Financing a Used Car With Bad Credit

When you have bad credit, it can be difficult to finance a used car. Everyone needs reliable transportation, but having bad credit oftentimes translates to higher interest rates and car payments. Despite these common obstacles, there are ways to get financed, even if your credit isn’t in the best shape. If you have a low credit score and you are in the market for a used car, here are some things you can do to increase your chances of securing financing.

Make a Large Down Payment

Making a large down payment is a simple, yet effective way to boost your chances of getting approved for financing. It shows financial institutions that you are serious about purchasing a vehicle and that you are capable of saving and managing money. You also present less of a financial risk, since buyers who invest large sums of their own money are less likely to default on loans. Buyers who make a down payment may also gain access to better interest rates.

Rebuild Your Credit

This may seem like an obvious course of action if you have bad credit, but it is the most efficient way to ensure that you get approved for a loan. Paying off overdue bills and establishing a history of responsible credit use can go a long way when it comes to securing financing. Car buyers with lower scores will be subject to higher rates and less favorable payment terms.

Use a Cosigner

Using a cosigner can greatly improve your chances of getting financed. Enlisting the help of a spouse or close family member is the most common practice when it comes to cosigning. It should be noted however, that if you do not make your monthly payments on time, your cosigner will also be held responsible.

Don’t Despair

In the world of used cars, there are practical ways to secure financing with bad credit. We offer customers a variety of financing offers, and we are sure that we can work with you, regardless of your financial situation. Don’t give up just yet; there are many ways to finance a car with less than perfect credit.

What Preapproval Means for Car Loans

Car loans can be expensive over the life of your vehicle if you do not plan ahead. High interest rates and long terms will add to the cost of your car over the years. It may be tempting to go straight to the dealer and test drive some vehicles when shopping for a car. Before doing this, consider becoming preapproved for a loan. Shopping for a loan before shopping for a car will give you a better understanding of your buying power and the overall cost of your potential vehicle.

Preapproval is a preliminary loan application. A potential lender will review your credit, your income, and possibly several other factors. They will then tell you how much they are willing to lend you, what the interest rate on the loan will be, how long you will be expected to make payments on the loan, and if any down payment will be required.

As the borrower, you do not have to commit to accepting the loan at that time. Banks, credit unions, and dealers offer preapproval, so there are several financing options to choose from. Preapproval allows you to shop at all these locations before committing to a loan.

With a good credit score and a large down payment, you may be preapproved for a very large loan. While this may make it tempting to purchase a more expensive vehicle, be careful to not overextend yourself and exceed your monthly budget.

If you are not approved for a large enough loan, preapproval allows you enough time to prepare to compensate for the difference. Consider a larger down payment, a cosigner, or a longer term loan to make your car loan offers more agreeable.

Preapproval helps you know how much car you can purchase, how long it will take you to pay for that vehicle, and what the long-term costs of the loan will be. Car loans can be intimidating, but preapproval may make the borrowing process easier to understand.

Why Canada’s used-car world is becoming a buyer’s market

TORONTO — The balance of power in the used car market is shifting towards shoppers as improved data and online offerings create more opportunities to push for the best price.

A fast-evolving online marketplace is providing more intelligence on the fair value of cars, said Cliff Banks, a Detroit-based auto retail expert.

“I don’t know that it can be any more transparent…they all provide intelligence on the pricing and the deal of the vehicle, whether it’s a good deal, a fair deal.”

Kijiji Canada recently announced it will add a standalone auto sales site that will roll out later this year to keep up with shifting expectations. The site will add reviews of dealers as well as market pricing information from Carproof.

“The key feature for us, and one of the biggest, the biggest win for us is what’s called price transparency or price analysis,” said Matt McKenzie, general manager at Kijiji Canada.

The online classified company, owned by eBay, already boasts of being the largest player in the Canadian market with about 500,000 vehicle listings. Autotrader, owned by Etobicoke-based Trader Corp., lists about 444,000 vehicles on its site while there are many other offerings on the market as well.

Listing companies are boosting their online presence as the used vehicle market is set for significant growth, said Dennis DesRosiers, president of DesRosiers Automotive Consultants.

“There’s tremendous opportunity, and that brings in all the different retail players and their approach of, how do I get a piece of that?”

