which may conduct independent searches in relation to your Personal Information. You authorize Driving With Steve and/or our agents/affiliates sell and/or otherwise disclose this Personal information to other wholesale lead providers or motor vehicle dealerships which may be able to assist you in purchasing a vehicle.

Links
Driving With Steve has not reviewed all of the sites linked to its Internet web site and is not responsible for the contents of any such linked site. The inclusion of any link does not imply endorsement by Driving With Steve of the site. Use of any such linked web site is at the user’s own risk.

Site Terms of Use Modifications
Driving With Steve may revise these terms of use for its web site at any time without notice. By using this web site you are agreeing to be bound by the then current version of these Terms and Conditions of Use.

Governing Law
Any claim relating to Driving With Steve web site shall be governed by the laws of the Country of Canada without regard to its conflict of law provisions. General Terms and Conditions applicable to Use of a Web Site.

How We Treat Your Personal Information
Your privacy is very important to us. We created this page to show you how we keep the information you provide to us safe and private.

Involved companies, car dealerships in this loan process are important. When you apply for credit, you must agree that the info you supply to us may be used to apply for consumer credit reports from one or more credit reporting agencies together with their application and administration of your application.

To give you the best possible service, we work together with service providers in order to deal with your loan applications. We do not arrange for or facilitate credit.

We will release some or all of your information to these providers but just to look for credit for you. We take cautionary steps in order to examine the use of the information and stop the use of the information for any other reason whatsoever. All companies herein are required by law to adhere to federal and provincial privacy laws.

Your privacy is very important to us. Accordingly, we have developed this Policy in order for you to understand how we collect, use, communicate and disclose and make use of personal information. The following outlines our Privacy Policy.

We will collect personal information by lawful and fair means and, with the knowledge or consent of the individual concerned. Personal data should be relevant to the purposes for which it is to be used, and, to the extent necessary for those purposes, should be accurate, complete, and up-to-date.

By accepting the terms of this Privacy Policy, you also consent to receiving email about additional products and services from us or any of our affiliates.

We will protect personal information by reasonable security safeguards against loss or theft, as well as unauthorized access, disclosure, copying, use or modification. However, security risks cannot be eliminated and we cannot guarantee that your Personal Information will not be used or disclosed in ways not otherwise described in this Privacy Policy.

If you choose to unsubscribe to our e-mail list, it will not be regarded as a withdrawal of consent. Likewise withdrawing consent directly with the persons or organizations to whom your Personal information has been sold and/or disclosed will not withdraw the consent that you are providing to us by accepting this Privacy Policy.

We will make readily available to customers information about our policies and practices relating to the management of personal information. We are committed to conducting our business in accordance with these principles in order to ensure that the confidentiality of personal information is protected and maintained.

Cookies
Driving With Steve may collect all information regarding your use of our website(s). Such information may include: dates and times that you access the website, the browsers and operating systems used, software and devices used, as well as, online services and details of your usage when on our website.

Driving With Steve website(s), online services, email messages and advertisements may collect information (e.g. cookies, web beacons, tokens, pixels or tags) to assist Driving With Steve in improving its products, services, customer communications and advertising. This will also help Driving With Steve keep you safe and prevent fraud.

Driving With Steve may use the information collected to recognize you as a user of the Driving With Steve website or online services and to facilitate and improve your use of the Driving With Steve websites or online services. Information may also be used to confirm that messages have been delivered to and opened by you and to provide you with targeted offers.

You may choose to decline or disable cookies, however doing so may affect your ability to access or use certain features of a website or online service. Much of the information that is automatically collected by technological means is non-personal information (because the information does not identify you), and Driving With Steve will deal with that non-personal information as explained in this Privacy Policy unless applicable law requires otherwise.

Driving With Steve may use interest-based advertising services (sometimes called “remarketing” or “retargeting”) provided by third party vendors (such as Google and Facebook) to display unique offers on third party websites and social media sites visited by users of the Driving With Steve website.

Advertising vendors (such as Google and Facebook) use cookies, pixels or tokens – unique identifiers of a web browser on a specific computer that are installed on the computer when it accesses Driving With Steve website – to display ads based on the computer’s past access to Driving With Steve website.

You may always opt-out of Google’s use of cookies by visiting Google’s Ads Settings. You can also opt out of a remarketing vendor’s use of cookies by visiting the Network Advertising Initiative’s consumer opt-out page.

If you do not wish to see ads from Driving With Steve, you can set your preferences for how Google advertises using the Google Ad Preferences page or opt out of interest-based advertising entirely. If you have any issues with our Privacy Policy, please contact support@drivingwithsteve.com