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Bad Credit Car Loans in Red Deer

Bad Credit Car Loans in Red Deer

Buying a car is an exciting experience, but it can quickly turn stressful if you have bad credit. According to Experian, the average credit score for someone taking out an auto loan is 669 – meaning a large portion of buyers have less than ideal credit.

If you fall into the bad credit range, you may feel like purchasing a vehicle is impossible. Dealerships may turn you away, and you may not qualify for reasonable interest rates from lenders.

The good news is there are still options available. Specialized lenders work with borrowers with poor credit every day to get them driving the vehicles they need. There are also steps you can take to improve your credit and chances of financing approval.

This guide will walk through everything you need to know about getting a bad credit car loan in Red Deer, AB. We’ll explain why bad credit happens, how to improve your credit score, which dealerships work with bad credit buyers, and tips for getting approved. With the right preparation and research, you can end up with an affordable used car loan even with less than perfect credit.

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What is a Bad Credit Car Loan?

A bad credit car loan is a type of auto financing specifically designed for borrowers with poor credit histories. These loans allow people with low credit scores to qualify for financing to purchase a vehicle, even though traditional lenders would likely deny their applications.

Bad credit car loans are offered by special finance dealerships and subprime lenders. They cater to borrowers who have experienced financial setbacks, bankruptcies, defaults, or other issues that damaged their credit. Instead of relying mainly on credit scores to make lending decisions, subprime lenders look at applicants’ ability to afford the vehicle payments.

While interest rates are higher compared to prime loans, a bad credit car loan gives borrowers with credit challenges an opportunity to buy and finance a reliable vehicle. These loans also help consumers rebuild their credit by making timely payments and establishing positive payment histories.

Key features of bad credit auto loans include:


  • Higher interest rates than prime loans
  • Lower loan amounts and higher down payments
  • Approval based on income rather than credit score
  • Opportunity to improve credit by making payments on time
  • Offered by special finance dealers and subprime lenders


So in summary, bad credit car loans provide financing options for purchasing vehicles to borrowers with poor credit at higher costs. They allow consumers to buy necessary transportation even with past credit challenges.


Why Bad Credit Happens

There are many potential reasons someone can end up with bad credit. Here are some of the most common causes:


Job Loss

Losing your job can quickly lead to missed payments and mounting debt, especially if you are unable to find a new job right away. The missed payments will likely show up on your credit report.


Unexpected Medical Bills

If you or a family member has a major illness or injury, the medical bills can pile up quickly. Even with insurance, you may be left paying high deductibles and co-pays which can hurt your credit if you miss other payments as a result.



A divorce often comes with large legal fees and sometimes spousal support payments. Taking on this financial burden while also splitting up shared assets and liabilities with your former spouse can be challenging and lead to missed payments.


Poor Money Management

Not budgeting properly, overspending, lack of savings, and other examples of poor money management habits can make it hard to pay all your bills in full and on time. Failing to make payments will damage your credit.


Lack of Credit History

If you have never had a credit card or taken out a loan, you will have very little credit history for lenders to review. This lack of track record will cause you to have a low credit score.

These are just some examples of why you may end up with bad credit through no fault of your own. Remember, it’s never too late to turn things around and rebuild your credit over time.


Consequences of Bad Credit

Having bad credit can have several negative consequences that make it more difficult to get approved for loans and other financing. Here are some of the main issues bad credit can cause:


Difficulty Getting Approved for Loans

Lenders see bad credit scores as an indicator of risk, so you’ll have a much harder time getting approved for financing like car loans or mortgages if you have bad credit. Many lenders won’t even consider applicants with credit scores below a certain threshold.


Higher Interest Rates

If you do manage to get approved for a loan with bad credit, you can expect to pay much higher interest rates. This is because the lender sees you as a riskier borrower and charges more interest to offset that risk.


Lower Credit Limits

Credit card companies will typically offer lower credit limits to borrowers with poor credit, limiting your purchasing power and access to credit.


Difficulty Renting

Many landlords nowadays will check credit reports and may deny applicants with poor credit history. Bad credit makes it harder to get approved for an apartment.


Paying Deposits

You may have to pay security deposits for things like utilities, cell phones, and insurance if you have bad credit. These deposits are meant to offset the risk of nonpayment.


Employment Issues

Some employers may check credit reports and view bad credit as a sign of irresponsibility. It may negatively impact your prospects in the job market.

