Which Car Loan Lender Should I Go With?
If you’re buying a car for the first time, you’ve probably saved up a lot of money to make that purchase. But even if you’ve saved quite a bit, if you don’t have the exact amount of money to pay for your vehicle upfront, applying for a car loan in Ottawa might be the best alternative solution for you. In addition to helping you finance your vehicle, going with a car loan gives you the flexibility of paying off your vehicle in monthly installments, making it much easier on your budget.
If this is the first time you’re buying a car — you probably have a lot of questions regarding the car loan process including how it works, the types of loans available out there as well as they types of lenders you could go with. While it all may seem a little intimidating at first, once you’ve completed your first ride at the rodeo, you’ll realize that the process of obtaining a car loan isn’t that hard. To give you a quick crash course, here’s everything you need to know:
The Benefit Of Getting a Car Loan
Depending on the car model and year it was manufactured, cars can cost you anywhere between $15,000-30,000. In most cases, you may not have that kind of money lying around to pay for your vehicle upfront. Even if you do, you may not feel comfortable letting go of all that money at one go. No matter which position you find yourself in, getting a car loan in Ottawa can help you in both situations.
Once you’ve decided on the lender you want to go with, you need to submit an application form. Before you apply, make sure you meet their requirements which typically include proof of income, credit history and more. Once you get approved, you can start to negotiate a monthly payment plan that works for you. Since lenders will be lending you money to pay for the vehicle, there will be interest added on top of your regularly monthly payments, but rest assured payments will still be more manageable this way than not getting a loan at all. Once you agree on a payment plan and sign your contract with the lender, all you have to do is make your monthly payments until you fulfill the contract’s full term. By then, the car will be yours!
Besides making the car buying process a lot more manageable, getting a car loan is a great way to help improve your credit score. Whether you’re trying to repair it or fulfill your goals of reaching the “excellent” level, getting a car loan helps diversify your credit history — which plays a major part to credit bureaus when determining credit scores.
Secured VS. Unsecured Loans
When you’re getting a car loan in Ottawa, you’ll want to know the difference between secured and unsecured loans and figure out which one is best for you.
When you sign a secured loan, that means that you’re offering up your car up as collateral as part of your contract. This helps give the lender piece of mind, ensuring that no matter what happens — they’ll be able to get their money back. In the case that the borrower fails to repay back their loan or starts becoming delinquent on their payments, the lender will have the right to send a repo team to your home and repossess the vehicle. After that happens, they’ll put the vehicle up for auction to try and recoup the money they. Secured loans help keep the borrower accountable for their payments, but as long as you make them you really have nothing to worry about. Many borrowers actually prefer to go with secured loans as the interest rates are more reasonable.
If you don’t want to risk getting your car repossessed under any circumstances, the other viable option is going with an unsecured loan. There is no collateral attached to it, which ends up becoming a high risk contract for the lender. Because of that, interest rates are much higher than secured loans and the application requirements for approval are much stricter. Those looking to get an unsecured loan typically have to have a higher credit score, good income and solid credit history to prove that they can be trusted to pay back the loan on time. In cases where the borrower becomes delinquent on their payments, while lenders can’t take away your car, they will send a collections agency to try and get their money back.
No matter what sort of loan you go with, it’s imperative that you negotiate a payment plan that works for you. You don’t want to want to agree to a plan that you won’t be able to keep up with. Any negative hits to your credit history can gravely impact your credit score, which can have other negative repercussions down the road.
Which Car Loan Lender Should You Go With?
There are a lot of great lenders out there, but it’s certainly not “one size fits all”. The lender you decide to go with will depend on a number of factors. It’s important to remember your eligibility also depends on your financial standings and whether or not you’re qualified to get approval from your desired lender. But luckily, no matter what financial situation you’re in, there’s a lender out there that can help you score a car loan and fulfill your goals of being a car owner.
If You Have A Good Credit Score
If you have a good credit score, you have a buffet of options to choose from. Lenders across the board will be happy to strike a deal with you because you’ve proven that you’re able to manage your finances (as reflected by your credit score). Borrowers with a score of 720 and above will be offered special premium rates, including lower interest rates and flexible payment plans. If you’re within this credit score range, take this to your advantage! It gives you more negotiating power to get the plan you want and if you’ve done your research, you can strike a solid deal with your preferred lender.
If you have a good credit score, you’re in the best place to qualify for a loan from a bank or credit union. When it comes to application requirements, they tend to be the most strict — requiring a good credit history and a minimum income. Traditionally borrowers like to go to them for loans because they’re familiar financial institutions, and it’s very likely you have an account with them already for other banking purposes. If that’s the case, it makes the loan application process much easier as they already have a file on you.
If You’re Looking For Convenience
If you want to get two things done at once, you may be inclined to get a dealership loan. You’re going to be there any, right? So why not kill two birds with one stone and get your loan there while you’re at it. Just remember that before you go, you still want to size up the competition so you’re not caught off guard or signing a deal that could have been a lot better for you.
Dealerships usually work with their automaker’s financing group so they’ll typically offer loan options from there. Keep a watchful eye though, some dealers will mark up quotes so they can get a bonus off their sale. To avoid extreme mark-ups, make sure you go into it having done your research beforehand.
If You Have Bad Credit
Nobody’s perfect, especially when it comes to managing personal finances. We all go through financial hiccups — some bigger than others — but that shouldn’t prevent you from owning a car. While you may be turned down by many mainstream lenders, there are others out there that will work in your favour.
Online lenders are a great option as they typically list all their offerings online so you can compare their rates. It’s important to do your research on them and make sure they’re reputable as there are scammers out there offering loans as a way to steal your personal information.
Whether you have bad credit, no credit or a history of bankruptcy, Ottawa Bad Credit Car Loans will work with you no matter what sort of financial situation you’re in. There’s zero judgement and just full compassion as their team works hard to find a loan that works within your means. They work alongside financial institutions to help you score a deal, so you can drive away in the car of your dreams. Contact them today to see how they can help you.
How To Increase Your Chances Of Approval
Now that you know where to go, you need to get your application approved! Here’s how to bump up your chances and make yourself look like the ideal borrower:
Make Sure You Meet Requirements
Don’t just apply to the first lender you see or the one that’s considered the best in the market by some of your friends and colleagues. Remember, what your friends and family have been able to qualify for, may not be the same for you. Before applying anywhere, make sure you meet the application requirements asked of you. Keep a look out for requirements that look into credit scores, income minimums, and employment. If you check off all their boxes, the higher the chances you of you getting approved. But if you don’t meet the requirements of your top choice, don’t sweat it. There’s a lender out there that’s right for you.
Triple-Check Your Application
You don’t want silly mistakes to impede your chances of approval, but believe it or not, it’s a common reason why people’s application gets rejected. Before you submit your form, be sure that you’ve presented all the information that’s been asked you and that all those documents are up-to-date.
Get A Co-Sign On Your Loan
If you’re worried your application isn’t strong enough on it’s own or your poor credit score is holding you back from getting a car loan, consider getting someone to co-sign your application with you. If the primary borrower (that’s you!) is unable to make monthly car loan payments, that responsibility will then fall onto cosigner. This will give the lender piece of mind, especially if you’re not an ideal borrower. Be sure to get a close friend or family member with a better financial history than you to co-sign and your application will be more likely to go through.
Improve Your Credit Score
If you’re not in a rush to buy a car right now, consider putting your car owning plans on hold and work on becoming a more desirable applicant. Improving your credit score is a good place to start as the better it is, the greater the chance you have of getting the car loan deal that works in your favour.