Making An Informed Purchase
When it comes to bad credit auto financing, the loan term is mainly influenced by the vehicle year, odometer reading and buyer’s credit history. For newer vehicles (2015-2017) the loan term may be extended to 7 years (84 months). Even though your car loan bi-weekly payment is lower on a longer term, you end up paying much more interest in the long run.
Another downfall of long-term auto financing is the fact that the vehicle may not last as long as the loan term. This results in you paying for a car loan and interest for a vehicle that you may no longer be able to drive.
Although it’s best to avoid long-term car loans, look for an auto finance company that offers you the ability to rebuild your credit while driving your car. It is recommended to use the auto loan as a tool to rebuild bad credit, as long as no payments are missed. Typically, most customers choose a longer loan term to keep their payments low, and then ideally be eligible to refinance at a lower rate within 12 to 18 months later.
Some companies will offer you a short term auto loan and make you believe that it’s the only way to get refinanced or trade the vehicle in. This is not true due to the fact that all major Canadian lenders offer open-ended car loans, meaning you can pay it off or trade it in at any time, as long as your account is up to date, with absolutely no penalty or fees.
Another trick these auto loan companies use, is to suggest that short-term leasing is a better option to take than traditional financing. But after reading the fine print, you may find at the end of the leasing term that you’re stuck with a balloon payment that may far exceed your budget. If you cannot afford the end payment, these companies will repossess your vehicle and report it to the credit bureau, which will prevent you from getting a car loan in the future.
Additionally, when you lease a vehicle, remember that it is not YOUR vehicle. The leasing company will possess a second key to your car just in case a payment is missed and they need to come and get it.
How Are We Different?
- We follow every lender’s guidelines and ensure the vehicle you’re getting is reliable. We have partnered up with various warranty and insurance companies to make sure that both your car loan and vehicle is protected (various warranty and insurance terms are available).
- We offer the industry’s leading credit rebuild program. Most of our clients qualify for refinancing in as little as 12 to 18 months, depending on eligibility and improved credit score.
- Even though the car loan may last up to 84 months, all of our auto loans are open-ended, meaning you can trade in or refinance the vehicle sooner than the loan term length. We recommend extending the term to make bi-weekly payments manageable and applying for refinancing after 12 to 18 months of on-time payments and improved credit.
- We don’t offer any leasing for bad credit auto loans, because we believe that every customer deserves the opportunity to drive their OWN vehicle while rebuilding their credit.