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Bad Credit Car Loans in Abbotsford

Bad Credit Car Loans in Abbotsford

Finding the right vehicle on a budget can be a challenging experience for anyone. But when you’re also dealing with the limitations of bad credit, it can feel like an uphill battle.


Your credit score plays a significant role in not only getting approved for an auto loan, but also determining the interest rate and other terms. So if you have bad credit, it’s understandable to feel discouraged about your chances of financing a reliable car.


The good news is that all hope is not lost if you have less-than-ideal credit. While it may take more time and effort, people in Abbotsford with bad credit can get approved for auto loans. This guide covers tips and strategies to improve your odds, shop smart, and find the best possible financing.


We’ll provide an overview of topics like:

  • What credit score range you’ll need for approval
  • Ways to get pre-approved before shopping
  • Which lenders offer bad credit car loans
  • How cosigners can help
  • Down payment amounts to expect
  • Interest rates and loan terms
  • Steps to avoid extra fees
  • Increasing your credit during the loan term


While bad credit makes financing more challenging, having the right information empowers you to take control of the process. So let’s dive in and cover the key steps to get the vehicle you need despite less-than-perfect credit.

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What Credit Score is Needed for Car Loans in Abbotsford?

Your credit score is one of the most important factors lenders consider when approving auto loans. In general, the higher your credit score, the better your chances of getting approved and securing lower interest rates.

Credit scores in Canada range from 300 to 900, with higher scores indicating better credit health. Anything below 650 is usually considered bad credit, while scores of 720 or above are considered excellent credit.

For used car loans in Abbotsford, lenders typically look for minimum credit scores around 675. Borrowers with scores in this range should be able to get approved, though interest rates may be higher.

New car loans generally require higher scores, with most lenders wanting to see at least 730. However, some specialized lenders may approve new car loans for borrowers with scores as low as 500.

So while bad credit doesn’t mean you can’t get approved, the higher your score, the better deal you can expect on your auto financing. Taking steps to improve your credit before applying for a loan is recommended whenever possible.

 

Getting Pre-Approved for an Auto Loan

Getting pre-approved for financing is one of the most important steps when shopping for a car with bad credit in Abbotsford. Pre-approval provides you with a few key advantages:

First, pre-approval gives you an estimate on the loan amount, interest rate, and monthly payments you qualify for based on a soft credit check. This allows you to set a realistic budget when looking at cars and narrow your search to affordable options.

Second, being pre-approved makes you a cash buyer in the eyes of the dealer. This puts you in a much stronger negotiating position compared to an unqualified buyer still seeking financing. Dealers know you already have financing lined up, so they will be more motivated to offer you the best price.

Finally, having a pre-approval letter speeds up the process once you’ve selected a car. The dealer can use the pre-approval details and simply complete the paperwork, rather than needing to find a lender willing to finance you. This gets you driving your new car that much quicker.

The pre-approval process is straightforward. You’ll fill out an application with information like your income, debts, down payment amount, and the vehicle you want to get. The lender will then check your credit and provide conditional approval if you qualify. This pre-approval is good for a set time frame, usually 60 days. When you find the car you want, the dealer finalizes the loan within the pre-approved parameters.

 

Shopping for Cars with Bad Credit

When shopping for a vehicle with bad credit, it’s important to be strategic and realistic about the types of cars you can afford. Focus your search on finding a reliable used car that meets your basic transportation needs without breaking the bank.

Buying from a dealership often provides more protection than private sellers, but can be more expensive. Dealerships will likely have a service department for maintenance and repairs, some type of warranty, and the ability to provide financing options. However, their sticker prices tend to be higher and fees can add up quickly. Private sellers typically have more room to negotiate on price, but you purchase the vehicle “as-is” with no financing support.

Regardless of where you buy, have a mechanic inspect any used car before purchasing. Get a vehicle history report to check for accidents, flood damage or other problems. Test drive the car and evaluate its condition – old tires, significant rust or major mechanical issues are red flags. Avoid highly modified vehicles as repairs may be more complicated.

While you may feel tempted by a flashy sports car or luxury sedan, gently used economy models often make the most financial sense with bad credit. Well-maintained compact cars and reliable makes like Toyota and Honda are great options. Focus on safety, affordability and practicality instead of flash.

 

Bad Credit Auto Financing Options

When shopping for a car loan with bad credit, you have a few different financing options to consider:

 

Secured Auto Loans

A secured auto loan requires you to put up collateral, usually the vehicle itself, to secure the loan. The lender can repossess the collateral if you default on the loan.

 

Pros: Secured loans often have lower interest rates than unsecured loans. They may be easier to qualify for with bad credit.

 

Cons: The lender can repossess your car if you miss payments. You also may have a hard time selling the car until the loan is paid off.

 

Unsecured Auto Loans

An unsecured auto loan does not require any collateral to back the loan. The lender is taking on more risk.

 

Pros: No collateral is required. The lender cannot repossess the vehicle if you default.

 

Cons: Interest rates tend to be higher for unsecured loans. Approval with bad credit may be challenging.

 

In-House Financing

Some dealerships offer their own in-house financing to buyers with poor credit. This allows them more flexibility than banks.

 

Pros: Dealers may be more willing to work with bad credit. They can set their own lending standards.

 

Cons: Interest rates are often higher than banks. Selection may be limited to the dealer’s inventory.

 

Improve Your Chances with a Co-Signer

If your credit score is very low, adding a co-signer with good credit to your auto loan application can significantly improve your chances of approval. A co-signer agrees to be equally responsible for repaying the loan. This provides the lender with additional assurance that monthly payments will be made on time.

When looking for a co-signer, choose someone with strong credit and a stable financial situation. Avoid asking family members unless they clearly understand the obligation and can afford to take on payments if needed. Discuss expectations upfront and have a plan for eventually refinancing the loan in your own name once you’ve established a solid payment history.

While a co-signer can help you get approved and possibly secure a lower interest rate, it also puts their credit score at risk if you miss payments. Be sure to only make this request of someone you trust completely.

 

Trade-In vs Selling Privately

When you have bad credit and need a car loan, coming up with a down payment can be challenging. One way to boost your down payment is to sell your current vehicle rather than trading it in. However, there are pros and cons to consider with each option.

The main advantages of trading in your car to the dealership include:

 

  • It’s more convenient – you handle everything in one place
  • You may get a slight bump in trade-in value as an incentive if you’re financing with the dealer
  • The value is definitive – no need to negotiate or find buyers

 

Downsides of trading in can include:

 

  • You won’t get as much money as selling it yourself
  • Dealers tend to lowball trade-in offers
  • You have less control over the final sale price

 

If you decide to sell your car privately instead, some benefits are:

 

  • You can usually get a higher sale price
  • More control over finding buyers and negotiating
  • Use sale proceeds towards down payment

 

However, risks of private sale include:

 

  • More time and effort to find buyers
  • Needing to continue making payments until it sells
  • Dealing with test drives, paperwork and transfers
  • Safety concerns

 

To maximize your trade-in value, have the vehicle detailed and make any needed repairs. Get quotes from multiple dealers to compare offers. Consider listing it online to gauge interest and see if you get better private party offers.