So in summary, having bad credit makes getting loans and credit much more difficult and expensive. It can also create problems in other areas of life like finding housing and employment. Taking steps to improve your credit is important to avoid these issues.


Improving Your Credit

If you have bad credit, it can feel frustrating trying to raise your credit score. However, there are steps you can take to start rebuilding your credit and improving your chances of getting approved for a car loan.


Pay Down Debt

One of the biggest factors impacting your credit score is your credit utilization ratio – how much of your available credit you are using. Try to pay down high balances on any credit cards or loans to get your credit utilization below 30%. This can give an immediate boost to your score.


Avoid Applying for New Credit

Each credit application causes a hard inquiry on your report that can lower your score, especially if you have several in a short period. Avoid applying for new credit lines until your score starts to recover. Too many hard inquiries can be a red flag for lenders.


Become an Authorized User

Ask a family member with good credit to add you as an authorized user on one of their credit cards. As an authorized user, their payment history will be added to your credit report and can help raise your score.


Dispute Any Errors

Review your credit reports closely and dispute any inaccurate information that may be dragging down your score. Getting errors corrected can provide a quick boost.


Make Payments On Time

Set up automatic payments on all your bills to avoid missed payments. Payment history makes up a significant portion of your credit score. Even one late payment can drop your score dramatically.

Following these tips can help rebuild and improve your credit over time, boosting your chances of approval for an auto loan. Be patient and persistent – with diligent work, you can recover from bad credit.


Getting a Car Loan with Bad Credit in Red Deer, AB

If you have bad credit and are looking to purchase a vehicle in Red Deer, Alberta, you may face some unique challenges compared to other areas. Red Deer is a mid-sized city with a limited number of options when it comes to dealerships and lenders that specialize in bad credit auto loans. This lack of competition can sometimes lead to higher interest rates and fewer incentives or discounts for those with poor credit.

Additionally, with a smaller population size, lenders in Red Deer may have stricter lending requirements when evaluating those with lower credit scores. They may want to see more established credit or a higher down payment compared to major metro areas like Calgary or Edmonton which have more subprime lenders competing for business.

However, the good news is that you still have options for getting approved for a car loan despite bad credit in Red Deer. The key is being prepared with a higher down payment, having proof of stable income, and shopping around to find a dealer or lender that is willing to work with your unique situation. Having a co-signer with good credit or putting up collateral like a house or savings account can also improve your chances of getting approved. Don’t get discouraged if one lender turns you down – persistence and having the right information will eventually pay off with the vehicle you need.


Dealerships That Offer Bad Credit Car Loans in Red Deer, AB

If you’re looking for a bad credit car loan in Red Deer, AB, here are some of the top dealerships to consider:


Mac James Motors

Mac James Motors is a used car dealership that specializes in bad credit financing. They work with many lenders to find loan approval for customers, even if they’ve been declined elsewhere. Mac James has a large selection of used vehicles to choose from.


Automaxx Red Deer

Automaxx Red Deer offers a quick and easy pre-approval process for bad credit car loans. They have a variety of makes and models available and claim to get almost everyone approved. You can start the process online or visit their dealership.


Canada Drives

Canada Drives is an online auto financing company that connects customers to their network of lenders. They work with applicants in Red Deer who have bad credit, bankruptcies, and previous loan denials. Pre-approvals only take 2 minutes.


Car Deal Canada

Car Deal Canada is a dealership group with a location in Red Deer. They advertise bad credit approval and have a selection of used vehicles in all price ranges. You can apply for financing online or in person.


Wheaton Chevrolet Red Deer

Wheaton Chevrolet Red Deer states that all types of credit, including bad credit, can qualify for auto financing through their dealership. They offer Chevrolet models as well as some used vehicles.


Red Deer Honda

Red Deer Honda is a good option for Honda models and other used cars. They claim to be able to help with bad credit, no credit, and bankruptcies. The finance team can assist with finding a lender.


What To Look For in a Bad Credit Car Loan

When shopping for a bad credit auto loan, it’s important to compare offers from multiple lenders and look at all the details. Here are some key factors to consider:


Interest Rates

The interest rate has a big impact on your total loan cost. Since bad credit borrowers are seen as higher risk, interest rates for bad credit loans tend to be higher than rates for good credit borrowers. However, lenders’ rates can vary significantly, so shop around for the best deal.


