On a Budget, No Credit: Finding the Best Hidden Auto Loans in Canada in 2019 | Ride Approval
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Finding the right auto loan to finance your next vehicle purchase, especially if you are on a budget and don’t have a long credit history, can be difficult. The good news is, some simple steps can make you more attractive to auto loan agencies and get you in the vehicle of your dreams. Here at Ride Approval, we specialize in finding the best auto loans in Canada and matching our clients up with the loan that’s right for them.

Finding the Best Hidden Auto Loans in Canada on a Budget

Shop for a Loan Separately

Many people make the mistake of shopping for the car first and then trying to get a loan on the specific model. This can cause your rates to rise because you’re negotiating directly with the person selling the car, and they’re invested in getting the best deal. Once an auto dealer gets a look at your credit history, it’s hard to budge them from their chosen rate.

Working with an auto loan facilitator like Ride Approval makes it easier to find a loan you can afford and a car that matches it. When you’re pre-qualified for a loan, that gives you an advantage in negotiations with the dealer.

Shop Smart and Shop Fast

One secret of the auto loan market that few people know is that when you apply for a loan, the credit agencies take notice, and that lowers your credit rating. Each loan application is seen as your intention to take on financial liability. This is why it’s smart to only apply with a few smart options that offer you the best bet.

It takes two weeks for credit agencies to register inquiries, and if you make all your applications in a two-week period, it only counts as one inquiry and won’t decrease your odds of getting a loan.

Understand Your Credit Situation

Before applying for a loan, it’s smart to get a credit report on yourself and check your score from one of the biggest credit agencies in Canada. Most major credit agencies offer reports for a small fee, and several third-party sites offer free credit checks. This is a good way to increase your odds of getting a quick loan approval by picking agencies that deal with your credit rating.

If you have credit liabilities that can be resolved quickly, like outstanding small debts that you can afford to pay off, every step you make takes your credit in the right direction. Credit and loan agencies aren’t just looking at scores; they’re looking for movement in the right direction.

Build Up Your Credit

Even if you don’t have a credit history or you have a history of debts, making small changes can make you look like a more appealing candidate for a car loan. If you intend to get a car loan in the near future, the best thing you can do is get a credit card with a low limit and start making purchases. Take a few of your regular purchases and start paying for them with your card, then pay the card off regularly each month.

Credit check agencies keep track of all transactions, and even if you don’t make any big purchases, a history of timely credit card payments works in your favor. The longer you have to build a credit record, the better.

Understand Your Payment Plan

Many auto loan agencies will entice customers by advertising low monthly payments, not disclosing that their clients are paying off their loans far later than the average. The best auto loans in Canada offer a good balance of affordable monthly payments with a length that won’t accumulate too much interest and will have you paid in full in a reasonable length of time. One of the first questions to ask any loan agency is how long the loan will take to be paid in full with regular payments.

At Ride Approval, we pride ourselves on transparency. We offer our clients multiple payment options and full disclosure on payment schedules for all our loan formats.

Understand What to Avoid

Many lenders offering auto loans to clients with bad or limited credit jack up interest rates covered up by low monthly payments, leaving the client in compounding debt. Many auto dealers mark up the auto loan to give themselves a bigger profit, and this is a common trap for clients who are shopping directly with the car dealer. That’s why it’s important to check review sites for all auto loan agencies you negotiate with before signing a contract.

One advantage of working with an auto loan facilitator like Ride Approval is that we’ve worked with all these companies and know which can be trusted. We’ll do the comparison shopping for you and find the right fit for your budget and financial needs.

Read the Contract

Before signing an auto loan contract, make sure you’ve read all the fine print to avoid common pitfalls that many borrowers aren’t aware of. Don’t be afraid to renegotiate if you see one of these in the contract, and make sure they know you’ll walk away if the terms aren’t altered. Moving on and trying with a new agency is preferable to signing a bad loan.

Some things to look out for in auto loan contracts are mandatory binding arbitration that takes away your right to sue, a variable interest rate that can soak you if circumstances change, and prepayment penalties that start you in the hole. Make sure that every term is written out rather than oral promises.

Make Sure Everything Is Final

One trick many auto loan agencies try is conditional financing, where the terms of the deal are subject to change later, and you could get stuck with terms skewed against you after you’ve signed. Common terms that can change in this arrangement include the interest rate, the down payment, the monthly payment rate, and the time you have to repay. Working with an auto loan facilitator can help you weed out these players from the market, since we want everyone involved to get their money back as quickly as possible.

Know Your Lender

There are hundreds of agencies offering auto loans in Canada, and not all of them are reputable or offer ideal terms for someone without a solid credit history. The best way to know you’re getting the best deal is to work with a third party that also has a stake in you getting the best deal possible. We’ve worked with hundreds of agencies and have a record of our dealings with them, making it easy for you to get a deal that works with your budget and vehicle needs.

The Best Auto Loans in Canada

If you’re on a budget and don’t have a spotless credit record, there are auto loan lenders out there who offer affordable loans. The best way to find them is to work with a vehicle financing agency that knows how to get you the best deals. Contact Ride Approval for more information on our services or apply on our website today.