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Bad Credit Car Loans in Saskatoon

Bad Credit Car Loans in Saskatoon

Buying a car is hard enough without having to worry about bad credit holding you back. If you have a low credit score or a limited credit history, you may feel like finding an auto loan that works for you in Saskatoon is impossible.


However, the truth is that many lending options exist for borrowers with less-than-perfect credit. While you may pay higher interest rates than those with good credit, many reputable lenders are willing to provide loans to borrowers with poor, bad, or no credit at all.


The key is knowing where to look to find a bad credit auto loan in Saskatoon and how you can improve your chances of approval. With some persistence and the right strategy, you can still end up with reasonable loan terms and get the transportation you need.

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What Is Considered Bad Credit?

In Canada, your credit score generally ranges between 300 and 900. The higher your score, the better your credit standing. A score of 720 or above is considered excellent credit, while a score below 500 is seen as poor credit.

Here’s a quick overview of the credit score ranges:

 

  • 800-900 – Exceptional
  • 740-799 – Very Good
  • 670-739 – Good
  • 580-669 – Fair
  • 300-579 – Poor

 

Most lenders consider a credit score below 600 as bad credit. This means you will likely face higher interest rates or even loan denial. A score between 600-669 is generally seen as subprime. While you can still qualify for a car loan with subprime credit, you’ll pay much higher interest compared to those with good credit scores.

 

Why Lenders View Bad Credit as Risky

Lenders consider borrowers with low credit scores to be riskier for a few key reasons:

 

Payment history – Your credit report shows your track record of making payments on time. Late payments, collections, and other negative marks indicate you may be more likely to miss or default on a new loan.

 

Outstanding debt – High amounts of outstanding debt like credit cards, loans, and financing compared to your income reduces your ability to take on more debt. It’s harder to make payments on a new car loan if you’re already stretched thin.

 

Credit utilization – Maxing out credit cards and having high balances close to your limits suggests you may rely heavily on credit. Lenders worry you won’t be able to handle additional debt.

 

Limited credit history – A short credit history provides less information for lenders to understand your credit habits. They may view you as riskier until you build a longer positive history.

Without a strong credit history to demonstrate responsible borrowing and repayment, lenders view bad credit applicants as riskier bets for new loans.

 

Document Requirements

When applying for a bad credit auto loan, there are several documents you’ll need to provide the lender to verify your identity and assess your financial situation:

 

  • Driver’s License – This verifies your identity and that you are licensed to drive in Saskatchewan.
  • Proof of Income – Recent pay stubs or bank statements showing regular deposits will be required to confirm your income.
  • Proof of Residence – Utility bills or bank statements with your address demonstrate you live in Saskatchewan.
  • Car Insurance Quote – Required to show you can get insured for the vehicle you want to purchase.
  • References – Some lenders may request personal or professional references.
  • Down Payment – Proof you have funds saved for a down payment if required.

 

Having these documents ready will help speed up the application and approval process. Be sure all information provided is accurate.

 

Improving Your Credit Score

One of the best things you can do before applying for a car loan is work on improving your credit score. The higher your score, the better your chances of getting approved and securing a lower interest rate. Here are some tips for boosting your credit score:

 

  • Pay all your bills on time – Payment history makes up a significant portion of your credit score. Set up reminders if needed so you don’t miss payments.
  • Pay down balances – Try to keep credit card balances low. High utilization rates can negatively impact your score.
  • Limit new credit applications – Each application can cause a small, temporary drop in your score. Apply only for what you need.
  • Correct any errors on your credit report – Mistakes can drag down your score so review all reports annually and dispute any inaccuracies.
  • Consider being added as an authorized user – If someone with good credit adds you as a user, it can help build your score.
  • Avoid closing old accounts – Having longer open accounts demonstrates stability which is good for your score.

 

It can take time to see significant improvements to your credit score. But being proactive and using responsible credit habits will help increase your chances of getting approved for an auto loan in Saskatoon.

 

Getting a Co-Signer

One way to potentially improve your chances of getting approved for an auto loan with bad credit is to add a creditworthy co-signer to your application. A co-signer agrees to be equally responsible for repaying the loan if you can’t or don’t pay. Co-signers can be extremely helpful if you have little or no credit history, are rebuilding your credit after events like bankruptcy, or simply have a low score.

