auto loans

Maintain Good Credit History

Credit history is one factor that insurers take into account. Different studies show that people with fair and average scores are high-risk customers. They are more likely to commit fraud, file inflated claims, and file more claims compared to people with very good and excellent scores. Other factors that insurers take into account include miles driven per year, vehicle use and vehicle type, previous coverage, and deductibles. Additional factors include things like your claims history, driving record, years of experience, and marital status. Insurers pay close attention to your driving record before making an offer. If you have a history of traffic violations and accidents, you will pay more. Insurers also use rating factors such as gender, age, and geographic location. These factors are taken into account to assess the probability of customers filing a claim.

There are other vehicle and driver factors for insurance companies, among which:

• Level of education
• Residence and location
• Home ownership
• Financial security
• Number of drivers
• Prior liability limits
• Number of insured vehicles
• Car alarm and other safety devices
• Length of time being insured with them

Where you live is one factor that affects rates. If your location has a higher than average claims ratio or accident rate, then you are likely to pay more. Obviously, insurance companies also take into account factors such as payment plans, profitability, and existing legislation.

Shop around for Deals

When shopping around for deals, try to get as many quotes as you can and discuss your options with insurance providers. Depending on your individual circumstances, you may benefit from discounts offered to customers with no moving violations and no accidents. Those with multiple policies are also offered better terms. Some insurers also offer discounts to long-term customers, those who have low annual mileages, and even students enrolled out of province.

Compare Premiums and Costs before Buying a Vehicle

You may want to compare insurance costs before you purchase a vehicle. The reason is that insurers calculate premiums based on factors such as vehicle use and type. When it comes to vehicle type, if the company’s data shows that owners of this particular model file more claims or cause more car accidents, then you are in a high-risk category. Other factors that insurance providers look into include safety tests, accident rate for your car model, cost of repairs, as well as theft rate and purchase price. If you plan to buy a used vehicle, then the age of the vehicle is a factor for companies. While the repair costs for old vehicles are about the same as new ones, old vehicles tend to break more often. At the same time, owners of new vehicles sometimes benefit from a new car discount.

Ask about Group Insurance

Group coverage is yet another way to save. Another benefit for policyholders is the greater payment flexibility. There are further advantages such as cost sharing between employer and employees, considerably lower costs, and the chance to get basic coverage. There are benefits for employers as well, among which better retention rates, increased productivity, and others.

You may want to ask whether your employer or local organization offers this option. In fact, many companies offer group insurance to employees and so do organizations, clubs, universities, and colleges. Employers usually offer group health insurance policies but some plans also feature car insurance as an added benefit. University alumni are also offered discounts on different plans, including home and auto coverage. Finally, some membership and professional organizations offer group coverage options, including societies, honorary groups, and others.

If this is not an option, contact insurance companies in your area and inquire about the benefits they offer. Many insurers offer discounts on vehicle-related services such as repairs, towing, and others. Others offer discounts on vehicle accessories, car rentals, and parking at designated facilities and areas.

Higher Deductible Results in Lower Premiums

Many are unsure whether to choose a low or high deductible on their car insurance policy. Common wisdom says that a high deductible means lower monthly payments. If you increase your deductible by $300, then your premiums decrease by up to 30 percent. If your budget is tight, then a low deductible makes more sense. The same goes if you have a history of traffic accidents. To make a choice, however, it is important to learn what a deductible is. This is the amount you are asked to pay when filing a claim. For example, if your policy covers medical payments and a hospital stay costs $250, what you are left paying depends on the deductible. If it is $150, the insurance company will pay $100 and you will pay $150. Basically, insurers and customers share the risk should anything happen. The deductible applies in two cases – when you have collision or comprehensive coverage. There is no deductible on liability plans.

Some experts recommend getting comprehensive coverage with a low deductible and a collision policy with a high deductible. This is one way to lower the risk of accidents. To figure out which option suits you best, you can use an insurance quote tool, and there are plenty available online.

There are finance companies and other establishments that offer bad credit car loans to consumers with damaged credit, and the prospects are often better for such applicants compared to borrowers with no history. In times when the economy is improving, more lenders are willing to accommodate customers with different credit profiles, and new players quickly expand and gain a market share. What is more, lenders have different criteria, and your credit profile is not the only factor they take into account. Your score is a more important factor when you apply for a larger loan, for example, a mortgage because financial establishments take more risk. Even if you are considered a moderate- or high-risk borrower, some finance companies will be willing to offer a near-prime car loan.