 

Down Payment Tips

A down payment is often required to purchase a vehicle, even for borrowers with poor credit. While some special finance loans may not require money down, most will need at least $1,000 or 10% of the vehicle’s price as a down payment.

Aim to put down as much as you’re comfortably able to on a bad credit auto loan. A larger down payment shows the lender you’re financially committed and also lowers the amount financed. This can help reduce your interest rates and monthly payments.

Recommended down payments for bad credit:

 

  • New car loan: 10-20%
  • Used car loan: 10-30% or even 50% for older used vehicles

 

Some creative sources for down payment funds when you have limited savings:

 

  • Ask family or friends for help
  • Trade in your current vehicle
  • Sell valuable items you no longer need
  • Tax refunds
  • Use reward points for gift cards to pay expenses and save cash
  • Borrow against your home equity if available

 

Making a sizable down payment is key for securing bad credit auto financing and getting reasonable rates. Explore all possible options to put down the most you can afford.

 

Interest Rates for Bad Credit

Interest rates are going to be higher for borrowers with bad credit compared to those with good or excellent credit scores. With a credit score below 620, you can expect to pay much higher interest on an auto loan than the average rates.

Here are some typical interest rates for borrowers based on credit score tiers:

 

  • 800+ credit score: Average around 3%
  • 740-799 credit score: Average around 4%
  • 670-739 credit score: Average around 6%
  • 620-669 credit score: Average around 8%
  • 590-619 credit score: Average around 10%
  • 500-589 credit score: Average around 12%
  • Below 500 credit score: Average around 15%+

 

As you can see, the lower your credit score is, the higher your interest rate will be. With bad credit lenders like Eden Park,  you may pay double or triple the interest rate of someone with excellent credit.

Here are some tips to potentially improve your interest rate on a bad credit auto loan:

 

  • Shop around for the best rate and terms
  • Put down a larger down payment if possible
  • Consider a shorter loan term to reduce total interest paid
  • Bring a co-signer with good credit on your application
  • Try to boost your credit score before applying if time allows
  • Negotiate with the lender/dealer to see if they can beat another offer

 

While interest rates will be higher with poor credit, taking the steps above can help you secure the most favourable rate possible for your situation.

 

Loan Terms to Consider

When taking out a bad credit auto loan, you’ll need to decide on the length of the loan term – typically between 24 and 72 months. The longer the term length, the lower your monthly payments will be. However, you’ll end up paying more in interest charges over the full loan period.

A 24-month loan term will have higher monthly payments, but you’ll pay less in interest overall and build equity in the vehicle more quickly. This can be a good option if you plan to trade in or sell the car before the loan is paid off.

With a 72-month loan, you’ll benefit from a lower monthly payment. But you may end up “upside-down” on the loan if you want to get rid of the car before it’s paid off. You’ll owe more than the car is worth.

Carefully consider your budget and long-term plans when deciding on a loan term for your bad credit car loan. A 36 or 48-month term is a good compromise for most borrowers.

 

Watch Out for Extra Fees

When financing a car, especially with bad credit, it’s important to watch out for extra fees beyond just the purchase price of the vehicle and interest rate on your loan. Dealerships and lenders commonly tack on additional fees that can add hundreds or even thousands of dollars to the total cost of your auto loan.

Some of the most common extra fees to look out for include:

 

  • Documentation fees (or “doc fees”): These fees cover preparing and processing documents related to your sale and loan. Doc fees typically range from $300-$500.
  • Dealer preparation fees: This covers getting the vehicle ready for sale, including cleaning and inspections. Expect to pay $500 or more.
  • Title and registration fees: Covers title and registration processing with the DMV. Usually $50-$150.
  • Destination or transportation fees: Charges for transporting the vehicle to the dealership. Often $1000-$1500 for shipping.

 

To minimize these extra fees when financing with bad credit:

 

  • Negotiate the documentation fee with the dealer – ask if they can remove or lower it.
  • Research documentation fee limits in your state/province.
  • Ask the dealer to include prep fees in the vehicle price.
  • Understand that government fees can’t be negotiated but others usually can.
  • Calculate the total fees ahead of time so there are no surprises.

 

Being aware of the extra fees charged by dealers and lenders can help prevent getting ripped off when financing a car with bad credit. Do your homework beforehand and be ready to negotiate to keep your total costs down.

 

Review The Fine Print Carefully

When you have poor credit, some lenders may attempt to take advantage of you by slipping unfavourable terms into the fine print. Make sure to thoroughly review the entire loan contract before signing anything. Some important things to look for:

 

  • Interest rates – Look for the annual percentage rate (APR), not just the monthly payment. A high APR indicates you’ll pay much more over the life of the loan.
  • Balloon payments – Some contracts require a large lump sum payment at the end of the term. This is usually to make up for a low monthly payment.
  • Early repayment penalties – You may be charged excessive fees if trying to pay off the loan early.
  • Cost of extras – Things like GAP insurance and extended warranties can significantly increase the overall loan cost.
  • Mileage limits – Going over a preset mileage cap can trigger fees.

 

Don’t hesitate to negotiate if you spot concerning terms. A reputable lender will be willing to work with you. Walk away if a dealer or lender seems shady or pushes you into a deal you’re unsure about.

 

Maintain Your Vehicle

Once you have your new (or used) vehicle, it’s important to maintain it properly so it continues running smoothly. Follow the manufacturer’s maintenance schedule for oil changes, tire rotations, fluid flushes, and other services. Keep records of all maintenance performed.

Stay on top of repairs as soon as you notice any issues. Small problems can turn into major repairs if left unchecked. Listen for new noises, pay attention to warning lights, and address any drivability problems right away. Find a trusted independent mechanic or dealership service department.

Make sure you have adequate auto insurance coverage at all times. Collision and comprehensive insurance will pay for damage from an accident or other incident like theft or vandalism. It’s required by your lender. Liability insurance covers any injuries or property damage you cause in an accident. Compare quotes every year to find the best rate.

Protect your investment by keeping your car well-maintained, repaired, and insured. Take care of it and it will serve you well until you’re ready to upgrade.

 

Improve Credit during Loan Term

One of the best ways to build your credit is by making regular on-time payments on your auto loan. Set up automatic payments so you never miss a payment. Aside from loan payments, take other steps to improve your credit score:

 

  • Check your credit report and dispute any errors – Mistakes can drag down your score so review all 3 of your credit reports for inaccuracies.
  • Keep credit card balances low – High utilization rates on cards hurt your score, so aim for less than 30% of the limit.
  • Avoid applying for more new credit – Too many hard inquiries from new applications makes you look risky.
  • Become an authorized user – Ask a friend or family member with good credit to add you as a user to help build your history.
  • Limit new account openings – Space out applying for new credit and loans, as a mix of new and old accounts is ideal.