Loan Term Length

Longer loan terms (like 72 or 84 months) mean smaller monthly payments, but you pay more in interest over the life of the loan. Shorter terms have higher payments but lower total interest costs. Evaluate your budget to find the right balance.


Down Payment Amount

A larger down payment reduces the amount you have to borrow, lowering your payments and total interest charges. Putting 10-20% down is ideal, but any amount can help improve loan terms.



Look for any origination fees, documentation fees, or prepayment penalties imposed by the lender. Limiting fees helps reduce the overall cost of borrowing.


Loan-to-Value Ratio

Your loan amount compared to the car’s value is called the LTV ratio. A high LTV (like 110-120%) may be offered but costs more in the long run. Look for the lowest LTV possible.


Co-signer Option

Adding a co-signer with good credit may help you qualify for lower rates. Just know the co-signer is equally responsible for repaying the loan.

Examining all parts of a loan offer is important to find the best bad credit auto financing in Red Deer, AB for your situation.


Getting Pre-Approved

Getting pre-approved for a bad credit car loan in Red Deer, AB can make the process of getting a loan much smoother. Here are some of the benefits of getting pre-approved:


  • You’ll know how much you can afford – When you get pre-approved, the lender will tell you the maximum loan amount you qualify for based on your credit, income, and other factors. This helps narrow your search to cars in your price range.
  • Stronger negotiating position – Walking into a dealership with a pre-approval letter puts you in a better position to negotiate. The dealer knows you are a serious buyer who has already been approved for financing.
  • Faster buying process – Having your financing ready means you can focus on finding the right car. The dealership simply needs to verify your information rather than submitting a full application.


Here are the steps to getting pre-approved for a bad credit auto loan in Red Deer, AB:


  1. Check your credit report and score – Make sure there are no surprises or errors on your credit report before applying. You can get free credit reports from Equifax and TransUnion.
  2. Gather required documents – Lenders will want proof of income (recent pay stubs), government ID, and proof of address. Having these ready will make the pre-approval process faster.
  3. Research lenders – Look for lenders in Red Deer that specialize in bad credit loans. They will be more likely to approve those with poor credit.
  4. Apply online or in person – Many lenders allow you to get pre-approved online by submitting an application. You can also apply in person at a dealership.
  5. Get pre-approval letter – If approved, the lender will issue a pre-approval letter. This letter states the maximum loan amount and terms you qualify for.


Going through the pre-approval process shows dealers that you are serious about purchasing and have the financing readiness to do so. With a pre-approval in hand, you can shop for cars knowing exactly what you can afford.


Documents Needed

When applying for a bad credit car loan, there are some key documents you’ll need to provide to dealerships and lenders to help improve your chances of getting approved. Here are the main things to gather:


  • Proof of Income – This is usually recent pay stubs, bank statements, tax returns or a letter from your employer verifying your income. Lenders want to see that you have enough steady income to afford the monthly car payments.
  • Identification – A valid government-issued ID like a driver’s license or passport. You’ll also need proof of address like a utility bill.
  • Down Payment – Having a down payment of 10-20% of the vehicle price often helps improve your chances. Gather proof you have the down payment amount through bank statements or other assets.
  • Collateral – Some lenders may ask for collateral like a house or other asset you own free and clear. This gives them recourse if you default on the loan.
  • Co-Signer – If you have poor credit, having a co-signer with good credit can help you get approved. Make sure the co-signer is prepared to provide their proof of income and ID as well.
  • References – Personal and professional reference contacts can strengthen your application.


Having all these documents ready in advance will make the application process much smoother and improve your chances of a quick approval.


Improving Your Chances

Even if you have bad credit, there are some things you can do to improve your chances of getting approved for a car loan in Red Deer:


Save up for a down payment

Having a down payment shows lenders you are serious and financially responsible. Even 5-10% down can make a big difference in getting approved and lowering your interest rate.


Find a co-signer

If you have a family member or friend with good credit willing to co-sign your loan, this gives the lender more confidence in approving your application. Just keep in mind the co-signer is equally responsible for repaying the loan.


Pre-qualify with the dealer

Many dealers in Red Deer allow you to get pre-qualified or pre-approved online or over the phone first before coming in. This pre-approval can help strengthen your position during the final negotiations.


