How To Get Guaranteed Auto Loan?

For those in the market for a new car, many of you may be considering an auto loan to help you finance this purchase. That is the case for most drivers in Vancouver and the rest of Canada. Auto loans are a common practice in the country but can be an intimidating process for new drivers or those with bad credit. There’s also the chance that you go through the lengthy process of applying for a loan and at the end of it all, have your application denied.

Throughout this article we’ll give you a few tips to get a guaranteed auto loan regardless if you have bad credit or even no credit.

Credit Score

We’ve mentioned this many times before, but a credit score is the most important thing to consider when applying for a car loan. In fact, it’s the first thing that lenders and dealerships check for.

Your credit score indicates how financially responsible you are. Anything above 680 is generally considered a good credit score and anything below 620 is considered low. If you are sitting with low credit, this will signal to the lender that you are riskier to lend money to and will therefore charge a higher interest rate on your auto loan.

Before you go shopping, know what your credit score is. Not only will you be able to understand how much money you qualify for, but you may also be able to negotiate a better interest rate.

Look Outside the Dealership

If you are looking to get an auto loan through a dealership you may end up paying a higher rate. In some cases, they will try to raise interest rates and get more money from the borrower. In order to avoid this there are other financing options outside of the dealership to be aware of.

There are online financing options. This way you can see all the terms and conditions before you sign, so you know understand the rate you are paying for.

You can also get a pre-approval. This will show you the loan amount you are qualified for, making shopping easier and reducing your stress.

Additionally, if you know that your credit score has improved after a year, you can refinance your loan for better rates.

Get a Cosigner

Another way to guarantee your auto loan is to get a cosigner. This is an extremely viable option, especially for someone with no credit. Having someone cosign your loan agreement will decrease your interest rates but be sure that they are fully on board. In the eyes of the lender, the person that cosigns for your loan will pay the remainder if you, the borrower defaults. Think of it as insurance for the lender.

If you do go down this route, be sure that your cosigner has good credit. It indicates that they are financially responsible and are capable of repaying the loan. When applying for a loan with a cosigner, make sure you have a written agreement with them as well evidence of their ability to pay: pay stubs as well employment and residence stability are all essential pieces of information.

Collateral Loans

If you do have bad credit but own significant assets, like a house or property, you are still able to get better interest rates on your loan. For a collateral loan, you are offering your asset as insurance to the lender. This can lower your rates to something similar to someone with good credit. Collateral doesn’t have to be property, it can even be the car you were planning to purchase.

With collateral loans, we do recommend you use this as your last option. In the event that you do fail to repay the loan, they lender will most likely take the asset that you offered as collateral.

Therefore, we would recommend that you start off by first trying to lower your credit score. For more information on how you can improve your credit score, check out our guide here.

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