Having a co-signer can provide multiple benefits when trying to secure an auto loan with bad credit:

 

  • Increase the chances of approval since the co-signer’s good credit helps offset your bad credit or lack of credit history
  • May allow you to qualify for a lower interest rate than you could get on your own
  • Give you access to more financing options that may not be available with only your credit

 

However, co-signing an auto loan can also pose risks:

 

  • The co-signer is equally responsible – if you default, the co-signer’s credit will suffer too
  • It could prevent the co-signer from getting other loans until yours is paid off
  • If you pay late, it damages both of your credit scores
  • Adds a complicated relationship dynamic of debt obligation

 

Overall, having a trusted person with good credit co-sign your auto loan can greatly help your chances of approval. But make sure the co-signer understands the responsibility and risks before agreeing.

 

Down Payment Options

When getting a bad credit auto loan, the down payment is one area where you may have some flexibility in negotiating with the lender. The typical down payment required is usually 10-20% of the vehicle’s purchase price. However, some special financing programs may only ask for little as $0-500 down for buyers with credit challenges.

Putting down a larger down payment shows the lender you are committed to the loan and have “skin in the game. It also lowers the amount being financed, which reduces the lender’s risk. Some options for coming up with a down payment include:

 

  • Savings – Using money you have saved specifically for a down payment.
  • Borrowing from family/friends – They may be willing to gift or lend you money for a down payment that you then pay back over time.
  • Selling assets – Consider selling valuables, collectibles, or other items you no longer need to come up with cash.
  • Trade-in – The value of an existing owned vehicle can directly reduce the purchase price and act as your down payment.

 

While most lenders require some down payment, in special cases they may approve $0 down. This occurs when the applicant has past good payment history with the lender, a reliable co-signer, or strong recent credit improvement.

 

Interest Rates

When you have bad credit, you can expect to pay higher interest rates on an auto loan compared to someone with excellent credit. Lenders view bad credit applicants as riskier, so they charge more in interest to compensate.

For bad credit borrowers, interest rates typically range between 9-25%. The exact rate you receive depends on factors like:

 

  • Your credit score – The lower your score, the higher your rate will be.
  • Down payment amount – The more you put down, the lower your rate.
  • The lender – Some lenders specialize in bad credit loans and offer more competitive rates.
  • New vs used car – New cars tend to have lower rates than used.
  • Loan term – Shorter terms often have lower rates.

 

While bad credit rates are almost always higher than rates for good credit, improving your credit score before applying for a loan can help you qualify for the lowest rates possible.

Be sure to compare rates from multiple lenders, as this can vary significantly. Online lenders sometimes offer more competitive bad credit loan rates than traditional banks. Working with a lender who specializes in bad credit loans can help ensure you get the lowest rate for your situation.

 

Payment Terms

One important aspect of getting a bad credit car loan is the payment terms. The repayment term or length of the loan usually ranges from 24 to 84 months for bad credit borrowers.

A longer term, like 72-84 months, means lower monthly payments since the loan amount is spread out over more months. However, it also means you pay more interest over the life of the loan. Shorter terms have higher monthly payments but you pay off the loan faster and less interest.

Many lenders limit the maximum term allowed for bad credit car loans. For example, some may only approve terms up to 60 or 72 months for bad credit borrowers. They want to limit their risk by ensuring the loan is paid off quicker.

You’ll need to discuss options with your lender and find the right balance between an affordable monthly payment and total interest paid. Avoid excessive loan lengths like 84-96 months which indicate you can’t truly afford the vehicle.

 

Finding the Right Lender

Finding a lender willing to finance a car loan for bad credit borrowers can be challenging, but not impossible. Here are some tips to find a lender that will work with you despite poor credit:

 

  • Check your credit report and score – Having an accurate understanding of your credit status will help set realistic expectations when applying.
  • Consider getting a cosigner – Adding a cosigner with good credit will make getting approved easier.
  • Apply to your bank or credit union – Establishing relationships with financial institutions improves your chances versus applying cold.
  • Research lenders known for bad credit financing – Many online providers and subprime lenders specialize in higher risk borrowers.
  • Increase your down payment amount – Larger down payments reduce the risk for lenders.
  • Only apply to lenders that do soft credit checks – Too many hard inquiries will further damage your credit score.
  • Prepare documents explaining your situation – Documents supporting extenuating circumstances for your credit challenges may help.
  • Consider financing from the dealership – Dealerships sometimes have more flexibility than banks.

 

Taking the time to find a lender willing to work with you will go a long way to getting approved. Be prepared for higher interest rates and stricter terms due to the increased risk.

 

Online Car Loan Providers

With the rise of online lending, getting approved for a car loan with bad credit has become easier than ever. Online lenders are able to use advanced technology and algorithms to analyze risk in ways that traditional lenders can’t. This allows them to extend credit to borrowers who may not qualify with banks and credit unions.

