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Minimum Requirements for a Car Loan With Bad or No Credit

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Minimum Requirements for a Car Loan With Bad or No Credit

When it comes time to take the leap and purchase that new car, you probably have mixed emotions. You may be flying high with the excitement of a new ride while, at the same time, be filled with some worry. People who are buying their very first car may wonder -- am I eligible for auto loans in Canada? Or for those who have less than stellar credit, they may be concerned as well about their ability to secure car loans in Edmonton. However, with the proper understanding of what lenders are looking for, you can prepare to purchase your new car. Let's take a look at what you'll need to obtain a new ride with bad or no credit.

First Step

Probably, the first thing you need to do before jumping into purchasing a vehicle is to check your credit. This will give you the advantage in a couple of ways. For one thing, by reviewing your credit before the lender does, you will be able to identify any errors and work to correct them. Secondly, you'll have an idea what negative factors may influence your score. Consequently, you might be able to improve your score.

Auto Financing Minimum Requirements

Of course, every financial institution varies in what their requirements are for securing a car loan. However, even with poor or non-existent credit, you should be able to obtain a car loan with the right lender. When looking to secure car loans in Edmonton, several factors go into the lender's decision. First, they will need to review your debt-to-income ratio. This includes adding up all your income sources, adding up all your expenses, and determining what percentage (or ratio) of that is debt. Most lenders like to see no more than 36 percent of your total income going towards debt.

 

Next, the lender will examine your credit report. Not only will they look at the score but your credit utilization ratio. This ratio is determined by how much of your total credit you are using. The lower the ratio, the better it is for your loan application.

 

Auto Loan Requirements with Bad Credit or No Credit

 

A person's credit score may range anywhere from 300 to 900. A 300 credit score is considered terrible and most people have well above that. Similarly, a 900 score is extremely high. Most people will fall somewhere in the middle. For a car loan, if you have a score above 680, you shouldn't have a problem obtaining a car loan. Even if your score is lower than that, you can still get a car loan in Edmonton.

 

When the loan specialist reviews your loan application, he or she will look at other factors aside from your credit score. They will ask about your employment history, your assets, and the factors that contributed to a poor score.

 

At Freedom Credit, we specialize in helping people get a car even if they are dealing with a challenging credit score problem. Furthermore, we also help new car buyers take that important step in getting the best loan options for a car. Freedom Credit is standing by to help with your questions, so get in touch today.

 

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