 

As you work to improve your credit during the auto loan term, your score should steadily increase. Check it periodically so you know how your efforts are impacting your profile. A higher score opens the door to better loan terms in the future.

 

Conclusion

Getting approved for a car loan in Abbotsford with bad credit is possible, but it requires some strategic planning and effort on your part. The most important things to remember are improving your credit score as much as possible before applying, having a reasonable down payment ready, finding a co-signer if you can, and shopping around for the best rates and loan terms. Don’t forget to carefully review all fees and read the fine print before signing anything.

With a focused approach, it’s possible to get driving the car you need while also taking steps to improve your financial situation over time. Maintaining your vehicle properly and making all your payments on time will help rebuild your credit so your next auto loan will be even easier to obtain. Don’t get discouraged if you don’t get approved right away – be persistent and explore all your options. There are lenders willing to work with bad credit borrowers with the right attitude and preparation.

Abbotsford Bad Credit Car Loan Questions

The lowest credit score most lenders will approve for a car loan is around 500-550. However, interest rates are quite high at this level. For more reasonable rates, you’ll want a score of at least 600. Shop around with lenders as each has their own approval criteria. With a low score, focusing on used cars instead of new can help improve chances of approval.

You’ll need proof of income, residency status, drivers license, car insurance, debt obligations, monthly expenses, collateral (trade-in vehicle), down payment amount, requested loan amount and term length. Having all this ready speeds up the application and approval process.

Tips include having a sizable down payment, keeping the loan term short (3 years or less), putting up collateral like a paid off trade-in vehicle, having a co-signer with better credit, keeping your requested loan amount low, and applying with lenders like credit unions that specialize in bad credit loans.

Your best chances for getting approved with bad credit is through the dealership’s financing department, especially if you are buying from a buy here pay here type used car lot. They specialize in approvals for subprime borrowers and have relationships with many lending sources.

Most new car 0% financing offers require a minimum credit score of at least 720. Some luxury brand vehicle financing deals may require a score over 760 to qualify for 0%. If your score is lower, you likely won’t qualify for 0% but dealers can still offer discounted rates.

There is no defined minimum income threshold but most lenders want to see that your total monthly debts including the new car payment are less than 40% of your gross monthly income. A minimum monthly income of around $2,000 is recommended for financing a reliable used car.

Yes, getting pre-approved is highly recommended. It shows dealers you are a serious buyer and improves your negotiating leverage. With an approval letter in hand detailing the loan amount, dealers know they just need to find a car that fits your budget.

Most lenders require a 20% down payment for borrowers with poor credit. But some subprime lenders like InstaLoan and Canada Drives offer no money down car loans in Abbotsford to high risk borrowers at higher interest rates. You can get pre-approved with them before visiting dealers.

Yes, you can qualify for a used car loan through subprime lenders by providing proof of income from EI, social assistance, disability or other government benefits. The loan amount is based on your monthly benefit income, other debts and down payment.



 

The easiest bad credit car loans to get approved for are older used vehicles financed directly through the dealership rather than a bank. Approval is based more on the vehicle value versus your credit score. Aim for used cars under $10,000 and research vehicles that hold value.

As an approximate minimum, plan on a gross monthly income of around $3,000 to afford financing a $15,000 used car purchase. That allows for the loan payment, insurance, gas and maintenance expenses while keeping total debts under 40% of your income.

Tips include making payments on time or early, paying more than the minimum due, limiting hard credit checks from other loan applications, keeping credit card balances low, not closing old accounts, reviewing credit reports regularly and limiting new debt obligations.



 

Co-signers can improve the chances of getting approved and may allow for lower interest rates. Make sure any co-signer understands they are equally responsible for the loan should you stop making payments. Have a repayment plan in place with them.

Currently, used car loan rates for borrowers with bad credit in Abbotsford tend to average between 8% and 20% depending on credit factors. Rates are towards the lower end of that for newer used vehicles. Expect rates over 15% for older or high mileage cars.

Watch out for very high interest rates, large down payments, short 12-24 month terms and little wiggle room if unable to make payments. Ask about conditions related to late payments, early repayment policies and ownership terms until loan is fully paid.

Some lenders promoting guaranteed approvals include Canada Drives, InstaLoan, CAR2GO and Vancouver Auto Loans. Keep in mind guaranteed approval comes with conditions like higher than usual interest rates, large down payments, short terms and specific car criteria.

 

Find out why it has a rebuilt title – was it from significant damage, theft recovery or an out-of-province import? Get a detailed vehicle history report. Inspect carefully for issues. Have a mechanic assess it. Make sure it has passed safety inspection. Expect higher financing rates.

Stable long term employment helps approval chances since it demonstrates reliable income. But for bad credit applicants, many subprime lenders put more emphasis on current income level than past job stability. Proof of at least 3-6 months in your current role is often enough.

Getting approved for two simultaneous auto loans is difficult but possible in some cases, especially if your current loan is in good standing and you have sufficient income to afford both payments. The total vehicle loan payments cannot exceed 40% of your gross monthly earnings.

 

What Credit Score is Needed for Car Loans in Abbotsford?

Your credit score is one of the most important factors lenders consider when approving auto loans. In general, the higher your credit score, the better your chances of getting approved and securing lower interest rates.

Credit scores in Canada range from 300 to 900, with higher scores indicating better credit health. Anything below 650 is usually considered bad credit, while scores of 720 or above are considered excellent credit.

For used car loans in Abbotsford, lenders typically look for minimum credit scores around 675. Borrowers with scores in this range should be able to get approved, though interest rates may be higher.

New car loans generally require higher scores, with most lenders wanting to see at least 730. However, some specialized lenders may approve new car loans for borrowers with scores as low as 500.

So while bad credit doesn’t mean you can’t get approved, the higher your score, the better deal you can expect on your auto financing. Taking steps to improve your credit before applying for a loan is recommended whenever possible.

 

Getting Pre-Approved for an Auto Loan

Getting pre-approved for financing is one of the most important steps when shopping for a car with bad credit in Abbotsford. Pre-approval provides you with a few key advantages:

First, pre-approval gives you an estimate on the loan amount, interest rate, and monthly payments you qualify for based on a soft credit check. This allows you to set a realistic budget when looking at cars and narrow your search to affordable options.

Second, being pre-approved makes you a cash buyer in the eyes of the dealer. This puts you in a much stronger negotiating position compared to an unqualified buyer still seeking financing. Dealers know you already have financing lined up, so they will be more motivated to offer you the best price.

