What is Bad Credit Financing?

What is Bad Credit Financing?

Posted on June 2, 2022

When you drive through the city, you see plenty of car dealerships advertising “Bad Credit Financing”, but what does that mean?  Let’s break it down.

First things first, we need to make sure we know what credit is.  Our credit score is determined by our ability to handle any debts we take on.  If you pay your bills on time and make at least the minimum payments on credit cards, you likely have good credit.

Sometimes, through no fault of our own, we may have poor credit or no credit at all.  For example, if you’re new to the country and you haven’t had time to build up any credit yet, you might have a hard time securing a loan through a bank.

This is where bad credit financing can be helpful.  If you can’t qualify for a loan through a traditional lender, getting a loan on a used vehicle can help you build your credit back up to a good place.  The caveat is that these loans tend to come with slightly higher interest rates.

If you’re in Flamborough and need a vehicle though, and don’t have time to build up your credit any other way, a low credit financing plan could be the right option for you.  Making your payments on time will lead to better credit overall and in the future you could qualify for lower interest rates.

As with any big purchase, make sure you do your research ahead of time.  Know your credit score (you can find it online through Equifax or TransUnion), make yourself a budget, and be realistic.  You can browse vehicles online to see options you can afford and even apply to get pre-approved for financing.  It doesn’t have to be hard or scary as long as you’re prepared!

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