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Bad Credit Car Loans in Moncton

Bad Credit Car Loans in Moncton

If you have bad credit, getting approved for an auto loan can feel like an uphill battle. With a low credit score, you may worry that owning your own vehicle is out of reach.


However, there are options for those with less-than-perfect credit. While bad credit will make qualifying for an auto loan more challenging, it is possible with the right preparation and work.


In this complete guide, we’ll cover everything you need to know about getting a car loan with bad credit in Moncton, New Brunswick. You’ll learn:

 

  • What credit score lenders look for
  • How to improve your chances of getting approved
  • Bad credit auto loan providers in Moncton
  • What APRs and fees to expect
  • Tips to rebuild your credit over time


With the right information and perseverance, owning a vehicle is an achievable goal even with bad credit. Read on to learn how you may be able to get the keys to your own set of wheels.

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What is Bad Credit?

Bad credit refers to poor credit health as indicated by a low credit score. Your credit score is a three-digit number, typically ranging from 300 to 850, that is generated based on information in your credit report. The credit bureaus use credit scores as a representation of your creditworthiness – how likely you are to repay debts and make payments on time. Credit scores are calculated using information related to your payment history, amounts owed, length of credit history, types of credit in use, and recent inquiries.

The most commonly used credit score is the FICO score, but there are also other scoring models like VantageScore. In general, a FICO score below 580 is considered very poor, while a score above 670 is considered good to excellent credit. The lower your credit score, the higher risk you will be perceived by lenders.

There are a few main reasons that can cause bad credit:

 

  • Missed or late payments
  • High credit utilization ratio
  • Collections, charge-offs, bankruptcies, or foreclosures
  • Too many recent credit inquiries
  • Short credit history

 

Having bad credit makes it more difficult to get approved for loans and credit cards. You will likely pay higher interest rates and have fewer options available. However, there are still financing options for people with poor credit health.

 

Why is Bad Credit a Problem for Auto Loans?

Having bad credit can make it much more difficult to qualify for an auto loan and lead to less favorable loan terms. Here are some of the key problems bad credit causes when applying for a car loan:

 

Higher Interest Rates

Lenders view applicants with lower credit scores as riskier borrowers. To compensate for this increased risk, lenders will charge higher interest rates. The worse your credit score, the higher your interest rate is likely to be. With a poor credit score, you may pay interest rates of 10-20% or even higher.

 

Loan Rejection

Many traditional lenders have credit score cut-offs, below which they will automatically reject applications. Applicants with very poor credit scores below 550 will often have their applications denied by prime lenders. Even borrowers with fair credit in the low 600s may struggle to qualify with major banks and dealerships.

 

What Credit Score is Needed for an Auto Loan?

When applying for auto financing, your credit score plays a major role in determining whether you’ll be approved as well as the interest rate you’ll pay. Auto lenders generally have minimum credit score requirements to qualify for financing.

For new car loans, most lenders look for borrowers to have credit scores of at least 620-650. However, interest rates on new car loans tend to be lowest for those with scores of 720 and above.

For used cars, minimum credit scores tend to be slightly lower, with most lenders requiring at least 600-625 for approval. But again, borrowers with higher credit scores in the 675-700+ range will qualify for the best rates.

So while it’s possible to get approved for auto financing even with less-than-ideal credit, a higher score opens up more options with better terms. Checking your credit reports and scores ahead of time can help you determine where you stand.

 

Can You Get a Car Loan with Bad Credit?

Yes, it is possible to get approved for an auto loan even if you have bad credit. While lenders do consider your credit score and history when making lending decisions, they also look at other factors like your income, employment history, down payment amount, and collateral. So just because you have a low credit score doesn’t necessarily mean you will be automatically denied for an auto loan.

Here are some of the options available when applying for a car loan with bad credit:

 

  • Apply with subprime lenders that specialize in higher-risk borrowers. They are more likely to approve applicants with poor credit.
  • Provide a larger down payment, which shows your commitment to repaying the loan and lowers the amount financed.
  • Bring a cosigner with good credit, which gives the lender more confidence in the ability to repay.
  • Consider a secured auto loan that uses the vehicle as collateral. This also reduces the lender’s risk.
  • Shop for older used vehicles that have lower loan amounts, making approval easier.
  • Repair any errors on your credit reports to try to increase your scores.