Here are some of the top online lenders to consider for bad credit auto loans:

 

CarLoan.com

Car.Loan.com is an online marketplace connecting borrowers with lenders. They work with a network of lenders, including banks, credit unions, and other financial institutions. This gives them a wide range of loan options for people with credit scores as low as 500.

 

Auto Credit Express

Auto Credit Express specializes in helping people with poor credit get approved for car loans. They connect applicants to a nationwide network of special finance dealers and lenders. To get started, you fill out one online form and they will match you with lenders ready to approve your loan.

 

MyAutoloan.com

MyAutoloan.com uses advanced algorithms to match borrowers with lenders based on individual circumstances. They work with lenders across the country to find financing options for people with credit difficulties. MyAutoloan.com also provides online tools for assessing loan offers.

The convenience of getting approved online for a car loan can save a lot of time and hassle. With a network of lenders ready to work with bad credit, these services make it easier to find financing that fits your budget and credit profile.

 

Dealerships That Work with Bad Credit

Here are some of the dealerships in and around Saskatoon that are known for working with bad credit customers and helping them finance a used vehicle:

 

  • North Point Auto Sales – Located on 51th Street East, North Point Auto Sales specifically advertises that they work with all credit situations including bad credit. They have flexible financing options to get approvals for those with challenged credit.
  • Budget Auto Center – With a dealership on Faithfull Avenue, Budget Auto Centre claims to specialize in securing no credit car loans and first-time buyer approvals. They work to get customers the best rate possible given their credit history.
  • Orange Motors – This Saskatoon dealership located on Idylwyld Drive says they can pre-approve customers for auto loans in just a few minutes, even those with bad credit histories. They focus on flexible used car financing.
  • Mainway Mazda – Situated on Circle Drive East, Mainway Mazda has an on-site financing centre to assist people with poor credit. Their advisors can help customers with bad credit get approved.
  • Sherwood Chevrolet – Sherwood Chevrolet’s dealership on Millar Avenue offers a “Smart Start” bad credit program to help customers purchase a used Chevy even with credit challenges. Low rates and flexible terms are available.

 

Checking reputable dealerships with financing experts and programs for bad credit borrowers can help increase your chances of getting approved for a used car loan despite credit challenges.

 

Buying Used vs New

When you have bad credit, deciding whether to buy a new or used vehicle with your auto loan is an important consideration. There are pros and cons to each option.

 

Pros of Buying Used

Buying a used car with bad credit has a few advantages:

 

  • Lower price – Used cars are cheaper than new, meaning your loan amount will be lower.
  • Faster depreciation – Used car values tend to depreciate more slowly than new, so it may hold its value better over the loan term.
  • Wider selection – Looking outside only current model years opens up more choices.
  • Lower insurance – Insurance is cheaper for used cars.

 

Cons of Buying Used

There are also some potential downsides of buying used with bad credit:

 

  • Shorter warranty – Used cars tend to have much shorter or no warranties.
  • More maintenance – The older a car is, the more likely it is to need service and repairs.
  • Higher interest rates – Since used cars are seen as riskier, interest rates may be higher.
  • Fewer tech features – Newer models tend to have more updated tech and safety features.

 

Pros of Buying New

There are also some pros to buying new with bad credit:

 

  • Full warranty – New cars come with longer manufacturer warranties, typically 3 years or more.
  • No repair worries – Brand new cars shouldn’t need any maintenance for a while.
  • Latest features – New models have the most up-to-date tech and safety equipment.
  • Lower insurance – Brand new cars can have slightly cheaper insurance rates.

 

Cons of Buying New

Some potential cons of buying new with bad credit include:

 

  • Higher price – New cars are more expensive, meaning you’ll need a larger loan.
  • Faster depreciation – Brand new cars lose a lot of value quickly as soon as they leave the lot.
  • Limited selection – You can only choose from current model year vehicles.
  • Higher sales tax – Sales tax is based on the purchase price, so it will be higher for a new car.

 

Weighing the pros and cons of buying new versus used will help determine the best option for your budget and needs when financing a car with bad credit.

 

Avoiding Scams

When shopping for bad credit auto loans, it’s important to be on the lookout for scams. Here are some tips to avoid getting scammed:

 

Do your research – Take time to research lenders before applying for a loan. Look for reviews and complaints to get a sense of their reputation. Avoid lenders with many negative reviews or complaints about deceptive practices.

 

Beware of “guaranteed approval” – No reputable lender will guarantee loan approval without checking your credit and ability to repay. If it sounds too good to be true, it probably is.

