Before you apply for a any type of car loan, it’s important that you obtain a copy of your credit report. In Canada, you have 2 options. Equifax and Trans Union. Equifax is the most common bureau used by lenders and would be recommended. The first thing that lenders are going to check is your credit history and what they find there will affect your future car loan interest rates. When reviewing your credit report, make sure that the information contained in the report is accurate and current. If you find any information that shouldn’t be on your report, which is common, contact the bureau to have it corrected. In most cases, anything over 7 years old should have been removed from your bureau and at times, from past experience, the bureau will remove reports that are even 5 years old. All you have to do is ask.
Once you have everything in place with your credit bureau, you are now ready to apply for a car loan. Now, when applying for a car loan, don’t apply at multiple places. If every place you apply does a credit bureau check on your credit, it will effect you chances in getting a car loan. If a lender has given an approval for financing and notices that you have received another approval from a different lender, they normally decline your application and the other lender may do the same. Why you ask? In their eyes, they believe that you are looking to possibly get 2 loans for 2 different vehicles. This was done in the past by many individuals and even though they qualified for 1 car loan, both lenders would give them the approval and the consumer would take both vehicles. The consumer may be able to afford both car payments for a period of time, but would eventually not pay one of the loans or both, due to the strain of the monthly payments.
Lenders have guidelines in place to protect themselves and consumers of such situations. So don’t put yourself in a tough position and make sure that your monthly payment meets your budget. Depending on your past credit history, your interest rates may be at bank rate or as high as 29.9%. If you are one of those people that have to re-establish your credit rating and stuck with a 29.9% rate, make sure that you don’t purchase the vehicle of your dreams, but more like a vehicle that will get you from point a to point b. Pay your loan for a period of 1 year and then refinance your current vehicle loan. With that 1 year of payments, you will qualify for a lower interest rate. Normally you may save up to 10% on your rate!
If you are still unclear in the credit bureau process, don’t hesitate to speak to someone that does financing as a career. Normally, they are more than willing to help. For Ontario car loans information, you may speak to Auto Funds professionals via the web and they will assist you with questions about your future car loan and current rates that are available. Auto Funds strictly works on financing people for a vehicle purchase. They are the auto loans Ontario specialists.
