Most people go through rough financial times. If you have gone through one and have recovered or are in the process of recovery, one of the things you may be looking at is buying a new car. You know that your financial position is such that you can now afford it. But your credit history may still be working against you. The finance company has no choice but to look at your car loan application based on your credit rating and history. But this does not mean that you cannot buy the new car you want. Here are a few tips on getting bad credit car loans in Ottawa.
Start off by knowing what your credit rating is. You are entitled to one free report a year and if you need an additional more current one, it will be available for a small fee. Reports are usually available online. Your current rating will be a key factor in the finance company deciding whether you fall under the bad credit car loan category and the amount of interest you will pay. The lower your credit rating, the higher will be the rate of interest. This is only fair. As far as the financier is concerned, the lower your credit rating, the high the risk he is taking in lending you the money and he has to justify this by getting higher returns.
Before applying for a car loan in Ottawa, pay off as much of your outstanding debt as possible. The lower your total outstanding debt, the better your chances of getting financing. Even if you are classified as a bad credit car loan in Brockville, the fact that you have paid off other lenders will work in your favor.
A common misconception is that having a large number of credit cards raises your credit rating. This is fine if you have had a consistently good credit record. But if your rating is or has been poor, a lender who is willing to give you a bad credit car loan may have his doubts increased by the fact that a person in your position has too many open lines of credit and may fall into a debt trap and be unable to repay his debts. Having just one or two credit cards will indicate that you are controlling your finances.
Limit the number of enquiries made on your credit report. Every enquiry stays on record for at least two years, even the ones you make yourself. A potential lender, on finding too many enquiries on your credit report may think that you are still running up debt and that other finance companies have rejected your loan applications. This could change your status from a bad credit car loan to a rejected application.
Stability counts. Irrespective of your past record, the fact that you have been staying at the same place for a reasonable period of time (say at least one year) and have had a reasonable tenure in your current job will serve to indicate that you are in a stable position in your life and be a positive influence on the lender’s decision to give you the loan.