 

While you may pay a higher interest rate, with the right lender and loan program, many people with bad credit are still able to finance the vehicles they need. Be sure to compare multiple lenders to find the most competitive rates and terms.

 

Applying for a Bad Credit Auto Loan

The application process for a bad credit auto loan is similar to applying for any other auto loan. Here are the key steps:

 

  1. Check Your Credit Report

Before applying, get a copy of your credit report so you know exactly what lenders will see. You can get free reports annually from Equifax, TransUnion and Experian. Reviewing the details helps you anticipate any questions or issues.

 

  1. Gather Required Documentation

Lenders typically require:

 

  • A valid driver’s license
  • Proof of income – recent pay stubs, tax returns, etc.
  • Residency documents – utility bills, etc. showing your address
  • Down payment amount
  • Details on the vehicle you want to purchase, such as the VIN number
  • Auto insurance information
  • Personal references

 

Having all documentation ready shows lenders you’re organized and serious about getting approved.

 

  1. Submit Your Application

You can apply online, over the phone or in person. Fill out all details accurately and honestly to avoid issues verifying information later. Many lenders now use online applications for speed and convenience.

 

  1. Get Pre-Approved

Aim to get pre-approved before shopping for vehicles, so you know the loan amount and terms you qualify for. Pre-approval also shows dealers you’re a serious buyer.

 

  1. Select Your Vehicle

Choose a used vehicle priced within your budget and loan approval amount. Shopping at dealerships that work with bad credit lenders can simplify the process.

 

  1. Finalize Paperwork

Review the final loan terms, ask any questions you have, then sign the paperwork. Make sure you understand the monthly payment, APR, loan length and all details before committing.

 

Improving Your Chances of Approval

Having poor credit can make getting approved for an auto loan more difficult, but there are steps you can take to improve your chances of getting the financing you need:

 

Make a Large Down Payment

Putting down a larger down payment shows lenders you are financially committed to repaying the loan. Aim for a down payment of 20% or more if possible.

 

Add a Cosigner

Adding a cosigner with good credit to your loan application can greatly improve your chances of approval. Their good credit helps offset your poor credit.

 

Apply Through the Dealer

Many dealerships work with special finance lenders focused on bad credit loans. Applying for financing through the dealer can open up more lending options.

Taking steps like these shows lenders you are serious about getting a car loan and committed to repaying it responsibly despite having poor credit.

 

Bad Credit Auto Loan Lenders in Moncton

If you’re looking for a bad credit auto loan in Moncton, here are some of the top local lenders to consider:

 

  • Rallye Motors Nissan – This Moncton dealership specializes in financing solutions for bad credit, no credit, bankruptcy, and more. They have an online application and promise instant approvals.
  • Steele Nissan Moncton – Steele Nissan is a reputable local dealer that works with a partner lender to secure bad credit financing for their vehicles. They focus on simplifying the process.
  • Lounsbury Chevrolet Moncton – Lounsbury has an in-house financing department able to assist customers in Moncton with bad credit get approved for a Chevrolet. They have an online application.
  • Moncton Honda – This Honda dealership can provide financing for all credit situations. Their financing department will work to find a solution even for bad credit.
  • Fredericton Hyundai – Fredericton Hyundai offers bad credit solutions and even credit repair services to help improve your chances of getting approved.

 

Besides dealerships, you may also want to check with banks, credit unions, and specialized bad credit lenders in Moncton. The key is to shop around, compare interest rates, and find the best auto loan for your situation.

 

What APR Can You Expect with Bad Credit?

The annual percentage rate (APR) you can expect to pay on a car loan depends heavily on your credit score. The lower your credit score, the higher your interest rate and APR will be. This is because lenders view borrowers with poor credit scores as riskier, so they charge more in interest to offset that risk.

On average, borrowers with credit scores below 580 can expect to pay APRs between 15-25% on auto loans. For scores between 580-669, APRs typically range from 8-15%. With fair credit in the 670-739 range, you’ll usually see APRs of 4-8%. Finally, those with good credit scores above 740 enjoy the lowest rates, often between 2-4% APR.

The table below provides some average APR ranges for auto loans based on credit score:

 

Credit Score

Average APR Range

300-579 (Poor)

15-25%

580-669 (Fair)

8-15%

670-739 (Good)

4-8%

740-799 (Very Good)

2-4%

800-850 (Exceptional)

1-2%

 

Keep in mind that the APR range for any given credit score band can vary quite a bit. Factors like your income, debt levels, down payment amount, and even geographic location can affect the APR offered. But in general, the lower your credit score, the higher the interest rate and APR you can plan on paying for your auto loan.

