Depending on where you live in Toronto, you know that having a car is an important element of living life in the big city. Even if you live downtown, there are so many advantages to having a car when it comes to getting out and about especially during the winter time. However, it’s not always easy to afford a car and getting a loan can still be quite difficult – especially if you have a bad credit rating.
The good news for Torontonians is that auto loans for people with bad credit do exist. Since the automotive industry has gone through a challenging time itself, many car companies are offering loans to help individuals afford the cost of a new car. If you believe that you can’t find auto financing due to bankruptcy or other problems related to bad credit, then it is important to realize that there are lenders who work with borrowers that have bad credit histories. This includes those in the Toronto area.
The reasons you may have bad credit
We always recommend that before you go out and get a new car loan, that you take the time to find out your credit score. You can do this by contacting one of the Canadian credit bureaus – Equifax, Transunion or Experian. You can get your credit score online 
and also request a hard copy report by giving them a call. Once you have that data at your fingertips, you’ll have a better idea on how bad your credit really is, which will help you when you are about to negotiate a loan with your Toronto auto dealer. Your credit rating is influenced by your payment behaviour and will be influenced negatively by late payments, a high debt to income ratio and past bankruptcies. If your score does come out as a poor one, you don’t have to worry that you won’t be able to get a car. Remember that the car dealers are looking for buyers and they will try to do what they can to provide you with an offer.
So, what are 3 sources in Toronto that can help you if you have bad credit?
#1 – Specialist lenders
Since there are a number of people in the market today who have poor credit, there are lenders who specialize in just such situations. While many of these lenders charge more interest because the likelihood of default is higher with high risk borrowers, it is important to note that there are lenders who specialize in bad credit auto loans. This way if you desperately need a car and are able to commit to paying off the car every month in installments, you can get the funds you need to secure that vehicle. Also, you don’t have to worry about being taken advantage of and paying ridiculously high prices as many of these specialty lenders can offer very competitive rates.
#2 – Toronto car dealerships
Since bad credit loans have been increasing in popularity in recent years, many dealers provide loans in order to secure their deals. Many Toronto dealers are willing to provide you with a quote even if you have a poor credit rating. Many encourage customers to investigate the rate and loan amount that they are able to give them. The major benefit of getting a bad credit car loan in Toronto through the dealer is that once they know your financial situation, they can help you find the right car to meet your specific budget needs.
If you use other lenders, this aspect may be missed as they won’t understand the ins and outs of finding the right car that is both practical and financially effective. Since the dealer will be the lender they will also want to help you find an affordable vehicle so you are realistically able to pay back your loan.
#3 – Banks
There’s no doubt that banks can be great sources for bad credit car loans. If you have a strong relationship with your existing bank, they’ll have a good understanding of your needs and your current financial affairs. Then, you will simply need to fill out a loan application, meet with your advisor and determine how much money you’ll be able to spend on a car in order to effectively manage your budget now and in the future. This method of obtaining a car loan is great for people that want some flexibility out of where they purchase their car. For people with bad credit, this may present a limiting factor as banks tend to be a bit more conservative on who they lend funds to. Just keep that in mind as you meet with your banking professional.
At the end of the day, bad credit no longer prevents you from receiving a car loan in Toronto. In fact, the alternatives keep growing with today’s climate being competitive to find you the loan you need.
