Car Loans With Unpaid Collections: The Ultimate Guide

Car Loans With Unpaid Collections: The Ultimate Guide

Posted on March 22, 2023

In Canada, you cannot get by without a vehicle; that is a fact of life for most of us. While public transit is an option in some major metropolitan areas like the GTA and Vancouver, Canadians living in more rural areas simply do not have any viable alternatives. If you need a car loan and have unpaid collections, finding a lender willing to give you a shot can be very difficult. We are going to cover what things you must do to get a car loan with unpaid collections.

How Recent Are Your Unpaid Collections?

Details inside your credit report stay there for up to seven years. If your unpaid collections are from a few years ago, it will not hurt your credit score like it would if it was recent. This does not mean you can ignore this obligation; the debt needs to be paid and should be paid off as soon as possible.

There are lenders who will not issue a new car loan if there are unpaid collections on your credit report, even if you owe a small amount like $100. If the debt has gone to a collection agency, contact them and negotiate a settlement, be sure to get it in writing that if you paid off the debt, the collection agency would report it to the credit bureaus as soon as possible.

This letter is insurance in case the agency forgot to report the payment in a timely manner. You can dispute the unpaid collection by submitting the letter and proof of payment via the credit bureau's official dispute channel. These steps may seem like a lot of work, and it can be since this is your first time dealing with the unpaid collections, but it can serve as motivation to never let an account fall into collections again.

Are you the type of person that forgets to pay their bills on time? Thanks to technology, you can either sign up for pre-authorized payments or simply set reminders on your calendar to never miss another due date.

The Best Place to Finance a Car Loan With Unpaid Collections

You may not have time to wait for your credit to improve and need a vehicle fast. In this situation, you can reach out to a dealership in your community and ask them to help you identify a suitable lender.

The dealership will spend time with you learning about the causes of your credit issues; this is an important step because the dealership will explain your situation to the prospective lender, so the more transparent you are with the dealership, the better.

By working with the dealership, you should have no major issues getting a car loan approved. Be sure to follow the advice given by the dealership, and your credit score will rise to prime territory (720+) in no time at all but the pressure is on you to make the first move.

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