How to Find Best New Car Loans in Canada - Car Financing with Bad Credit

Finding the most ideal financing options can be a challenge, especially if you have a bad credit score. Even if you have a bad credit report history, there are ways to secure a new or used car loan for your next car purchase. Curious? Read more in the next sections to learn how to find the best car loan rates British Columbia, even with bad credit, to drive away in your new dream car soon!

What is a New Car Loan?

A new car loan allows you to purchase a brand-new vehicle through borrowed money from a car dealership. After buying a car, you are usually required to pay monthly installments for your car payment. Luckily, new car loan options in BC have a lower interest rate. The interest rate and loan amount will depend on factors such as your credit score, the duration of the loan, down payment, and whether you are applying for First Nation financing in British Columbia. 

Recommended: New Vs Used Car: Which Car Loan Should You Choose?

The Basic Eligibility Requirements for Auto Finance Loans in BC

Before applying for an auto loan in BC, it’s important to meet the basic eligibility requirements, which include:

1. Age Requirement

You must be at least 19 years old to apply for an auto loan in British Columbia.

2. Proof of Income

You should be earning at least $1,800 every month. You need to provide proof of your income to be eligible for a personal loan for your car.

3. Proof of Residency

You need to show valid proof of residency for your auto finance loan. 

4. Down Payment

Many lenders ask for a down payment, especially if you are applying for a bad credit car loan. A larger down payment helps reduce the risk for the lender, allowing you to be eligible for the loan.

5. Driver’s License

To show that you are eligible to drive the car, you need to show your driver's license to your lender.

Auto Loan Interest Rates Based on Credit Score

Your credit score determines the car loan interest rate and total loan payment. Always remember to check your credit score and use a car loan calculator to determine the rates. Here's how it affects your auto loan:

• Excellent Credit (760+): If you have a credit score above 760, you will most likely qualify for the best interest rates. This translates to lower monthly car payments due to being able to apply for financing solutions with the lowest rates in the market.
• Good Credit (660-759): With good credit, you can expect affordable loan interest rates. While not as low as those offered to borrowers with excellent credit, these rates are still manageable.
• Fair Credit (550-659): If your credit score is in this range, you will find car loans with higher interest rates. You can make a down payment to reduce the amount of interest rate charged by the lender.
• Bad Credit (below 550): If you finance your car with a poor credit score, you will be charged with higher vehicle financing rates as the score decreases. It’s still possible to get approved by your car dealership through bad credit car loans.

Read Also: Does Financing a Car Build Credit in Canada: A Detailed Guide 

The Steps to Find the Best New Car Loan Options in BC

When you're looking for the best auto loan options for new cars in BC, remember to follow these steps:

1. Know Your Credit Score

Before you start looking for the best automotive financing solutions, it’s important to know your credit score. The credit score will help determine the total interest rates based on the market prices. You can check your score for free once a year from major credit bureaus such as Equifax, TransUnion, and Experian.

2. Research BC Car Dealerships

Once you know your credit score, start researching car dealerships that offer new car loans with bad credit options in BC. Be sure to check different loan rates in Canada to ensure you are getting better rates from other dealerships.

3. Check the Interest Rates

When looking for car loans, research to compare rates and to find the best financing interest rates in the market. Interest rates determine how much you will be paying for the loan amount. Lower rates are ideal, especially if the loan term is shorter.

4. Check Loan Terms

Loan terms determine the length of the loan and can also influence the interest you pay for the loan. Shorter loan terms have higher monthly payments, however, it will also mean that you will need to pay lower interest rates and costs in the total loan amount. Meanwhile, longer terms result in lower monthly payments and higher interest rates.

5. Get Pre-Approved

Getting pre-approved for your car loan offers you flexibility and gives you a chance to look around for better options within the car dealership when shopping for a new car. 

How to Apply for Car Loans in Canada

Applying for a car loan in BC is simple! You can follow these steps to apply for a car loan:

1. Choose Your Car Dealership: Reach out to the car dealership for your car loan.
2. Fill Out the Application: Provide all the required information, including personal details, income, and credit history. 
3. Submit Documents: You will be required to submit documents on proof of identity, proof of income, and proof of residency. Be sure to have these documents ready when you are applying for your car loan.
4. Wait for Approval: Once your application is submitted, the car dealership will review your application to determine whether you are eligible for the auto loan. Once approved, you will be able to choose from their wide collection of new cars.
5. Finalize the Deal: Sign the loan agreement and drive your dream car!

Can I Get a Bad Credit Car Loan in BC?

Yes, you can apply for a bad credit car loan in BC. Auto Lending Hub specializes in offering bad credit car loans. This allows you to rebuild your credit score while you drive your dream car! You can shop around for their wide new vehicles consisting of reputable brands such as Toyota, BMW, and Honda.

Read Also: How Financing a Car Works in Canada: Everything You Need to Know

Conclusion

You can find the best car loans in BC, even with bad credit. By following the steps outlined above, you can find a car and secure an auto loan with agreeable terms. Moreover, you can improve your credit score at the same time.