While new vehicle sales are expected to be largely flat at about two million this year, the used vehicle market is set to add half a million more in sales in the next three to five years, on top of the three million that changed hands last year, said DesRosiers.

The rise in the used vehicle market comes as improved quality in the past decade means cars and trucks are lasting much longer, allowing for a potential lifespan of four to six owners from the two or three expected not long ago.

“It takes 23 years to remove the vehicles from the road now, a decade ago it only took about 12, so it’s essentially doubled,” said DesRosiers.

Used vehicles also offer margins that are two to three times higher than for new cars, adding to their appeal, he said.

The quality and information improvements have significantly changed the overall used retail market, said DesRosiers.

“It’s not that far long ago, call it 15 years ago or maybe 10 years ago, where the used car market was largely a culture of deceit…even if the online capacity was there, there was just so much riffraff in the used car market that it was very dangerous. A lot of that has changed.”

The improved access to data means used-car retailers have to be more transparent and competitive about their pricing, said Jamie Tekela, director of pre-owned operations at Pfaff Automotive Partners.

“You need to really justify what you’re asking, why you’re asking it, and you can’t go asking $500 more for the same Honda Civic with the same mileage. It just it doesn’t work any more.”

“It’s night and day, to be perfectly honest. It’s gotten a lot more customer friendly,” he said.

The improved information on crash reports, comparable sales, and other metrics hasn’t done away with potential negotiations but does give more justification, said Jamie.

“There’s always going to be negotiations when trying to buy and sell vehicles, but with so much information available to each and every one of us, it’s a lot easier to explain our rhyme and reason why we’re asking what for a car.”

Best Time to Buy a Car in Canada

Changing your car is something you will inevitably do multiple times during your life. The fact that you live in Canada, the second biggest country in the world and that Canadian cities tend to spread more horizontally than growing vertically, makes the point of having a car literally a “must.” So, you will ask yourself a lot of times: When is the best time to buy a car?

Changing your car is something you will inevitably do multiple times during your life. The fact that you live in Canada, the second biggest country in the world and that Canadian cities tend to spread more horizontally than growing vertically, makes the point of having a car literally a “must.” So, you will ask yourself a lot of times: When is the best time to buy a car?

And here is my fast response: it depends on your needs and your rush. That is why in the following article I’ve split the analysis in three: If you want to know the ideal month for new cars, the perfect moment for used cars and the third and last one: if you are in a rush.

Best Time to Buy a Car: September to December for New Cars

If your primary concern is price and you are looking for a new car, the best time span of the year is between September and December. And more precisely, the best moment is November.

The fact that new models are being delivered and parking lots need space, makes manufacturers offer incentives for previous year’s models with the intention of attracting customers to drive these away. Sometimes, you can find a few thousand on MSRP savings with incentives that are really worth.

Additionally, during February and March, usually a low sales season, new car prices also go down a little bit but never compared with the levels reached during the last quarter of the year.

Nissan Canada sometimes offers the Rogue during October-November with 4,000CAD savings incentives.

Anytime for Used Cars

A new car is the same anywhere: you go to dealer X, Y, and Z and they all have the 0 Km same vehicle. Wherever dealer you go, you will get the same exact “clone.” But used cars are different. Buying a used car is more a matter of opportunity than timing. Any time in the year you can find different used car offers as these aren’t globally managed by a massive market flow.

Looking for a Used Car: Don’t Rush If Possible

While I’ve talked about it on other articles, you need to remember that even with the same exact kilometers, same precise date of maintenance and being in similar weather conditions, vehicles depreciate in different.  Cars are used differently: bumps, driving habits, breaking hard, breaking slow, high speeds, low speeds… there are multiple factors that affect the actual condition of a vehicle. And all this can result in the fact that both “brother” cars have different costs.

If you are looking for a used car, don’t rush. The ideal time span you should use for exploring alternatives is 3 – 4 weeks of 10 hours a week of search. The fact that you have found a desirable offer doesn’t directly means that you should go with it. We have all been there and that “opportunity feeling” influences a lot on making a decision.

Propose Yourself at Least 10 Options on a Spreadsheet

One thing that helps a lot not to rush and be happy with whatever decision you make at the end is to put as many options as possible on the table. Yes, an actual “data table” or spreadsheet. If you propose yourself to get up to, let’s say, ten choices, then you can be sure that you will make an excellent final decision.

