Do you have bad credit? If so, you’re absolutely not alone. In fact, the average credit score in Canada is currently 650. By most standards and scoring models, that doesn’t even put you in the “good” category, which starts at about 660.
With millions of Canadians struggling with less than ideal credit scores, how do you go about getting an auto loan when you need a new car or truck? It’s tough, we know, but there’s actually a great solution: bad credit truck loans.
Bad credit truck loans or any other type of bad credit auto loan are alternatives to traditional auto loans that only people with great credit scores qualify for. Here’s everything you need to know, along with how you can access the loan you need.
Understanding Credit Scores in Canada
Understanding your credit score is an important part of understanding why you might not be qualifying for the auto loans you’d like. After all, a good credit score can help you get a loan but also a mortgage or a credit card with a lower interest rate.
In Canada, there are two main types of credit scoring: FICO and Beacon. FICO scores are the most common type of credit score (and there’s actually a new FICO 10 credit scoring model in Canada). They range from 300 to 850.
Beacon scores are used by some lenders, but they’re not as common. They range from 500 to 900.
How do each stack up? They’re pretty similar and both can be used to demonstrate to lenders that you’re responsible enough to pay back a truck loan.
The average FICO score in Canada is 700. The average Beacon score is 650. So, what do these numbers mean? A FICO score of 700 is considered good. It means you’re likely to be approved for a loan or a credit card with a decent interest rate.
A Beacon score of 650 is also considered good. But if you have a Beacon score of 700, that’s excellent! It means you’re likely to be approved for a loan or a credit card with a very low interest rate.
Understanding your credit score is the first step to getting the best deal on a loan or a credit card. If you have a good credit score, make sure you shop around for the best rates. And if you have a bad credit score, you’ll want to keep reading to see what your other options might be.
What Is a “Bad” Credit Score in Canada?
Credit scores range from 300 to 900, and the higher your score, the better. A score of 650 or above is considered “good,” while a score of 800 or above is considered “excellent.” Anything below 650 is generally considered “bad.”
While it’s not necessarily “bad,” you will note that it’s going to be harder to get a loan or a loan with great interest rates if your score is lower than 650.
Ultimately, the cutoff will vary depending on the lender and the type of loan you’re applying for.
For example, some lenders may be more lenient if you’re looking for a mortgage than if you’re applying for a credit card. Generally speaking, though, a score below 650 is going to make it difficult to get approved for most loans and lines of credit.
If you’re in that range, you may want to consider ways to improve your credit before applying for financing.
How to Improve Your Credit Score in Canada
A good credit score is important if you want to borrow money or qualify for a good interest rate on a loan.
If you’re interested in a larger loan like a commercial truck loan, for example, you might be better off spending some time improving your score.
If you’re looking to improve your credit score, here are a few things you can do:
- Make sure you make all your payments on time. This includes your mortgage, car loan, credit card, and any other debts you may have.
- Keep your balances low. If you have credit cards, try to keep the balances below 30% of your credit limit. This shows lenders that you’re using your credit responsibly and not maxing out your cards.
- Check your credit report for errors. Sometimes Credit reporting agencies make mistakes, which can negatively impact your score. If you spot an error, be sure to dispute it with the agency so it can be corrected.
- Limit your applications for new credit. Every time you apply for a new credit card or loan, it results in a hard inquiry on your report, which can ding your score slightly. So if you don’t need to apply for new credit, it’s best to avoid it.
By following these tips, you can improve your credit score and show lenders that you’re a responsible borrower. This, in turn, will help you access better loan rates or, at the very least, help you access normal auto loans.
What Credit Score Do You Need to Get an Auto Loan in Canada?
Generally speaking, the higher your credit score, the better. A score of 700 or above is considered “excellent,” and you should be able to get a very good interest rate with this score.
A score of 650 to 699 is considered “good,” and you should still be able to get a decent interest rate with this score. However, you might start to see auto loan lenders charging you way higher interest rates.
A score of 550 to 649 is considered “fair,” and you may be offered a higher interest rate with this score. Anything below 550 is considered “poor,” and it may be difficult to get approved for an auto loan with this score.
Of course, there are other factors that lenders will consider when evaluating your auto loan application, but your credit score is one of the most important. However, if you need a loan quickly and your credit score is poor, then there are other options such as bad credit loans.
What Is a Bad Credit Truck Loan?
A bad credit truck loan is a type of financing that is extended to individuals with poor credit scores. This type of loan is typically issued by subprime lenders, which are banks or other financial institutions that specialize in lending to borrowers with bad credit.
It is important to note that bad credit truck loans typically come with higher interest rates and fees than loans for borrowers with good credit. However, for many people with bad credit, a bad credit truck loan may be the only option for financing a vehicle.