 

Don’t pay upfront fees – Legitimate lenders won’t ask for large upfront fees before approving your loan. Walk away if a lender wants you to pay hefty application or processing fees upfront.

 

Read the fine print – Dishonest lenders may hide high rates, fees or shady terms in the fine print. Read contracts carefully before signing anything.

 

Guard personal information – Provide the minimum amount of personal information upfront. Beware of lenders asking for sensitive info like bank account details right away.

 

Consider dealer financing – While not always the cheapest option, dealer financing may be less risky than loans from obscure online lenders.

By being an informed consumer and doing your homework, you can avoid falling victim to predatory lenders and loan scams when shopping for bad credit auto financing.

 

Conclusion

Getting approved for an auto loan with bad credit might seem daunting, but it is possible with the right preparation and persistence. This guide covered the key steps to take:

 

– Check your credit report and focus on improving your score – even small increases can help.

– Calculate the down payment amount you can afford. Larger down payments offset the risk for lenders.

– Find a trusted dealership or lender that specializes in bad credit. Look for flexible terms and competitive interest rates.

– Have all necessary documents ready before starting the application process. This shows responsibility.

– Consider getting a creditworthy cosigner to improve your chances of approval.

– Comparison shop to avoid getting locked into a bad deal. Look beyond the monthly payment at the total cost.

 

With strategic planning and serious effort, those with poor credit can still get the vehicle they need. Test driving your new car makes all the hard work worthwhile.

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Saskatoon Bad Credit Car Loan Questions

Most lenders in Saskatoon require a minimum credit score between 500-650 for approval on a used car loan. The higher your credit score, the better interest rate you can qualify for. With a score below 500, you may need a cosigner or to apply at a “buy here pay here” dealer that offers in-house financing. Always check with lenders as minimum score requirements can vary.

If you have bad credit, there are still financing options in Saskatoon:

 

– Specialty subprime lenders that work with bad credit applicants

– Buy here pay here dealers that offer their own in-house financing

– Down payment assistance programs to offset credit risk

– Secured car loans using collateral like a GIC

– Cosigner loans leveraging a cosigner’s good credit

– Rebuilding your credit and reapplying after 6-12 months

 

Shopping around and comparing rates from multiple subprime lenders can help find the best bad credit car loan option. Always read the fine print and understand the terms before signing.

With bad credit, the lowest interest rate you may qualify for on a used car loan in Saskatoon is around 10-15%. The exact rate offered will depend on factors like:

 

– Your specific credit score and history details

– Income level

– Debt-to-income ratio

– Down payment amount

– Collateral offered

 

Those with the worst credit may pay interest rates over 20% from some subprime lenders. Having a cosigner or putting down a larger down payment can help improve the rate offered. Compare options from multiple lenders to find the best rate with your credit situation.

When applying for a bad credit auto loan in Saskatoon, most lenders will require documents like:

 

– Valid government-issued ID

– Proof of income – recent pay stubs, T4, tax returns

– Proof of address – utility bill, bank statement

– Proof of auto insurance

– References – family, employers, landlords

– Down payment funds – bank statements, loan documents

– Listing of assets & liabilities

 

Having these documents ready can make for a quicker application and approval process. Always confirm exact requirements with the lender upfront when applying for a car loan with bad credit.

 

 

To boost your chances of getting approved, you can:

 

– Put down a larger down payment, typically 20% or more

– Have a cosigner with good credit co-apply on the loan

– Pay down other debt balances and avoid new credit inquiries

– Build up your credit history by adding positive entries

– Be prepared to verify income and show financial responsibility

– Consider applying at smaller buy here pay here dealers

– Purchase an older, lower-cost used vehicle

 

Improving your credit situation before applying and showing responsibility can go a long way in overcoming bad credit when applying for an auto loan.

**Pros:**

 

– Higher approval odds for bad credit

– Lower or no down payment requirements

– Offer older, lower-cost vehicles

– Can provide in-house financing when banks say no

 

**Cons:**

 

– Higher interest rates, often over 20%

– Tend to sell older, high mileage cars

– Stricter about late payments

– Mandatory GPS tracking in vehicles

– Quicker to repossess vehicle upon missed payment

 

Buy here pay here dealers provide an important bad credit financing option, but read all terms carefully and ensure the payment fits your budget prior to signing.

Secured loans requiring collateral like a GIC can provide an alternative solution for financing a vehicle when you have bad credit. The pros are improved chances of approval and often lower interest rates than other subprime loans. However, if you default, you risk losing the collateral securing the loan. Make sure you fully understand the repo process and that payments fit your budget prior to taking out a secured auto loan.