 

Down Payment Options

When getting a bad credit auto loan in Moncton, the down payment is one of the most important factors. A larger down payment shows the lender you are financially committed and can help get an approval.

Typically, a 20% down payment is recommended for bad credit borrowers. This reduces the amount financed and demonstrates you have funds available upfront. However, some Moncton lenders may accept down payments as low as 5-10% for bad credit.

Here are some common down payment requirements for bad credit auto loans in Moncton:

 

  • Prime Lending requires a minimum 10% down payment for bad credit approval.
  • Driven Auto Credit approves with 5% down for credit scores above 500.
  • Canada Drives requests 10-20% down based on credit profile.
  • Nova Scotia Auto Loans works with any down payment but suggests 15% for quick approval.

 

In summary, while low down payments around 5% may be accepted, bad credit borrowers can improve their chances by putting at least 10-20% down on a Moncton auto loan. This gives lenders confidence in the approval and shows you are invested in the purchase.

 

Other Fees to Expect

In addition to higher interest rates, there are usually extra fees associated with bad credit auto loans that you’ll need to budget for. Two common fees are:

 

Admin Fees

Lenders will often charge an admin or document processing fee for bad credit loans. This can be around $300-500 in most cases. It covers the additional administrative costs of processing and approving a high-risk loan application.

 

Prepayment Penalties

Since bad credit borrowers are seen as higher risk, some lenders will penalize you for trying to pay off the loan early. This prepayment penalty aims to ensure the lender earns enough interest revenue from the loan. Penalties can be 1-3% of the remaining loan balance.

Always read the fine print of a bad credit auto loan agreement so you are aware of any extra fees like this. And consider whether an alternative used car financing option may be more cost effective overall.

 

Alternatives to Auto Loans

If your credit is very poor, you may want to explore some alternatives to getting a traditional auto loan from a bank or credit union. Here are a few options to consider:

 

Lease a Vehicle

Leasing typically requires better credit than financing a used car purchase, but the credit check may not be quite as rigorous as for a new car loan. Leasing companies are primarily concerned that you can afford the monthly payment. Be aware that leases limit your mileage and charge fees for excess wear and tear.

 

Buy Here Pay Here

“Buy here pay here” dealerships will finance and sell you a used car all at the same location. They cater to customers with very bad credit who may not qualify for financing elsewhere. However, interest rates are typically sky-high.

 

Borrow from Family

If you have a family member willing to lend you money for a used car purchase, this can be much cheaper than obtaining financing through other methods. Draw up a legal contract agreeing on an interest rate and repayment terms to protect both parties.

While traditional loans may be difficult, exploring all your options gives you a better chance of finding affordable transportation.

 

Tips for Repairing your Credit

If your credit score is preventing you from getting approved for the car loan you need, there are ways you can start repairing and rebuilding your credit score. Here are some tips for improving your credit score over time:

 

Pay Down Debt

Your credit utilization ratio, which is the amount of credit you’re using versus your total available credit, makes up a significant portion of your credit score. Pay down credit card balances and other revolving debt to lower your utilization ratio and increase your credit score.

 

Don’t Close Unused Credit Cards

While you don’t want to increase your credit utilization, you also don’t want to close your oldest credit cards, as these help demonstrate you have a long credit history. Keep your unused accounts open.

 

Pay All Bills on Time

Payment history makes up 35% of your credit score calculation. Set up autopay and payment reminders to ensure you pay all bills by their due dates.

 

Limit New Credit Applications

Each time you apply for new credit, you’ll see an inquiry on your credit report that can negatively impact your score. Only apply for new credit when absolutely necessary.

 

Monitor Your Credit Report

Review your credit report regularly and dispute any inaccurate or fraudulent information that could be bringing down your score. Catching errors early can improve your credit.

 

Become an Authorized User

If you have a family member with a long credit history and good payment record, ask them to add you as an authorized user on one of their credit cards. This can give your score a boost.

 

Conclusion

Getting an auto loan with bad credit in Moncton can be challenging, but is certainly possible if you take the right steps. The most important things are having a down payment, providing the required documentation, and working with specialized lenders that service borrowers with poor credit. With some work on repairing your credit, you may be able to qualify for lower interest rates over time.