Come prepared with documents

Having all your necessary paperwork ready (income proof, ID, references etc.) shows the dealer you are organized and serious about getting approved.


Make a larger down payment

The more money you can put down, the better. Aim for at least 10-20% if possible. This reduces the risk for the lender and increases the chances your application is accepted.


Offer secure collateral

Assets like property or investments you can use as collateral will provide security to lenders and improves your chances of approval.

## Alternatives to Dealerships

While car dealerships specializing in bad credit loans are a popular option, they aren’t the only way to get financing for a used car with bad credit. Here are some other options to consider:


Private Sellers

Purchasing a used car from a private seller can sometimes be an alternative to going through a dealership. You may be able to negotiate more reasonable terms directly with the seller. However, private sales don’t come with any warranties or guarantees, so make sure you get the vehicle inspected first. Financing through a private seller typically involves drawing up a contract detailing the loan terms and securing the loan against the car title.


Peer-to-Peer Lending

Peer-to-peer lending networks like Borrowell allow people to borrow and lend money directly with each other online. Borrowers can apply for a personal loan for a used car purchase and lenders compete to offer the best rates. While interest rates may be higher than traditional loans, peer-to-peer lending opens up another financing option if you have difficulty qualifying elsewhere.


Credit Unions

Local credit unions sometimes offer used car loans to members with less stringent credit requirements than major banks. Interest rates may be higher with bad credit, but credit unions are worth looking into if you need flexible financing. Joining a local credit union can provide an alternative source of financing when you have limited options.


Online Lenders

There are a growing number of online lenders and financing companies focused on serving people with bad credit. They provide an easy way to compare loan offers from the convenience of your own home. Make sure to compare all terms, fees, and interest rates thoroughly before choosing an online lender.

While dealerships make financing easy, it helps to explore all your options when shopping for a car with bad credit. Weigh the pros and cons of each carefully before deciding what works best for your situation.


FAQs on Bad Credit Car Loans in Red Deer, AB

Here are some commonly asked questions about getting a bad credit car loan in Red Deer, AB:


What is considered bad credit for an auto loan?

Generally a credit score below 600 is considered bad credit by most lenders. Some may approve loans for people with credit scores in the low 500s.


How high will my interest rate be if I have bad credit?

For bad credit car loans, interest rates can range anywhere from 10% up to 35%. The higher your credit score, typically the lower your interest rate will be.


How long are payment terms on bad credit auto loans?

Most bad credit car loans have terms of 24 to 72 months, or 2 to 6 years. Longer terms of 6 years mean lower monthly payments but you pay more interest over the life of the loan.


What is the minimum down payment for a bad credit car loan?

Many bad credit car loans require 10% down or more. But some dealerships offer deals with little to no money down if you have income and some credit history.


Can I get approved with recent bankruptcy or repossession?

Yes, many subprime lenders work with borrowers who have had a recent bankruptcy, repossession, or foreclosure. Each lender has different policies on wait periods.


How long until I’m approved and can drive my car off the lot?

The approval process is usually very fast, often taking just minutes or hours to get a bad credit auto loan decision. Once approved, you can drive your new car home right away in most cases.


What documents do I need to bring when applying?

Bring your driver’s license, proof of income such as recent pay stubs, proof of residence, car insurance information, and references with contact information.



Bad credit can make it challenging to get approved for a car loan, but it is still possible with some preparation and persistence. The key is to understand all your options, improve your credit if you can, and work with lenders who specialize in bad credit loans. With the right approach, you can end up with an affordable loan that fits your budget and gets you driving again.

If you live in Red Deer, AB, focus your search on local dealerships that advertise bad credit financing. Get pre-approved to show you are serious. Come prepared with income proof, references, a down payment, and any other evidence that you can reliably make payments. Be persistent and cast a wide net until you find a lender willing to work with you.

Most importantly, make your payments on time once approved. This will help rebuild and improve your credit score over time. Then in the future you’ll have an easier time qualifying for loans on even better terms. With some diligence and responsible financial habits, a bad credit score doesn’t have to stop you from getting the car you need.

If you need a car and have been turned down due to bad credit, don’t get discouraged. Use the guidance in this article to improve your situation and get driving again. With focus and perseverance, you can get approved for a car loan even with less than perfect credit.