Take your time, don’t rush, and do a table with all available options before saying “Deal!”.

Urgency? Yes, sometimes it is urgent…

If your current car is broken, you have the “urgent need” of having a car, or you just some eventuality is rushing you, then I suggest you analyze the following before jumping into any decision. 

  • If your urgency is because of work, consider evaluating the monthly costs of a lease for a new car.
  • If it is because you need more space because of a new family member, work reasons or just upgrading for space, consider SUVs available under 500CAD/month.
  • If you are considering used vehicles, take at least two weeks of intensive search. The more time you take and the more options you see, the better decision you’ll make.
  • If your car is broken and you urgently need one, consider renting another one for a few days while you decide. 

The best choice will always depend on how clear your judgment was at the moment of closing your next car deal. Good luck!

About the author

Jorge Diaz is a passionate car lover, winter driver & Software Engineer. For the last 10 years, he has built Online Solutions used by more than 5,000 companies across the globe. He founded LeaseCosts in 2016 with the purpose of simplifying and helping people to better understand the complex market of new vehicles in Québec and Canada. You can connect with Jorge in LinkedIn or send him a direct message.

Article reference: 
https://www.leasecosts.ca/en/articles/best-time-buy-car-canada

Buying a Used Car: How to Choose a Payment Option

When the time comes to buy a used car, there are many financial factors to consider. Perhaps your budget will narrow your used car choices, or you may not be aware of the payment options available. We are ready to show you some ways you can pay for your vehicle and to show you that the make and model you desire most may well be within your reach if you plan carefully.

Consider the Time Frame

As you consider payment options, one of the first factors you might want to think about is how long you will be paying for your car. Whether you secure a loan through the bank or choose in-house financing with us and depending on your credit, your loan could be as brief as two or three years or as long as five. It is important to understand the exact terms of the length of your loan before you sign off on a vehicle.

Give Yourself Time

Even if you find yourself needing a new vehicle for your commute to work or school, you should avoid jumping into a deal right away. Take the time to consider your options, as this may help you avoid hefty payments that might be hard to handle later on. For example, ask yourself whether your current car is a valid trade in or if you can secure a down payment that may help lower the cost of a vehicle.

Review Your Budget

One mistake many people make when they shop for used cars is to miscalculate how much they can afford to pay monthly. To avoid this error, you will need to factor more than just the car payment into your auto ownership budget. The cost of insurance, gas and other taxes and fees that will need to be paid when you purchase a vehicle should all be included in your budget to ensure you do not overextend it.

Buying a used car can be a challenge, especially if you are unsure of your payment options. However, being prepared and asking the right questions can help you get the car you want at an affordable payment.

Getting the Best Interest Rate on a Used Car

You’ve narrowed down your search for the perfect used car for your needs and budget and are ready to address your finance options. If you won’t be buying the car outright, you’ll need to finance it, which means paying interest. To avoid paying more than necessary for used cars, you’ll want to keep your interest rate as low as possible, which you can easily do with a few good tips.

Think About Financing Through the Dealer

While you might think financing your car through a dealer is automatically more expensive, the truth of the matter is that doing so could net you a pretty solid deal. This is because dealerships can offer incentives like zero-percent financing and other specialized low rates. Check to see what’s on the table before you think about financing elsewhere.

Consider a Certified Pre-Owned Car

It seems counter intuitive, but older cars usually come with higher interest rates when compared to newer models. Instead of thinking you’re better off with a new model, consider the fact that dealerships sometimes have zero-percent interest specials on their certified pre-owned cars. Be sure to ask about them as you’re walking up and down the aisles checking out cars.

Consider Your Term Length

If it’s at all possible, get a car loan with the shortest term length possible. The reason for this is that a shorter term length equals a shorter repayment length, which means a lower amount of interest paid over the life of your loan. Another great thing about getting a term length as short as possible is that you don’t have to worry as much about being upside down on your loan, which is what happens when you owe more on your car than it’s worth.

As you can see, there are several things you can do to keep the interest rate low on your used car. Be sure to put these tips to good use.