In summary, don’t get discouraged if you have been turned down before. Do your research, organize your finances, and connect with the experts to get approvals. Keep an open communication with lenders so they understand your situation fully. Consider alternatives like buying cheaper used cars with cash if you need transportation right away. With some diligence and patience, you can rebuild your credit to open up better auto loan options again.

Here are some final tips for getting a bad credit car loan in Moncton:

 

  • Save up a down payment of 10-20% or more if possible
  • Have proof of income and other required documents ready
  • Shop for older used vehicles unless you have a large down payment
  • Apply with specialists like DrivetoOwn or Car Loan Canada
  • Consider a co-signer if you have someone willing
  • Explain any past credit issues to your lender
  • Make all payments on time once approved to rebuild credit

 

With some diligence and the right partners, you can get auto loan approval even with bad credit history. Drive safe and have an amazing ride!

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Moncton Bad Credit Car Loan Questions

Yes, there are many options to get approved for a car loan in Moncton even if you have bad credit or no credit history. Lenders like Canada Drives, East Coast Car Loans, and GetFinanced specialize in helping Canadians with poor credit secure auto financing. They understand past financial mistakes and are willing to work with you. To improve your chances, have proof of income, residency documents, auto insurance, driver’s license, and some cash for a down payment ready when applying. With the right lender, you can drive home with a car loan despite bad credit.

In Moncton, a credit score below 620 is generally considered bad or poor credit for financing a car purchase. Scores in the 300s, 400s, or 500s mean subprime credit and will lead to very high interest rates from most mainstream lenders. While each lender sets their own standards, shoppers with scores between 620-679 can expect to pay higher rates but still get approved from subprime lenders who offer special financing programs. Bring other qualifying factors besides your credit score to improve your chances.

While each lender uses different approval criteria, most set a minimum credit score between 500-550 for subprime auto financing. Canada Drives, for example, advertises potential approval for customers with credit as low as 500. But the interest rate offered will depend on your exact score – the lower it is, the higher your rate. With scores below 500, approval gets harder but bringing other qualifying factors can still make it possible with the right subprime lender.

Expect to put down a more substantial down payment when financing a car with bad credit – usually at least $1,000-1,500 or 10-20% of the vehicle price. Putting this amount down shows the lender you are invested in paying off the loan responsibly. It also lowers the amount financed so you borrow less, which helps offset the risk of lending to borrowers with poor credit. Shoppers with the lowest scores may need to put around 30-50% down for approval.

Yes, lenders want to see proof of steady income when considering bad credit car loan applications. This helps them evaluate if you can reasonably afford the monthly payments. Pay stubs showing 6-12 months of reliable income are commonly requested. If self-employed, tax returns or bank statements can verify income. High debt-to-income ratios will lead to denial so make sure your provable income is sufficient relative to debts/expenses.

Unemployed car shoppers typically have a harder time getting approved, but it is still possible in some cases if you bring other strong qualifying factors. For example, if you have substantial cash savings, a large down payment (50% or more), or a willing co-signer with excellent credit, some subprime lenders may overlook current unemployment. Proof of fixed government benefits can also substitute for traditional income. Shop around for an unemployed car loan program that fits your situation.

Yes, fixed income from social/disability assistance programs can help applicants qualify for auto financing even with bad credit. Lenders mainly want to verify if you have steady benefits capable of covering a monthly car payment. Bring recent documentation of your benefits and any other income streams. Some lenders even offer specialized car loan programs for borrowers receiving social assistance. Having a co-signer also improves the chances of getting approved.

 

Most lenders prefer at least 6 months, but some may approve applications with just 3 months at your current job. Having 1+ years at the same employer is ideal and lowers the risk that you’ll lose the source income to repay the loan. If recently switching jobs, include documentation of previous steady employment to show stability. Length at your job usually matters more to lenders when dealing with subprime applicants.

It is possible but challenging to qualify for an auto loan immediately after a bankruptcy. Most lenders require discharged bankruptcies to be at least 2-3 years old before considering an application. However, some specialized subprime lenders understand unique situations and offer bankruptcy car loan programs that approve applications sooner. Expect to pay very high interest rates after a recent bankruptcy but a large down payment can offset some risk.