If you are considering a bad credit truck loan, it’s important to shop around and compare offers from multiple lenders to get the best deal possible. Keep scrolling to learn how to do just that.
How to Apply for a Bad Credit Truck Loan?
If you’re looking to finance a new or used truck, but don’t have the best credit history, you may be wondering how to apply for a bad credit truck loan.
The good news is that it’s possible to get financing even if your credit score isn’t perfect.
Here are a few tips on how to apply for a bad credit truck loan in Canada:
- Start by checking your credit score and understanding where you stand. This will give you an idea of what kind of interest rate you can expect to pay.
- Shop around for the best rates and terms from different lenders. Be sure to compare both online and offline options.
- When you’ve found a lender that you’re comfortable with, complete their application process and provide all required documentation.
- Once approved, make sure to make all of your loan payments on time and in full. This will help improve your credit score over time and make it easier to get financing in the future.
Unfortunately, it’s difficult for us to give you specific steps regarding the application process. Each lender is different. However, if you apply through CarsFast, the process is quite simple.
Our auto financing network is made up of tons of LendingArch dealers across Canada. You simply fill out an online application form (a questionnaire, really) that takes about two minutes. Then we match you with the best lenders.
After that, you’re able to browse the available vehicles within your budget. Interested in a bad credit card loan?
Apply now to see what the process is like.
What Are Interest Rates on Bad Credit Truck Loans?
If you’re thinking about financing a truck with bad credit, you might be wondering what the interest rates are on bad credit truck loans.
The truth is, there is no one-size-fits-all answer to this question. Interest rates will vary depending on a number of factors, including your credit score, the type of loan you’re applying for, and the lending institution you’re working with.
That said, it’s important to keep in mind that interest rates on bad credit truck loans are typically higher than rates on loans for people with good credit.
So, if you’re considering financing a truck with bad credit, it’s important to compare rates from multiple lenders and make sure you understand all the terms of your loan before signing any paperwork.
By doing your research and shopping around, you can find an interest rate that works for you and helps you get the truck you need. Again, as we mentioned above, with CarsFast, we make that easy for you.
See what you qualify for by applying now.
What Kinds of Trucks Can You Get With Bad Credit Financing?
There are actually no restrictions to the type of truck you can get with bad credit financing like this. However, these types of loans are usually not for commercial trucks. Commercial truck loans require more financing and therefore a higher credit score.
However, with the right dealership or alternative lender there’s absolutely nothing stopping you from getting any one of the following types of trucks with a bad credit truck loan:
- Chevrolet
- GMC
- Toyota
- Dodge
- Ford
- Honda
Whether you’re interested in a flatbed truck or a classic pickup truck, you’re able to get the truck of your dreams as long as your bad credit truck loan covers the cost.
The Pros & Cons of Bad Credit Truck Loans
As a bad credit holder, you might be surprised to learn that there are actually many benefits to obtaining this type of loan. Sure, interest rates might be higher, but the pros tend to outweigh the cons here.
Some of the benefits of bad credit truck loans include:
- Getting quick approval
- More flexibility when applying
- No need for collateral or outstanding credit score
- A wider selection of vehicles (when you apply through CarsFast)
However, there definitely are some drawbacks you’ll want to be aware of.
First and foremost, these loans typically come with much higher interest rates and monthly payments than loans for consumers with good or excellent credit. In addition, lots of fees and penalties can apply, such as loan origination fees, late payment fees, and so on.
Additionally, late, short, or missed payments can further damage your credit score, making it even harder to get financing in the future. And if you have a cosigner on your loan, they could become responsible for your debt if you can’t afford the payments.
All things considered, it’s important to weigh the pros and cons of bad credit truck loans before making a decision.
How Long Does It Take to Get Approved for a Bad Credit Truck Loan?
It depends on a few things, like the lender you’re working with and the severity of your bad credit. In general, though, you can expect the approval process to take a little longer if you have bad credit when working with a traditional lending institution.
That’s because lenders will need to do a little more work to determine whether or not you’re a good candidate for a loan. They’ll likely look at your credit history and score, as well as your employment history and income.
When you work with a platform like CarsFast, however, the process of getting approved for a bad credit truck loan can be as quick as two to five minutes.
Get the Best Rates Through CarsFast
At CarsFast, we believe that bad credit or limited credit history shouldn’t prevent anyone from accessing reliable transportation. This is why we’ve made it our mission to offer Canadians better rates, low payments, and savings options.
Whether you’re looking for a bad credit truck loan or need a bad credit auto loan for a car, SUV, or van, we’ve got you covered.
Interested in a truck? Click here to start the simple application process.