Why You Should Buy Used Cars for Your Teen Drivers

If you’re one of the parents who balks at the idea of buying used cars for your teen drivers, hold up just a minute. There are a lot of reasons that parents choose to buy cars for their teens. Here are a few reasons why we think you should revisit buying a car for your teen.

Teaches Safe Driving

While it’s entirely possible for you to be a perpetual passenger as your teen drives for all of his or her teen years, this isn’t really teaching them much about safety. The real lessons in proper vehicle handling and safe driving are going to come when you’re not in the car at all, when your son or daughter is driving home from a dance at school with a car full of other kids. The old adage is true that practice makes perfect, and the best way to practice is for them to have the car out driving in the real world.

Secures Reliability

The #1 reason to buy your teen a car is so that you can make sure that the vehicle is reliable. If you tell your teenager to get a summer job to pay for their own car, they’re going to end up in a part-time job making minimum wage, and they won’t be able to afford a reliable car at the end of that summer.

However, a better idea would be to buy them a reliable used car and teach them financial responsibility by having them take over a portion of the car payments or pay for their own gas and insurance. This gives you the peace of mind knowing they’re driving something safe while teaching them financial responsibility.

Once your teen has a car of their own and you realize the freedom it gives you and the financial responsibility it’s instilling in them, you’ll wonder why you ever held off on doing it in the first place. Your teens are going to be driving one way or the other and they might as well have their own reliable car to do it.

How to Buy a Used Car

If your current vehicle is on its last wheels, you have probably started thinking about purchasing a used car. If you’ve never bought from a used cars service before, it might seem a bit overwhelming, but these guidelines will help you stay on track.

Set Your Budget

The first step is to decide how much you want to spend. Consider both how much you can spend for a down payment and how much you can afford to pay per month. Don’t forget to consider registration fees and insurance premiums. Once you have a budget, don’t look at anything you can’t afford.

Research Some Cars

Now that you know your price range, it’s time to start looking for the perfect car. You can start by doing some research online. Consider whether you want a two-door or four-door model, whether the car has good fuel efficiency and how safe the particular model has been overall.

Head to the Dealership

Once you know what you’re looking for, you can visit a dealership. Our used cars service will help you look at the available vehicles, give you a history of the car and let you do a walk-around, and then allow you to take it for a test drive. Never purchase a car from someone who seems to skirt around the walk-around or test drive. This is usually an indicator of major problems with the vehicle.

Purchase Your New Car

After you’ve decided which used car you want to buy, it’s time to do the paperwork. Always read every part of the contract to avoid any surprises. If you have questions about a section, be sure to ask. Never make assumptions about the meaning of a clause.

Buying a vehicle from a used cars service is easy as long as you know what to watch out for. Once you’ve signed the papers, grab the keys and head out to show off your purchase!

Understanding the Types of Cars

We carry a lot of used cars on our lots, in many makes, models and years. We frequently get people shopping for cars that don’t fully understand the options available to them. So here is a quick refresher course on some of the main varieties of cars that you have to choose from.

 

Sedans

 

These have been historically among the most popular of cars and have often been synonymous with family car. They are usually four doors with a separate space for storage in the back, most commonly a trunk. They often get good to excellent gas mileage, and are sometimes equated with practicality. They commonly seat 4 to 5 people.

 

Coupes are a type of sedan that may only have two-doors and may have a sporty accessory such as a spoiler. The backseat also tends to be smaller in coupes, though the term is somewhat flexible and used interchangeably with sedan.

 

Hatchbacks

 

Similar to sedans, hatchbacks differ mainly in the rear compartment, which has a tailgate that lifts up for easier access than a trunk. It’s preferred by buyers who like to put groceries in the back or other supplies, and it sometimes has a slightly sportier appearance.

 

SUVs

 

SUVs are larger than sedans and hatchbacks, seating up to 5 to 7 people. They usually have higher ground clearance, giving the driver and passengers an elevated view of the road. Because they have heavier bodies they tend get reduced gas mileage.

 

Crossover

 

This style of vehicle has become quite popular in recent years. It combines qualities of an SUV and a sedan, and again the definition is somewhat flexible. In terms of construction, a crossover is more closely related to a sedan than an SUV.

 

In short, when looking for used cars, it’s best to focus on the type that appeals to you the most. Once this is established, then you can take several for test drives.