What are Bad Credit Car Loans?

You may have heard advertisements for bad credit car loans in Saskatoon. Until you’re actually in a situation where you have to finance the purchase of a car even though you have bad credit, you may not ever pay attention to these advertisements. After all, finances can be a tough subject for many people, especially where loans and credit ratings are concerned.

If you are in a situation where you’re looking for financing, there are some misconceptions that can cost you dearly. Here are 3 of the most popular myths and facts about bad credit car loans in Northern Saskatchewan:

Myth: Getting a longer loan will help to save me money, especially if I have bad credit.

Fact: You will pay an interest rate on any loan that you take out. This interest rate is usually based on your credit history. The better your credit score and credit history, the better the interest rate (and visa versa). Therefore, you will be paying interest for the duration of the loan. If you get a longer loan (over a period of five or more years), you will pay substantially more for the car than if you were to get a shorter loan, in most cases. Therefore, try to put as much money down up front, then opt for as short of a loan as you can afford. 

Myth: If I have bad credit, I will only be able to finance an older car.

Fact: There are car dealerships and lenders that will help you afford any type of car that you want, regardless of your past credit history. However, keep in mind that if you have bad credit, your auto finance partner may have a higher risk of taking possession of your car. While you may think you have full ownership of the car once you purchase it, you actually only have partial ownership if you have taken out a loan. If you fail to pay any of your loan payments, the lender may take the car away from you. Therefore, some lenders do not care what type of car the borrower buys – if he or she does not pay for it, the lender gets to repossess it.

Myth: Buying a car through auto finance can improve my credit score.

Fact: Buying a car with bad credit through an auto finance option will only improve your credit score if you pay your loans in full every month. If you fail to make a payment, your loan could actually further damage your bad creditby decreasing your credit score. When you take out a loan, always repay it in full in order to improve your maintain your credit.

There are many ways to buy a car. Even if you have bad credit, you can find car loans in North Battleford that will make it possible to get behind the wheel of the car of your dreams. Just remember that you always need to pay back your loans – especially if you are trying to improve your bad credit through an auto finance option.