Finally, having a pre-approval letter speeds up the process once you’ve selected a car. The dealer can use the pre-approval details and simply complete the paperwork, rather than needing to find a lender willing to finance you. This gets you driving your new car that much quicker.

The pre-approval process is straightforward. You’ll fill out an application with information like your income, debts, down payment amount, and the vehicle you want to get. The lender will then check your credit and provide conditional approval if you qualify. This pre-approval is good for a set time frame, usually 60 days. When you find the car you want, the dealer finalizes the loan within the pre-approved parameters.

 

Shopping for Cars with Bad Credit

When shopping for a vehicle with bad credit, it’s important to be strategic and realistic about the types of cars you can afford. Focus your search on finding a reliable used car that meets your basic transportation needs without breaking the bank.

Buying from a dealership often provides more protection than private sellers, but can be more expensive. Dealerships will likely have a service department for maintenance and repairs, some type of warranty, and the ability to provide financing options. However, their sticker prices tend to be higher and fees can add up quickly. Private sellers typically have more room to negotiate on price, but you purchase the vehicle “as-is” with no financing support.

Regardless of where you buy, have a mechanic inspect any used car before purchasing. Get a vehicle history report to check for accidents, flood damage or other problems. Test drive the car and evaluate its condition – old tires, significant rust or major mechanical issues are red flags. Avoid highly modified vehicles as repairs may be more complicated.

While you may feel tempted by a flashy sports car or luxury sedan, gently used economy models often make the most financial sense with bad credit. Well-maintained compact cars and reliable makes like Toyota and Honda are great options. Focus on safety, affordability and practicality instead of flash.

 

Bad Credit Auto Financing Options

When shopping for a car loan with bad credit, you have a few different financing options to consider:

 

Secured Auto Loans

A secured auto loan requires you to put up collateral, usually the vehicle itself, to secure the loan. The lender can repossess the collateral if you default on the loan.

 

Pros: Secured loans often have lower interest rates than unsecured loans. They may be easier to qualify for with bad credit.

 

Cons: The lender can repossess your car if you miss payments. You also may have a hard time selling the car until the loan is paid off.

 

Unsecured Auto Loans

An unsecured auto loan does not require any collateral to back the loan. The lender is taking on more risk.

 

Pros: No collateral is required. The lender cannot repossess the vehicle if you default.

 

Cons: Interest rates tend to be higher for unsecured loans. Approval with bad credit may be challenging.

 

In-House Financing

Some dealerships offer their own in-house financing to buyers with poor credit. This allows them more flexibility than banks.

 

Pros: Dealers may be more willing to work with bad credit. They can set their own lending standards.

 

Cons: Interest rates are often higher than banks. Selection may be limited to the dealer’s inventory.

 

Improve Your Chances with a Co-Signer

If your credit score is very low, adding a co-signer with good credit to your auto loan application can significantly improve your chances of approval. A co-signer agrees to be equally responsible for repaying the loan. This provides the lender with additional assurance that monthly payments will be made on time.

When looking for a co-signer, choose someone with strong credit and a stable financial situation. Avoid asking family members unless they clearly understand the obligation and can afford to take on payments if needed. Discuss expectations upfront and have a plan for eventually refinancing the loan in your own name once you’ve established a solid payment history.

While a co-signer can help you get approved and possibly secure a lower interest rate, it also puts their credit score at risk if you miss payments. Be sure to only make this request of someone you trust completely.

 

Trade-In vs Selling Privately

When you have bad credit and need a car loan, coming up with a down payment can be challenging. One way to boost your down payment is to sell your current vehicle rather than trading it in. However, there are pros and cons to consider with each option.

The main advantages of trading in your car to the dealership include:

 

  • It’s more convenient – you handle everything in one place
  • You may get a slight bump in trade-in value as an incentive if you’re financing with the dealer
  • The value is definitive – no need to negotiate or find buyers

 

Downsides of trading in can include:

 

  • You won’t get as much money as selling it yourself
  • Dealers tend to lowball trade-in offers
  • You have less control over the final sale price

 

If you decide to sell your car privately instead, some benefits are:

 

  • You can usually get a higher sale price
  • More control over finding buyers and negotiating
  • Use sale proceeds towards down payment

 

However, risks of private sale include:

 

  • More time and effort to find buyers
  • Needing to continue making payments until it sells
  • Dealing with test drives, paperwork and transfers
  • Safety concerns

 

To maximize your trade-in value, have the vehicle detailed and make any needed repairs. Get quotes from multiple dealers to compare offers. Consider listing it online to gauge interest and see if you get better private party offers.

 

Down Payment Tips

A down payment is often required to purchase a vehicle, even for borrowers with poor credit. While some special finance loans may not require money down, most will need at least $1,000 or 10% of the vehicle’s price as a down payment.

Aim to put down as much as you’re comfortably able to on a bad credit auto loan. A larger down payment shows the lender you’re financially committed and also lowers the amount financed. This can help reduce your interest rates and monthly payments.

Recommended down payments for bad credit:

 

  • New car loan: 10-20%
  • Used car loan: 10-30% or even 50% for older used vehicles

 

Some creative sources for down payment funds when you have limited savings:

 

  • Ask family or friends for help
  • Trade in your current vehicle
  • Sell valuable items you no longer need
  • Tax refunds
  • Use reward points for gift cards to pay expenses and save cash
  • Borrow against your home equity if available

 

Making a sizable down payment is key for securing bad credit auto financing and getting reasonable rates. Explore all possible options to put down the most you can afford.

 

Interest Rates for Bad Credit

Interest rates are going to be higher for borrowers with bad credit compared to those with good or excellent credit scores. With a credit score below 620, you can expect to pay much higher interest on an auto loan than the average rates.

Here are some typical interest rates for borrowers based on credit score tiers:

 

  • 800+ credit score: Average around 3%
  • 740-799 credit score: Average around 4%
  • 670-739 credit score: Average around 6%
  • 620-669 credit score: Average around 8%
  • 590-619 credit score: Average around 10%
  • 500-589 credit score: Average around 12%
  • Below 500 credit score: Average around 15%+

 

As you can see, the lower your credit score is, the higher your interest rate will be. With bad credit lenders like Eden Park,  you may pay double or triple the interest rate of someone with excellent credit.

Here are some tips to potentially improve your interest rate on a bad credit auto loan:

 

  • Shop around for the best rate and terms
  • Put down a larger down payment if possible
  • Consider a shorter loan term to reduce total interest paid
  • Bring a co-signer with good credit on your application
  • Try to boost your credit score before applying if time allows
  • Negotiate with the lender/dealer to see if they can beat another offer

 

While interest rates will be higher with poor credit, taking the steps above can help you secure the most favourable rate possible for your situation.

 

Loan Terms to Consider

When taking out a bad credit auto loan, you’ll need to decide on the length of the loan term – typically between 24 and 72 months. The longer the term length, the lower your monthly payments will be. However, you’ll end up paying more in interest charges over the full loan period.

