Bad credit car loan tips – part one.

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This article deals with some of the commonly asked questions regarding
bad credit interest rate, and what not to do when it comes to
borrowing a car loan.

With today's economic downtown, and record setting unemployment
figures it is no surprised many Canadians are struggling to meet their
bill payments at the month end. Many of us are penalized with bad
credit, or slow payment on the credit report, and due to that are not
able to finance a vehicle through the normal channels dealers offer.
First of all, you are not alone in this situation, there are countless
people who are in the same boat. Now if you are currently in a
situation like such, you probably have noticed it is difficult for you
to get any credit, or finance any loan. But all hope is not lost yet,
you can apply for a bad credit car loan that will work in your favor.
Because many Canadians need a car for work or family, they found
themselves with no where to turn when the big dealerships turn them
down for a loan. The fact is you are looking at the wrong resources
for your car loan.

The difference between a bad credit car loan and a normal car loan is
mainly in the interest rate. A brand new car can cost you in range of
0.9% to 8% when it comes to financing. But a bad credit car loan will
range from 12% to 29%. I know the APR seems high, but when you look at
the amount of money you are borrowing the cost difference is not as
much as you think. For example if you took out a $10000 loan over the
period of 24 month, a normal 5.9% interest rate will produce a payment
of $442 while a 15% average bad credit car loan will only produce a
payment of $484. The extra $42 dollars can mean the world to someone
who is in need of a car loan. Not to mention a bad credit car loan can
be refinanced with a lower APR or interest rate, if your repayment
history is good for the next 12 months. So in essence you can break
your higher interest loan and get a lower interest rate within 12
months. That is called "credit rebuilding", where the bank sees your
improvement and offer you a break on the interest rate.

But it is crucial for you not to over apply, this can be two
scenarios, one where an individual is submitting credit application to
5 lenders at a time. The banks will see this as "credit hunting" which
is a bad sign for getting approved. Don't make yourself look desperate
in the bank's eyes. Also don't over apply by applying for a loan
amount that is way out of your reach, you should consult a credit
specialist to find out the loan amount you will be pre-approved for.
So you will not go over your limit, which can mean bad news for you as
a client.

This article is brought to you by Used Mazda Toronto, for more related
information please visit us online at http://www.usedmazdatoronto.ca
or http://www.usedhondatoronto.ca