Car Loans in Canada

Bad credit car loans are available from finance companies, credit unions, and banks and major banks such as the Royal Bank of Canada, Toronto-Dominion, and others. Consumers are offered old and new auto loans with variable and fixed rates and flexible amortization and repayment schedules. Some banks advertise secured options with lower interest rates. Finance companies also offer funding and advertise quick processing and approval. While banks take longer to review and process applications, finance companies advertize quick approval within 1 or 2 business days. There is an option to apply together with a cosigner, but many lenders are unwilling to approve applicants with a history of bankruptcies. Many finance companies in Canada also run a credit check.

Loan Types – Options and Differences

Secured Bad Credit Car Loans

Lenders usually offer lower interest rates compared to unsecured financing because the vehicle itself guarantees repayment. The rate can be as low as 4 percent but this depends on your credit profile. Financial institutions usually offer funding in the amount of $20,000 – $30,000, and the interest rate is usually fixed over the repayment term. Secured car loans for people with questionable credit are offered with:

• 95 – 100 percent approval rate
• No down payment required
• Or lower down payment compared to unsecured options
• Varying amounts based on the collateral

Unsecured Bad Credit Car Loans

This option is more expensive because of the lack of collateral and the higher risk involved for lenders.

• Less risky for applicants
• Higher down payment
• More difficult to find
• Interest rate of 7 – 10 percent or higher

Compared to secured options, finance companies offer smaller amounts. Even if the borrower defaults, the vehicle has not been pledged as collateral and cannot be repossessed. Besides, lenders take even more risk by offering loans to borrowers with damaged credit, and the terms are less competitive.

What Happens if You Have Bad Credit

Finding auto financing with competitive terms can be a challenge if you have poor or no credit. Some banks are willing to accept applications from borrowers with а borderline score provided that they have stable income and good debt to income ratio. If your score is low, you may want to look into non-traditional lenders because they have more lenient requirements. They will factor in the condition of the vehicle, the length of the term, amount required, down payment offered, etc. Auto loans for people with poor credit are available online as an alternative to the frustration of dealing with banks and dealerships. Some lenders offer auto financing to consumers with a history of repossessions, consumer proposals, maxed out cards, written off accounts, collections, and late or missed payments. This is one alternative for consumers with bad credit and major issues who plan to purchase a vehicle. Another option is to try and improve your credit profile and apply with your local union or bank.

What Are Bad Credit Car Loans

Basically, this is a subprime or near-prime vehicle loan with a higher interest rate compared to standard solutions. The term varies from lender to lender and is usually between 36 and 72 months. Some finance companies offer terms of up to 8 years. A longer term, however, means paying more in interest charges. The monthly payment is based on the term, APR, and other factors. When applying for a bad credit car loan in Canada, consumers must be employed to qualify.

There are two types of financing offered, new and used car loans, and the latter usually go with higher rates. Both options are available through some finance companies, regardless of your credit profile. Some non-traditional lenders even offer financing to customers with past bankruptcies but this is rather unusual.

Find a Poor Credit Car Loan in Canada

There are several options to look into, your local bank, your insurance company, bad credit lending services, and peer to peer lenders. If you are an existing customer, your local bank is your first stop because it is more likely that their loan officers treat you favorably. The same goes for your insurance company. A non-traditional lender is yet another option but make sure that you deal with an established and reputable finance company. To improve your chances of getting approved, you may want to bring some documents with you, including personal references, photo ID or driver’s license, and utility bills such as electricity, water, gas, or other bills. Make sure you bring recent pay stubs as well. If bad credit lenders are not an option for you, you can check with peer to peer lending services. What you do is create a profile on an online platform of your choice and post a listing that indicates the purpose and loan amount. There are investors that are willing to offer auto financing to consumers with a less than perfect score. The interest rate varies but if you are lucky, you can get a loan with a rate of about 7 percent. Finally, one option to improve your chances is to offer a significant down payment. You may ask your family for a loan or draw on your line of credit.

5 Ways to Save on Car Insurance