A 24-month loan term will have higher monthly payments, but you’ll pay less in interest overall and build equity in the vehicle more quickly. This can be a good option if you plan to trade in or sell the car before the loan is paid off.

With a 72-month loan, you’ll benefit from a lower monthly payment. But you may end up “upside-down” on the loan if you want to get rid of the car before it’s paid off. You’ll owe more than the car is worth.

Carefully consider your budget and long-term plans when deciding on a loan term for your bad credit car loan. A 36 or 48-month term is a good compromise for most borrowers.

 

Watch Out for Extra Fees

When financing a car, especially with bad credit, it’s important to watch out for extra fees beyond just the purchase price of the vehicle and interest rate on your loan. Dealerships and lenders commonly tack on additional fees that can add hundreds or even thousands of dollars to the total cost of your auto loan.

Some of the most common extra fees to look out for include:

 

  • Documentation fees (or “doc fees”): These fees cover preparing and processing documents related to your sale and loan. Doc fees typically range from $300-$500.
  • Dealer preparation fees: This covers getting the vehicle ready for sale, including cleaning and inspections. Expect to pay $500 or more.
  • Title and registration fees: Covers title and registration processing with the DMV. Usually $50-$150.
  • Destination or transportation fees: Charges for transporting the vehicle to the dealership. Often $1000-$1500 for shipping.

 

To minimize these extra fees when financing with bad credit:

 

  • Negotiate the documentation fee with the dealer – ask if they can remove or lower it.
  • Research documentation fee limits in your state/province.
  • Ask the dealer to include prep fees in the vehicle price.
  • Understand that government fees can’t be negotiated but others usually can.
  • Calculate the total fees ahead of time so there are no surprises.

 

Being aware of the extra fees charged by dealers and lenders can help prevent getting ripped off when financing a car with bad credit. Do your homework beforehand and be ready to negotiate to keep your total costs down.

 

Review The Fine Print Carefully

When you have poor credit, some lenders may attempt to take advantage of you by slipping unfavourable terms into the fine print. Make sure to thoroughly review the entire loan contract before signing anything. Some important things to look for:

 

  • Interest rates – Look for the annual percentage rate (APR), not just the monthly payment. A high APR indicates you’ll pay much more over the life of the loan.
  • Balloon payments – Some contracts require a large lump sum payment at the end of the term. This is usually to make up for a low monthly payment.
  • Early repayment penalties – You may be charged excessive fees if trying to pay off the loan early.
  • Cost of extras – Things like GAP insurance and extended warranties can significantly increase the overall loan cost.
  • Mileage limits – Going over a preset mileage cap can trigger fees.

 

Don’t hesitate to negotiate if you spot concerning terms. A reputable lender will be willing to work with you. Walk away if a dealer or lender seems shady or pushes you into a deal you’re unsure about.

 

Maintain Your Vehicle

Once you have your new (or used) vehicle, it’s important to maintain it properly so it continues running smoothly. Follow the manufacturer’s maintenance schedule for oil changes, tire rotations, fluid flushes, and other services. Keep records of all maintenance performed.

Stay on top of repairs as soon as you notice any issues. Small problems can turn into major repairs if left unchecked. Listen for new noises, pay attention to warning lights, and address any drivability problems right away. Find a trusted independent mechanic or dealership service department.

Make sure you have adequate auto insurance coverage at all times. Collision and comprehensive insurance will pay for damage from an accident or other incident like theft or vandalism. It’s required by your lender. Liability insurance covers any injuries or property damage you cause in an accident. Compare quotes every year to find the best rate.

Protect your investment by keeping your car well-maintained, repaired, and insured. Take care of it and it will serve you well until you’re ready to upgrade.

 

Improve Credit during Loan Term

One of the best ways to build your credit is by making regular on-time payments on your auto loan. Set up automatic payments so you never miss a payment. Aside from loan payments, take other steps to improve your credit score:

 

  • Check your credit report and dispute any errors – Mistakes can drag down your score so review all 3 of your credit reports for inaccuracies.
  • Keep credit card balances low – High utilization rates on cards hurt your score, so aim for less than 30% of the limit.
  • Avoid applying for more new credit – Too many hard inquiries from new applications makes you look risky.
  • Become an authorized user – Ask a friend or family member with good credit to add you as a user to help build your history.
  • Limit new account openings – Space out applying for new credit and loans, as a mix of new and old accounts is ideal.

 

As you work to improve your credit during the auto loan term, your score should steadily increase. Check it periodically so you know how your efforts are impacting your profile. A higher score opens the door to better loan terms in the future.

 

Conclusion

Getting approved for a car loan in Abbotsford with bad credit is possible, but it requires some strategic planning and effort on your part. The most important things to remember are improving your credit score as much as possible before applying, having a reasonable down payment ready, finding a co-signer if you can, and shopping around for the best rates and loan terms. Don’t forget to carefully review all fees and read the fine print before signing anything.

With a focused approach, it’s possible to get driving the car you need while also taking steps to improve your financial situation over time. Maintaining your vehicle properly and making all your payments on time will help rebuild your credit so your next auto loan will be even easier to obtain. Don’t get discouraged if you don’t get approved right away – be persistent and explore all your options. There are lenders willing to work with bad credit borrowers with the right attitude and preparation.

Abbotsford Bad Credit Car Loan Questions

The lowest credit score most lenders will approve for a car loan is around 500-550. However, interest rates are quite high at this level. For more reasonable rates, you’ll want a score of at least 600. Shop around with lenders as each has their own approval criteria. With a low score, focusing on used cars instead of new can help improve chances of approval.

You’ll need proof of income, residency status, drivers license, car insurance, debt obligations, monthly expenses, collateral (trade-in vehicle), down payment amount, requested loan amount and term length. Having all this ready speeds up the application and approval process.

Tips include having a sizable down payment, keeping the loan term short (3 years or less), putting up collateral like a paid off trade-in vehicle, having a co-signer with better credit, keeping your requested loan amount low, and applying with lenders like credit unions that specialize in bad credit loans.

Your best chances for getting approved with bad credit is through the dealership’s financing department, especially if you are buying from a buy here pay here type used car lot. They specialize in approvals for subprime borrowers and have relationships with many lending sources.

Most new car 0% financing offers require a minimum credit score of at least 720. Some luxury brand vehicle financing deals may require a score over 760 to qualify for 0%. If your score is lower, you likely won’t qualify for 0% but dealers can still offer discounted rates.

There is no defined minimum income threshold but most lenders want to see that your total monthly debts including the new car payment are less than 40% of your gross monthly income. A minimum monthly income of around $2,000 is recommended for financing a reliable used car.

Yes, getting pre-approved is highly recommended. It shows dealers you are a serious buyer and improves your negotiating leverage. With an approval letter in hand detailing the loan amount, dealers know they just need to find a car that fits your budget.