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Questions about Bad Credit Car Loans in Red Deer

There are several options for getting bad credit car loans in Red Deer. Many dealerships like Automaxx Red Deer, Mac James Motors, and Red Deer Honda specialize in helping those with poor credit get approved. They work with special finance lenders that offer higher risk loans. You can also get pre-approved online through companies like Canada Drives and Auto Credit Approval. They work with a network of dealers and lenders that provide bad credit auto financing. Going through a broker often gives you more lending options.


No matter how you apply, having some money for a down payment and bringing other documents like proof of income will help strengthen your auto loan application when you have bad credit. Expect higher interest rates, but focus on rebuilding your credit after getting approved.

Here are some top tips for getting the best rate possible on a bad credit car loan in Red Deer:


– Shop around with multiple dealers and lenders, comparing rates and terms

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

– Have proof of steady income and limited debt obligations

– Consider getting a co-signer with better credit to help qualify and get lower rates

– Look at used vehicles that are 2-3 years old to avoid fast depreciation

– Choose more fuel efficient vehicles with lower insurance rates

– Apply online first to get pre-approved before going to the dealership

– Read contracts thoroughly and negotiate the best possible deal

– Make payments on time going forward to rebuild your credit score


Putting in the work upfront to research and compare bad credit lending options will pay off hugely with thousands of dollars saved over the loan term.

Most subprime lenders for bad credit auto loans in Red Deer require a minimum credit score between 500 to 600. Scores in the low 500s may qualify but expect much higher interest rates and restrictions. Anything below 500 and approval becomes very unlikely or requires a large down payment.


For those with no credit score due to lack of credit history, there are still bad credit car loan options available. No credit car loans look at other qualifying factors like income, employment history, and down payment amount when approving. Interest rates are still higher but on-time payments can quickly help build positive credit.

When applying for a bad credit car loan in Red Deer, make sure you have the following documents ready for loan underwriters:


– Valid government-issued photo ID

– Proof of income – recent pay stubs or tax returns

– Documentation on any supplemental income

– Proof of address – utility bills, bank statements

– References – family or employers

– Down payment funds – bank statements, loan documents


Having these documents ready shows lenders you are serious about your application and saves time in getting approved. Proof of income and ability to make regular payments is most important. Expect lenders to verify all documents submitted.

The average interest rate for bad credit car loans in Red Deer is between 8% to 28%. A credit score in the low 500s can expect to pay interest rates from 14-28%, while a credit score closer to 600 may qualify for 8-15% interest. Rates also depend on other factors like down payment amount, income level, and the vehicle. Luxury cars will have higher rates. Getting pre-approved first lets you know the rate range to expect.

The maximum bad credit car loan amount you can qualify for in Red Deer really depends on your specific financial situation. Most subprime lenders cap loan amounts for bad credit buyers at around $25,000 for newer vehicles and up to $35,000 for used vehicles. Higher incomes can qualify for more – over $50,000 annual income may get approved for $45,000 even with bad credit.


Putting at least 10-20% down also helps increase loan approval amounts. Strong proof of ability to afford payments from steady verifiable income is key to getting the largest loan amount with poor credit. Shop around as max approval amounts can vary between subprime lenders.


Some of the top options for bad credit car dealerships in Red Deer include:


– Automaxx Red Deer – 6816 50 Ave

– Mac James Motors – 7819 50 Ave

– Red Deer Honda – 6603 67 St

– Red Deer Nissan – 6603 67 St

– BonnyBrook Auto – 7429 50 Ave


These dealers understand the challenges of bad credit buyers and have dedicated finance teams that work on approving subprime car loans. They work with specialty lenders focused on higher risk lending. Getting pre-approved before visiting the dealership can streamline the process.

Yes, getting pre-approved before shopping for a vehicle at a bad credit dealer in Red Deer can make the process much easier. Pre-approval provides you:


– Estimated loan amounts and rates without impacting your credit score

– Better bargaining position at the dealership

– Faster buying experience when already approved for financing

– Loan terms and monthly payment estimates

– Increased selection of vehicles that payment fits


With an approval letter in hand, you save time negotiating price knowing the payment that fits your budget. Getting pre-approved online before visiting the dealership locks in competitive financing rates.

The easiest place to get approved for a car loan with bad credit in Red Deer is going through a specialized subprime auto lender like XS Credit or rather than the dealership directly. These lenders work with those specifically with poor credit, no credit, and bankruptcies. They have higher approval odds and more flexible qualifying terms.


