What do you do when you are looking for a car loan but have bad credit?
This happened to me and I thought I would share my experience getting a car loan.
I was divorced a number of years ago and my spuse and I were in conflict over both our assets and our debts. The problem was that being stubborn, neither of us paid our bills – thinking that we were making the other pay.
The problem was that we just hurt our credit by doing that ending up with a bunch of late payments which turned into collections and ultimately into both of us claiming bankruptcy.
So if the process of going through divorce wasn’t bad enough, then we both went through bankruptcy. I had never been so humiliated in my life, that is, until I moved to Calgary and went to get a car loan.
So I saw an ad that said “everyone is approved” and applied. The first problem was that I was from out of province and couldn’t qualify for a loan. The second problem was my obvious credit issues during my divorce.
I found another ad that promised “100% approvals” and applied again.
But I was declined.
So I searched for bad credit auto loans and found a few websites. I applied at each and waited…And waited…Finally I got a call that I was approved.
I went in to choose my vehicle only to find that my approval, which was at 27% interest was only big enough to get me a small car when I needed a truck for my job. Also, the loan wouldn’t help me build new credit.
I was just about to give up when I got a flier from Varsity Auto Credit – http://www.varsityautocredit.com and called in and talked to a finance manager whom I relayed my whole experience to. He convinced me to apply again and go me another approval. This one was 19.9% which was still insanely high, but this loan reported to the credit bureau and helped me re-establish good credit. Also, we made a plan for me to make payments for a year and then come back to re-finance or get another vehicle and get a lower rate.
Almost a year to the day, I went back and got a truck (Finally…) and this time, with a year of good credit under my belt, my new rate was 6.85%. No longer was I paying credit card type interest and I had the truck that I wanted.
So if I can make a recommendation on getting a car loan when you have had credit problems, it’s to make sure that your loan is being reported to your credit bureau and that your higher interest is a short-term pain for a long-term gain.