Most lenders require a 20% down payment for borrowers with poor credit. But some subprime lenders like InstaLoan and Canada Drives offer no money down car loans in Abbotsford to high risk borrowers at higher interest rates. You can get pre-approved with them before visiting dealers.

Yes, you can qualify for a used car loan through subprime lenders by providing proof of income from EI, social assistance, disability or other government benefits. The loan amount is based on your monthly benefit income, other debts and down payment.



 

The easiest bad credit car loans to get approved for are older used vehicles financed directly through the dealership rather than a bank. Approval is based more on the vehicle value versus your credit score. Aim for used cars under $10,000 and research vehicles that hold value.

As an approximate minimum, plan on a gross monthly income of around $3,000 to afford financing a $15,000 used car purchase. That allows for the loan payment, insurance, gas and maintenance expenses while keeping total debts under 40% of your income.

Tips include making payments on time or early, paying more than the minimum due, limiting hard credit checks from other loan applications, keeping credit card balances low, not closing old accounts, reviewing credit reports regularly and limiting new debt obligations.



 

Co-signers can improve the chances of getting approved and may allow for lower interest rates. Make sure any co-signer understands they are equally responsible for the loan should you stop making payments. Have a repayment plan in place with them.

Currently, used car loan rates for borrowers with bad credit in Abbotsford tend to average between 8% and 20% depending on credit factors. Rates are towards the lower end of that for newer used vehicles. Expect rates over 15% for older or high mileage cars.

Watch out for very high interest rates, large down payments, short 12-24 month terms and little wiggle room if unable to make payments. Ask about conditions related to late payments, early repayment policies and ownership terms until loan is fully paid.

Some lenders promoting guaranteed approvals include Canada Drives, InstaLoan, CAR2GO and Vancouver Auto Loans. Keep in mind guaranteed approval comes with conditions like higher than usual interest rates, large down payments, short terms and specific car criteria.

 

Find out why it has a rebuilt title – was it from significant damage, theft recovery or an out-of-province import? Get a detailed vehicle history report. Inspect carefully for issues. Have a mechanic assess it. Make sure it has passed safety inspection. Expect higher financing rates.

Stable long term employment helps approval chances since it demonstrates reliable income. But for bad credit applicants, many subprime lenders put more emphasis on current income level than past job stability. Proof of at least 3-6 months in your current role is often enough.

Getting approved for two simultaneous auto loans is difficult but possible in some cases, especially if your current loan is in good standing and you have sufficient income to afford both payments. The total vehicle loan payments cannot exceed 40% of your gross monthly earnings.

 

What Credit Score is Needed for Car Loans in Abbotsford?

Your credit score is one of the most important factors lenders consider when approving auto loans. In general, the higher your credit score, the better your chances of getting approved and securing lower interest rates.

Credit scores in Canada range from 300 to 900, with higher scores indicating better credit health. Anything below 650 is usually considered bad credit, while scores of 720 or above are considered excellent credit.

For used car loans in Abbotsford, lenders typically look for minimum credit scores around 675. Borrowers with scores in this range should be able to get approved, though interest rates may be higher.

New car loans generally require higher scores, with most lenders wanting to see at least 730. However, some specialized lenders may approve new car loans for borrowers with scores as low as 500.

So while bad credit doesn’t mean you can’t get approved, the higher your score, the better deal you can expect on your auto financing. Taking steps to improve your credit before applying for a loan is recommended whenever possible.

 

Getting Pre-Approved for an Auto Loan

Getting pre-approved for financing is one of the most important steps when shopping for a car with bad credit in Abbotsford. Pre-approval provides you with a few key advantages:

First, pre-approval gives you an estimate on the loan amount, interest rate, and monthly payments you qualify for based on a soft credit check. This allows you to set a realistic budget when looking at cars and narrow your search to affordable options.

Second, being pre-approved makes you a cash buyer in the eyes of the dealer. This puts you in a much stronger negotiating position compared to an unqualified buyer still seeking financing. Dealers know you already have financing lined up, so they will be more motivated to offer you the best price.

Finally, having a pre-approval letter speeds up the process once you’ve selected a car. The dealer can use the pre-approval details and simply complete the paperwork, rather than needing to find a lender willing to finance you. This gets you driving your new car that much quicker.

The pre-approval process is straightforward. You’ll fill out an application with information like your income, debts, down payment amount, and the vehicle you want to get. The lender will then check your credit and provide conditional approval if you qualify. This pre-approval is good for a set time frame, usually 60 days. When you find the car you want, the dealer finalizes the loan within the pre-approved parameters.

 

Shopping for Cars with Bad Credit

When shopping for a vehicle with bad credit, it’s important to be strategic and realistic about the types of cars you can afford. Focus your search on finding a reliable used car that meets your basic transportation needs without breaking the bank.

Buying from a dealership often provides more protection than private sellers, but can be more expensive. Dealerships will likely have a service department for maintenance and repairs, some type of warranty, and the ability to provide financing options. However, their sticker prices tend to be higher and fees can add up quickly. Private sellers typically have more room to negotiate on price, but you purchase the vehicle “as-is” with no financing support.

Regardless of where you buy, have a mechanic inspect any used car before purchasing. Get a vehicle history report to check for accidents, flood damage or other problems. Test drive the car and evaluate its condition – old tires, significant rust or major mechanical issues are red flags. Avoid highly modified vehicles as repairs may be more complicated.

While you may feel tempted by a flashy sports car or luxury sedan, gently used economy models often make the most financial sense with bad credit. Well-maintained compact cars and reliable makes like Toyota and Honda are great options. Focus on safety, affordability and practicality instead of flash.

 

Bad Credit Auto Financing Options

When shopping for a car loan with bad credit, you have a few different financing options to consider:

 

Secured Auto Loans

A secured auto loan requires you to put up collateral, usually the vehicle itself, to secure the loan. The lender can repossess the collateral if you default on the loan.

 

Pros: Secured loans often have lower interest rates than unsecured loans. They may be easier to qualify for with bad credit.

 

Cons: The lender can repossess your car if you miss payments. You also may have a hard time selling the car until the loan is paid off.

 

Unsecured Auto Loans

An unsecured auto loan does not require any collateral to back the loan. The lender is taking on more risk.

 

Pros: No collateral is required. The lender cannot repossess the vehicle if you default.

 

Cons: Interest rates tend to be higher for unsecured loans. Approval with bad credit may be challenging.

 

In-House Financing

Some dealerships offer their own in-house financing to buyers with poor credit. This allows them more flexibility than banks.

 

Pros: Dealers may be more willing to work with bad credit. They can set their own lending standards.

 

Cons: Interest rates are often higher than banks. Selection may be limited to the dealer’s inventory.