The repossession process for defaulted subprime car loans typically involves:

 

  1. Missed payment notice and attempts to collect
  2. Repossession warning if non-payment continues
  3. Physical repossession of the vehicle by the lender
  4. Sale of the repossessed vehicle through wholesale auto auction
  5. Billing of the borrower for any loan deficiency balance

 

This can severely damage your credit. Voluntary vehicle surrender or working with the lender early upon missed payment is best to avoid repossession. Always read and understand repossession policy details before signing your loan.

If your vehicle gets repossessed by an auto lender in Saskatoon, you may have options like:

 

– Reinstatement – Paying the loan balance in full to redeem vehicle

– Redemption – Paying repossession fees to get vehicle back

– Deficiency judgement – Arrange lower lump-sum settlement of balance

– Voluntary repossession – Proactively surrender vehicle to lender

– Bankruptcy – Discharge deficiency balance (damages credit further)

– Buy used vehicle again using special financing

 

Avoiding repossession altogether by working with lender early upon the initial missed payment is always best. Consider all options carefully and understand impacts to credit if repossessed.

If you receive social assistance like Saskatchewan Income Support (SIS) or have a fixed disability income source, there are specialized car loan programs available that you may qualify for, including:

 

– Affordable transportation programs via social services agencies

– Non-profit lender vehicle loans e.g. Goodwill Auto Finance

– Manufacturers subsidized incentive programs e.g. Nissan Mobility Assist

– Disability grants and funding agencies

 

These programs cater to low income applicants and often have modified approval requirements. Confirm program eligibility rules before applying.

If you have no established credit history, some options to help get approved for a car loan include:

 

– Apply with a qualified cosigner who has good credit

– Take out a secured installment loan to start building credit

– Provide significant verifiable income and down payment funds

– Enroll in alternative data programs that consider utility payments

– Apply at buy here pay here dealers that rely less on credit scores

 

Building some credit history prior to applying, even if limited, can significantly help improve approval odds for those with no credit.

Top tips for negotiating an auto loan with bad credit:

 

– Get loan quotes from multiple competing lenders

– Consider credit unions which may offer more flexibility

– Ask lenders to pull just one combined credit check

– Get terms in writing before dealer visit

– Seek loan pre-approval in advance

– Read all loan terms carefully before signing

– Be upfront about credit situation with lender

– Make larger down payment if possible

– Ask about wiggle room on interest rate

– Inquire about early upgrade or refinance policy

 

The more informed you are, the better position you’ll be in to negotiate the best possible used car loan terms despite having bad credit.

Industry data estimates approximately 8-10% of subprime auto loans in Canada result in the vehicle being repossessed from the borrower due to non-payment. Rates peaked at over 15% during 2020 pandemic-related shutdowns. By comparison, prime borrowers see only a 1-2% repossession rate. Understanding exact lender policy details is key before committing to any subprime car loan.

For those with bad credit auto loans looking to trade-in their vehicle, any outstanding loan balance must still be paid off in order to trade into the new vehicle. Any negative equity would typically carry over to the new loan, resulting in higher payments. Work on paying down your loan aggressively before considering an early trade-in.

Industry experts typically recommend waiting at least 1-2 years after a vehicle repossession before applying for another auto loan. This allows some time for the negative impact to your credit to dissipate. Further, make an effort to rebuild credit, increase income, and save a larger down payment before reapplying. This can help improve the new loan terms offered.

 

Important steps to rebuild credit after a car repossession include:

 

– Getting any deficiency balance resolved

– Paying all other accounts on time

– Keeping credit card balances low

– Avoiding applying for more new credit right away

– Checking reports for errors and disputing inaccuracies

– Becoming an authorized user on a family member’s credit card account

– Taking out a new secured credit card or secured loan

 

With time and diligently rebuilding credit, you can recover from a repossession on your record.

 

Trusted online resources to learn more about Saskatoon auto financing requirements:

 

– Canada Drives Saskatoon Car Loan Review Page

– Saskatoon Car Dealers Association Advice Blog

– Saskatchewan Automobile Dealers Association Guides

– Saskatoon Credit Counselling Society Articles

– Saskatoon Public Library Personal Finance Section

– Service Canada Auto Financing Learning Resources

– Saskatoon Open Door Society New Immigrant Financial Guides

 

Reviewing guidance from non-profit financial literacy organizations can provide helpful advice on qualifying for and maintaining an auto loan in Saskatoon.

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