When applying for a car loan with bad credit, have these documents ready for the best chance of approval:

 

– Proof of income – recent pay stubs, tax returns if self-employed

– Government-issued ID – driver’s license, passport, etc

– Proof of address – utility bill, bank statement with current address

– References – names/contact info of people who can vouch for you

– Down payment – proof of funds through recent bank statements

– Auto insurance documentation

Yes, getting pre-approved for car financing before visiting dealerships can give you important leverage as a buyer. You’ll know what rates/terms you qualify for based on your credit, allowing you to focus on negotiating the best price on a vehicle. Dealers will also take your purchase seriously knowing you are a pre-approved buyer. This removes financing contingencies and saves time versus applying at the dealership.

Reputable options to get pre-approved online for auto financing despite bad credit include:

– Canada Drives

– Car Loans Canada

– Car Deal Canada

– GetFinanced

– Steele Auto Advantage

These specialized lenders understand credit challenges and have simplified applications to verify your rate and loan terms before visiting dealers. Getting pre-approved takes as little as 60 seconds and does not impact your credit score.

Tips to improve the chances of getting approved for auto financing with bad credit:

 

– Put down at least 10-20% as a down payment

– Find a creditworthy co-signer to apply with

– Provide proof of steady income for 6-12 months

– Include references willing to vouch for your commitment

– Apply with subprime lenders specializing in bad credit

– If declined, re-apply after raising your credit score

 

Meeting these criteria shows lenders you can manage payments responsibly and lowers perceived risk.

With bad credit, expect to pay quite high interest rates, often over 20%. Exact rates depend on your province, lender, and actual credit score – the lower the score, the higher the rate. Rates over 30% are possible for applicants with scores below 500 who get approved by more flexible subprime lenders. Putting more money down and showing other positive factors can potentially lower rates. Know that rates are higher for used vehicles.

To get the lowest interest rate possible on bad credit car financing:

 

– Shop rates from multiple lenders

– Improve your credit score if below 600

– Put down at least 20% as a down payment

– Find a creditworthy co-signer to apply with

– Provide proof of reliable income

– Look for lenders offering promotions and rate discounts

 

Comparing loan offers from different subprime lenders almost always saves money on interest charges. Rates change frequently too so shopping around matters.

Experts usually recommend shorter loan terms (3 years max) when financing with bad credit because it keeps your monthly payments affordable relative to income. But longer 5 or 6 year loans lower each payment, freeing up cash flow month-to-month. Just know that longer terms charge substantially more interest over time and put you at risk of being underwater on the loan balance. Determine the term length that aligns with your budget and financial circumstances.

 

Yes, many dealerships have relationships with special finance lenders and some have dedicated bad credit financing departments. They can access these subprime lenders to finance customers that banks would normally decline. Compared to getting pre-approved yourself, dealerships typically charge higher interest rates but provide convenience. Be prepared for hard credit inquiries and potential pressure tactics.

Yes, many dealerships have relationships with special finance lenders and some have dedicated bad credit financing departments. They can access these subprime lenders to finance customers that banks would normally decline. Compared to getting pre-approved yourself, dealerships typically charge higher interest rates but provide convenience. Be prepared for hard credit inquiries and potential pressure tactics.

**Pros**

 

– One stop shop for vehicle and financing

– Flexible terms for quick approvals

– Variety of subprime lenders to access

 

**Cons**

 

– Higher interest rates than independent lenders

– Hard credit check impacts your score

– Pressure tactics sometimes used

 

Weigh the convenience factor against potentially better rate and approval odds going through an independent subprime lender directly.

The easiest way to buy a car with bad credit is to get pre-approved for financing from a reputable online lender that specializes in bad credit, like Canada Drives or Car Deal Canada. They simplify the application process, verify your terms, and issue loan pre-approvals online in minutes without affecting your credit score. This gives you leverage to shop and negotiate for the best vehicle deal knowing the financing is secured on the back end.

Follow these key tips for success with financing a car purchase when having bad credit in Moncton:

– Shop for the best interest rates and loan approval terms instead of specific cars first

– Get pre-approved before visiting dealerships

– Put at least 20% down to lower monthly payments

– Ask dealers for their best price on vehicles that fit your budget

– Send applications to multiple lenders and compare offers

– If declined, build credit history and re-apply in 6 months

– Make all payments on time once approved to avoid repossession

Carefully planning the financing for affordability and stability is vital for overcoming any past credit mistakes when purchasing a vehicle.

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