 

Improve Your Chances with a Co-Signer

If your credit score is very low, adding a co-signer with good credit to your auto loan application can significantly improve your chances of approval. A co-signer agrees to be equally responsible for repaying the loan. This provides the lender with additional assurance that monthly payments will be made on time.

When looking for a co-signer, choose someone with strong credit and a stable financial situation. Avoid asking family members unless they clearly understand the obligation and can afford to take on payments if needed. Discuss expectations upfront and have a plan for eventually refinancing the loan in your own name once you’ve established a solid payment history.

While a co-signer can help you get approved and possibly secure a lower interest rate, it also puts their credit score at risk if you miss payments. Be sure to only make this request of someone you trust completely.

 

Trade-In vs Selling Privately

When you have bad credit and need a car loan, coming up with a down payment can be challenging. One way to boost your down payment is to sell your current vehicle rather than trading it in. However, there are pros and cons to consider with each option.

The main advantages of trading in your car to the dealership include:

 

  • It’s more convenient – you handle everything in one place
  • You may get a slight bump in trade-in value as an incentive if you’re financing with the dealer
  • The value is definitive – no need to negotiate or find buyers

 

Downsides of trading in can include:

 

  • You won’t get as much money as selling it yourself
  • Dealers tend to lowball trade-in offers
  • You have less control over the final sale price

 

If you decide to sell your car privately instead, some benefits are:

 

  • You can usually get a higher sale price
  • More control over finding buyers and negotiating
  • Use sale proceeds towards down payment

 

However, risks of private sale include:

 

  • More time and effort to find buyers
  • Needing to continue making payments until it sells
  • Dealing with test drives, paperwork and transfers
  • Safety concerns

 

To maximize your trade-in value, have the vehicle detailed and make any needed repairs. Get quotes from multiple dealers to compare offers. Consider listing it online to gauge interest and see if you get better private party offers.

 

Down Payment Tips

A down payment is often required to purchase a vehicle, even for borrowers with poor credit. While some special finance loans may not require money down, most will need at least $1,000 or 10% of the vehicle’s price as a down payment.

Aim to put down as much as you’re comfortably able to on a bad credit auto loan. A larger down payment shows the lender you’re financially committed and also lowers the amount financed. This can help reduce your interest rates and monthly payments.

Recommended down payments for bad credit:

 

  • New car loan: 10-20%
  • Used car loan: 10-30% or even 50% for older used vehicles

 

Some creative sources for down payment funds when you have limited savings:

 

  • Ask family or friends for help
  • Trade in your current vehicle
  • Sell valuable items you no longer need
  • Tax refunds
  • Use reward points for gift cards to pay expenses and save cash
  • Borrow against your home equity if available

 

Making a sizable down payment is key for securing bad credit auto financing and getting reasonable rates. Explore all possible options to put down the most you can afford.

 

Interest Rates for Bad Credit

Interest rates are going to be higher for borrowers with bad credit compared to those with good or excellent credit scores. With a credit score below 620, you can expect to pay much higher interest on an auto loan than the average rates.

Here are some typical interest rates for borrowers based on credit score tiers:

 

  • 800+ credit score: Average around 3%
  • 740-799 credit score: Average around 4%
  • 670-739 credit score: Average around 6%
  • 620-669 credit score: Average around 8%
  • 590-619 credit score: Average around 10%
  • 500-589 credit score: Average around 12%
  • Below 500 credit score: Average around 15%+

 

As you can see, the lower your credit score is, the higher your interest rate will be. With bad credit lenders like Eden Park,  you may pay double or triple the interest rate of someone with excellent credit.

Here are some tips to potentially improve your interest rate on a bad credit auto loan:

 

  • Shop around for the best rate and terms
  • Put down a larger down payment if possible
  • Consider a shorter loan term to reduce total interest paid
  • Bring a co-signer with good credit on your application
  • Try to boost your credit score before applying if time allows
  • Negotiate with the lender/dealer to see if they can beat another offer

 

While interest rates will be higher with poor credit, taking the steps above can help you secure the most favourable rate possible for your situation.

 

Loan Terms to Consider

When taking out a bad credit auto loan, you’ll need to decide on the length of the loan term – typically between 24 and 72 months. The longer the term length, the lower your monthly payments will be. However, you’ll end up paying more in interest charges over the full loan period.

A 24-month loan term will have higher monthly payments, but you’ll pay less in interest overall and build equity in the vehicle more quickly. This can be a good option if you plan to trade in or sell the car before the loan is paid off.

With a 72-month loan, you’ll benefit from a lower monthly payment. But you may end up “upside-down” on the loan if you want to get rid of the car before it’s paid off. You’ll owe more than the car is worth.

Carefully consider your budget and long-term plans when deciding on a loan term for your bad credit car loan. A 36 or 48-month term is a good compromise for most borrowers.

 

Watch Out for Extra Fees

When financing a car, especially with bad credit, it’s important to watch out for extra fees beyond just the purchase price of the vehicle and interest rate on your loan. Dealerships and lenders commonly tack on additional fees that can add hundreds or even thousands of dollars to the total cost of your auto loan.

Some of the most common extra fees to look out for include:

 

  • Documentation fees (or “doc fees”): These fees cover preparing and processing documents related to your sale and loan. Doc fees typically range from $300-$500.
  • Dealer preparation fees: This covers getting the vehicle ready for sale, including cleaning and inspections. Expect to pay $500 or more.
  • Title and registration fees: Covers title and registration processing with the DMV. Usually $50-$150.
  • Destination or transportation fees: Charges for transporting the vehicle to the dealership. Often $1000-$1500 for shipping.

 

To minimize these extra fees when financing with bad credit:

 

  • Negotiate the documentation fee with the dealer – ask if they can remove or lower it.
  • Research documentation fee limits in your state/province.
  • Ask the dealer to include prep fees in the vehicle price.
  • Understand that government fees can’t be negotiated but others usually can.
  • Calculate the total fees ahead of time so there are no surprises.

 

Being aware of the extra fees charged by dealers and lenders can help prevent getting ripped off when financing a car with bad credit. Do your homework beforehand and be ready to negotiate to keep your total costs down.

 

Review The Fine Print Carefully

When you have poor credit, some lenders may attempt to take advantage of you by slipping unfavourable terms into the fine print. Make sure to thoroughly review the entire loan contract before signing anything. Some important things to look for:

 

  • Interest rates – Look for the annual percentage rate (APR), not just the monthly payment. A high APR indicates you’ll pay much more over the life of the loan.
  • Balloon payments – Some contracts require a large lump sum payment at the end of the term. This is usually to make up for a low monthly payment.
  • Early repayment penalties – You may be charged excessive fees if trying to pay off the loan early.
  • Cost of extras – Things like GAP insurance and extended warranties can significantly increase the overall loan cost.
  • Mileage limits – Going over a preset mileage cap can trigger fees.