XS Credit claims over 80% approval odds even with bad credit by looking at more than just your credit score. They also base approval on income level, other debts, and down payment amount. Going through a lender that offers guaranteed approvals takes the guesswork out of qualifying.

Most subprime lenders have a minimum income requirement between $1,800 to $2,000 monthly to receive bad credit auto loan approval in Red Deer. This equals an annual income of $21,600 to $24,000. Higher incomes improve chances of approval and can qualify for larger loan amounts. Self-employed applicants need to provide detailed income documentation like tax returns. Retirees may use pensions or retirement accounts to qualify rather than employment income.

Yes, there are subprime lenders in Red Deer that specialize in approving car loans for applicants with an open bankruptcy or active consumer proposal. Most mainstream lenders will not approve those currently in an insolvency. But dealers like Mac James Motors claim to have over 20 lenders to work with for bankruptcy car loans. Canada Drives also claims high approval odds even with an undischarged bankruptcy.


Interest rates are quite high at over 20% with an open proposal or bankruptcy. It’s recommended to rebuild your credit first, but if you need a vehicle urgently then approval is possible in many cases. Provide as much income and down payment as possible.


When applying for a no credit car loan in Red Deer, you will need to provide documents that demonstrate your ability to afford the vehicle payments such as:


– Proof of income – recent pay stubs or bank statements showing regular deposits

– Documentation of any supplemental income sources

– Proof of current housing expense

– References from employer, landlords, or long-time acquaintances

– Collateral if available – clear title to another vehicle for example


Having some form of down payment, even a few hundred dollars, will also improve your chances of getting approved for a no credit auto loan. Auto lenders have little credit data to base decisions on, so income and stability take priority.



Most legitimate car dealers will still perform a credit check even on no-credit applicants. However, the following dealerships in Red Deer claim to offer no credit check financing options:


– Alberta Auto Credit

– Bonnybrook Auto

– Automaxx Red Deer

– Car Deal Canada


These dealers advertise approval for all credit situations including no credit. Instead of focusing just on your credit score, they base approval on your income, job status, references, and down payment amount. Avoid dealers advertising guaranteed approvals with no credit checks as these claims are likely too good to be true.

Most bad credit auto lenders in Red Deer, AB require a minimum down payment between 5% to 20% of the vehicle purchase price. Putting 20% down is ideal and gives the best approval odds and lowest interest rates. Here is what you can expect based on down payment amount:


– 20% down: More lenders to choose from, rates as low as 8%

– 10% down: Decent loan options still available, rates around 14%

– 5% down: Gets approved but less lender choice, rates over 20%

– $0 down: Very unlikely to get approved even with some credit


Saving enough for a 10-20% down payment before applying for a car loan gives you the strongest chance for bad credit approval in Red Deer.

Most bad credit auto lenders in Red Deer like to see at least 6 months at your current job, and 12 months of stable verifiable income source to improve approval odds. Between jobs they still want to see consistent income history without large gaps. Self employed applicants generally need 2+ years of steady 1099 income reporting.


Letting your lender know upfront about any recent job changes, and providing documentation of previous income sources allows them to fully evaluate your stability. Having long term employment or owning a business is looked upon favorably by underwriters for those with poor credit.

The best way to rebuild your credit after getting approved for a subprime auto loan in Red Deer is to make sure you pay every payment on time. Payment history makes up a large portion of your credit score. Even one missed payment can drop scores significantly. Using autopay or reminders helps avoid any late payments.


Also, paying more than the minimum due, and paying loans down faster than required repayment terms will help boost your credit scores as it shows positive payment behavior. Keep credit card balances low, and don’t apply for additional finance credit until after 12 months of positive payment history on your car loan.

Most financial experts recommend waiting at least 12 months after a subprime auto loan approval in Red Deer before trying to refinance into a better rate. This allows you time to establish a solid payment history and start rebuilding your credit score. After a year of on-time payments, your credit score can increase enough to qualify for refinancing at more favorable interest rates.


It’s also important during those first 12 months that you pay down your loan aggressively. Having 20-30% equity in the vehicle gives you better refinance chances as well. Pay off any other debts and keep credit card balances low as your overall credit profile will be re-examined when you apply to refinance the vehicle.

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