Bad credit puts you in an awkward situation. The hefty fees charged by traditional lenders can make it feel like half your life is spent paying off debts. To get a car loan with bad credit in Calgary, you need an organized plan. Do your research before stepping foot into a dealership to avoid costly mistakes.
In addition to knowing the types of financing options available, you should have a few questions prepared to ask the dealer. These questions ensure that you have all of your bases covered when the time comes to decide on an auto loan with a poor credit score.
1. What Documents Should I Bring?
Before a subprime lender issues a loan, they must prove your identification, residency, and income. This is part of the fraud prevention protocol and helps verify that you can afford a car loan. As such, you are required to bring the following documents.
- Driver’s license
- Check stubs
- Bank statement
- Recent phone bill or utility bill in your name with your current address
- Personal references/contacts
You might need more or fewer documents depending on your unique situation.
2. Should I Put Any Money Down?
In most cases, bad credit car finance dealerships ask buyers to provide a down payment. The amount differs with the provider and the vehicle’s selling price. It can be anything between 10-20% of the price. Find out how much money you should pay upfront and start saving as soon as possible. If you don’t have enough cash, you may cover the down payment with a trade-in.
3. How Much Will My Loan Cost and What Are the Terms?
With challenged credit, qualifying for competitive auto loan interest rates is difficult. However, it is imperative to inquire about the exact rate you’re eligible for. Higher interest means a larger monthly payment. Ask about the specifics of the loan term, including the frequency of payments, length of the loan term, the exact monthly payment, and prepayment penalties, if any. Understanding the terms and conditions allows you to plan your monthly budget and know when you’ll clear the debt.
4. What Are My Total Interest Charges?
Many bad credit car dealers assign a simple interest rate on the loan balance, which accrues daily. In this case, the interest payable reduces after every payment. It is important to know the overall interest you are going to pay throughout the loan term. An auto loan amortization calculator can help you estimate the total interest if you make all your scheduled payments on time.
5. How Much Is My Trade-In Worth?
A bad credit car dealer should give you the cash value of your trade-in vehicle after appraisal. You don’t have to spend a lot on repair, and it’s okay to negotiate if it’s in a good condition. Before approaching a dealer, look up the estimated trade-in value online through a trusted site. If there’s still a balance due on your trade-in, subtract the remaining loan balance from the estimate.
Final Word
If you have bad credit and need a car, you likely know better than to walk into one of those sketchy ‘buy here pay here’ lots where the dealer is more interested in your wallet than the value of your trade. Car dealerships low credit are not all bad, but confirming a few details ahead of time ensures you’re dealing with an ethical dealer. Ask the five important questions while the dealer is still contractually obligated to deliver on his end of the deal.