 

Don’t hesitate to negotiate if you spot concerning terms. A reputable lender will be willing to work with you. Walk away if a dealer or lender seems shady or pushes you into a deal you’re unsure about.

 

Maintain Your Vehicle

Once you have your new (or used) vehicle, it’s important to maintain it properly so it continues running smoothly. Follow the manufacturer’s maintenance schedule for oil changes, tire rotations, fluid flushes, and other services. Keep records of all maintenance performed.

Stay on top of repairs as soon as you notice any issues. Small problems can turn into major repairs if left unchecked. Listen for new noises, pay attention to warning lights, and address any drivability problems right away. Find a trusted independent mechanic or dealership service department.

Make sure you have adequate auto insurance coverage at all times. Collision and comprehensive insurance will pay for damage from an accident or other incident like theft or vandalism. It’s required by your lender. Liability insurance covers any injuries or property damage you cause in an accident. Compare quotes every year to find the best rate.

Protect your investment by keeping your car well-maintained, repaired, and insured. Take care of it and it will serve you well until you’re ready to upgrade.

 

Improve Credit during Loan Term

One of the best ways to build your credit is by making regular on-time payments on your auto loan. Set up automatic payments so you never miss a payment. Aside from loan payments, take other steps to improve your credit score:

 

  • Check your credit report and dispute any errors – Mistakes can drag down your score so review all 3 of your credit reports for inaccuracies.
  • Keep credit card balances low – High utilization rates on cards hurt your score, so aim for less than 30% of the limit.
  • Avoid applying for more new credit – Too many hard inquiries from new applications makes you look risky.
  • Become an authorized user – Ask a friend or family member with good credit to add you as a user to help build your history.
  • Limit new account openings – Space out applying for new credit and loans, as a mix of new and old accounts is ideal.

 

As you work to improve your credit during the auto loan term, your score should steadily increase. Check it periodically so you know how your efforts are impacting your profile. A higher score opens the door to better loan terms in the future.

 

Conclusion

Getting approved for a car loan in Abbotsford with bad credit is possible, but it requires some strategic planning and effort on your part. The most important things to remember are improving your credit score as much as possible before applying, having a reasonable down payment ready, finding a co-signer if you can, and shopping around for the best rates and loan terms. Don’t forget to carefully review all fees and read the fine print before signing anything.

With a focused approach, it’s possible to get driving the car you need while also taking steps to improve your financial situation over time. Maintaining your vehicle properly and making all your payments on time will help rebuild your credit so your next auto loan will be even easier to obtain. Don’t get discouraged if you don’t get approved right away – be persistent and explore all your options. There are lenders willing to work with bad credit borrowers with the right attitude and preparation.

Get Approved Today

See if you qualify in under 60 seconds

Abbotsford Bad Credit Car Loan Questions

The lowest credit score most lenders will approve for a car loan is around 500-550. However, interest rates are quite high at this level. For more reasonable rates, you’ll want a score of at least 600. Shop around with lenders as each has their own approval criteria. With a low score, focusing on used cars instead of new can help improve chances of approval.

You’ll need proof of income, residency status, drivers license, car insurance, debt obligations, monthly expenses, collateral (trade-in vehicle), down payment amount, requested loan amount and term length. Having all this ready speeds up the application and approval process.

Tips include having a sizable down payment, keeping the loan term short (3 years or less), putting up collateral like a paid off trade-in vehicle, having a co-signer with better credit, keeping your requested loan amount low, and applying with lenders like credit unions that specialize in bad credit loans.

Your best chances for getting approved with bad credit is through the dealership’s financing department, especially if you are buying from a buy here pay here type used car lot. They specialize in approvals for subprime borrowers and have relationships with many lending sources.

Most new car 0% financing offers require a minimum credit score of at least 720. Some luxury brand vehicle financing deals may require a score over 760 to qualify for 0%. If your score is lower, you likely won’t qualify for 0% but dealers can still offer discounted rates.

There is no defined minimum income threshold but most lenders want to see that your total monthly debts including the new car payment are less than 40% of your gross monthly income. A minimum monthly income of around $2,000 is recommended for financing a reliable used car.

Yes, getting pre-approved is highly recommended. It shows dealers you are a serious buyer and improves your negotiating leverage. With an approval letter in hand detailing the loan amount, dealers know they just need to find a car that fits your budget.

Most lenders require a 20% down payment for borrowers with poor credit. But some subprime lenders like InstaLoan and Canada Drives offer no money down car loans in Abbotsford to high risk borrowers at higher interest rates. You can get pre-approved with them before visiting dealers.

Yes, you can qualify for a used car loan through subprime lenders by providing proof of income from EI, social assistance, disability or other government benefits. The loan amount is based on your monthly benefit income, other debts and down payment.



 

The easiest bad credit car loans to get approved for are older used vehicles financed directly through the dealership rather than a bank. Approval is based more on the vehicle value versus your credit score. Aim for used cars under $10,000 and research vehicles that hold value.

As an approximate minimum, plan on a gross monthly income of around $3,000 to afford financing a $15,000 used car purchase. That allows for the loan payment, insurance, gas and maintenance expenses while keeping total debts under 40% of your income.

Tips include making payments on time or early, paying more than the minimum due, limiting hard credit checks from other loan applications, keeping credit card balances low, not closing old accounts, reviewing credit reports regularly and limiting new debt obligations.



 

Co-signers can improve the chances of getting approved and may allow for lower interest rates. Make sure any co-signer understands they are equally responsible for the loan should you stop making payments. Have a repayment plan in place with them.

Currently, used car loan rates for borrowers with bad credit in Abbotsford tend to average between 8% and 20% depending on credit factors. Rates are towards the lower end of that for newer used vehicles. Expect rates over 15% for older or high mileage cars.

Watch out for very high interest rates, large down payments, short 12-24 month terms and little wiggle room if unable to make payments. Ask about conditions related to late payments, early repayment policies and ownership terms until loan is fully paid.

Some lenders promoting guaranteed approvals include Canada Drives, InstaLoan, CAR2GO and Vancouver Auto Loans. Keep in mind guaranteed approval comes with conditions like higher than usual interest rates, large down payments, short terms and specific car criteria.

 

Find out why it has a rebuilt title – was it from significant damage, theft recovery or an out-of-province import? Get a detailed vehicle history report. Inspect carefully for issues. Have a mechanic assess it. Make sure it has passed safety inspection. Expect higher financing rates.

Stable long term employment helps approval chances since it demonstrates reliable income. But for bad credit applicants, many subprime lenders put more emphasis on current income level than past job stability. Proof of at least 3-6 months in your current role is often enough.

Getting approved for two simultaneous auto loans is difficult but possible in some cases, especially if your current loan is in good standing and you have sufficient income to afford both payments. The total vehicle loan payments cannot exceed 40% of your gross monthly earnings.

Get Approved Today

See if you qualify in under 60 seconds