When struggling with a low credit score, obtaining financing for any purchase can be a challenge. With a car being the second largest purchase you will make in your lifetime, auto loans can appear to be a daunting task.
When people are struggling with a low credit score they may lose hope on credit entirely and begin dealing only in cash. With vehicles, this can often mean purchasing something at a much lower price point, and with lower cost comes more potential problems. Until you've had the chance to meet with a qualified and experienced aut loan consultant, you won't know of the many benefits to a car loan:
If you don't have a background in credit scores, it's understandable that you will not know exactly where you stand. You may tell your auto finance rep that your credit score is terrible, and find out that you have an above average score. The best first step you can take is to meet with an auto loan rep and understand your specific situation so you know exactly where you stand.
Purchasing a car is the second largest purchase you will make in your life. As a result, credit bureaus take your car loan payment history seriously. Regular timely payments can greatly improve your credit score, making it easier to obtain other types of credit with better rates, like a mortgage or line of credit.
When you pay cash for a car, the vehicle is worth less than what you paid as soon as you drive it. When you finance a car, in most cases the vehicle will be worth what you owe on it when you refinance it, and in some cases, can be worth more than your outstanding balance.
Whenever you make an investment like a car, you have a set budget that you can spend within. In most cases an individual will have a much smaller amount they are hoping to spend if they are paying cash, which results in much more limited vehicle options. If a person takes the money that they have saved to use on the down payment of a vehicle, it's likely that paying monthly will open your options to newer and much more reliable vehicles.
If your credit score is in a tough spot when you need a car, remember that you are not stuck with the higher rate forever. Make your payments on time and within a year you will be able to refinance and get a much lower rates.
Financing a car provides an individual with opportunities to improve their credit score and get the new vehicle that they need and want. Before making a final decision it’s important to meet with an experienced automotive finance specialist to ensure that you are making the right decision for you and your family's finances.
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This Act requires that before you are obligated to purchase or lease a vehicle, the following information must be provided to you in writing:Annual percentage rate, total cost of financing,Total Loan Cost, Implicit Finance Charge.
Any dealer must disclose to customers in a written document information about the vehicle’s history and condition. For example, they must tell you if the vehicle was a rental or registered out of province, or has had previous body damage over $3,000. If you are not provided with this information when you are asked to sign a loan or lease, you have rights under the Consumer Protection Act and the Motor Vehicle Dealers Act, 2002. These rights may assist you in not proceeding with the transaction or limiting the amounts you may be required to pay. The Ontario Motor Vehicle Industry Council can assist you in better understanding your rights.