Numerous myths exist today regarding getting an auto loan with poor credit. In many cases that is all they are; myths. To help you know the facts, and ensure you make the right decision for your life and financial health, it is good to understand some of the common myths that you may encounter. Here are some of the common myths about an auto loan with bad credit.
Getting an Auto Loan with Poor Credit Can Hurt Your Credit
Getting an auto loan with poor credit can indeed increase your debt-to-income. However, getting preapproval for your vehicle loan and making your car payments on time every month can gradually improve your credit score. Also, it makes your credit history more appealing. Although getting an auto loan is not a quick solution to your poor credit, it can be an effective, long-term credit repair method.
You Cannot Get a Car Loan If You Have a New Job
The fact that you have begun a new job should not prevent you from getting a bad credit auto loan. Lenders evaluate your employment history. They understand that reliable transit is crucial in maintaining steady employment.
Short-Term Loans Are Best
Although you may pay more with a long-term loan, financing the vehicle for three or more years can work better for your budget. Always consider the overall loan’s cost and your monthly payments. Also, keep in mind that you can negotiate the terms.
You Are Not in Control of What You Will Pay
This is a common myth that discourages people to look for a used vehicle. While the thought of being exploited by a lender due to a bad credit risk can be scary, there is less risk if you are an informed and flexible shopper. Get a copy of your credit score, understand what it says, and be open to a range of makes and models to have more than one loan choice open for you.
Bad Credits Last a Lifetime
Another common myth that put off people from getting an auto with bad credit is the idea that poor credit will last forever. However, boosting your credit score is not difficult as you may think. If you are not satisfied with the financing being rendered with your bad credit score, you may take action to boost it. Paying your bills early and on time and avoiding credit inquires can help you boost your credit score and get better offers for auto loans.
Low Monthly Payments Are More Crucial Compared to Loans Terms
When looking for a bad credit auto loan, you might believe that lower monthly payments are a key factor. However, this myth can push you into a long, expensive loan. To see the big picture, consider the loan length and the amounts of payment. Also, make sure you understand the common auto loan terms. These include:
- Maturity term or date
- Maturity. The amount loaned
- Annual percentage rate (APR)
- Interest rate
At Canadian Approval Center, we help our customers with bad credit auto loans. Get preapproved fast and easy with our service.