Cars are a critical component of everyday life for most Albertans. We need them to visit family and friends, get to and from work, run errands, and to otherwise live a normal life. For this reason, if your vehicle is on its last leg — or has broken down altogether — it’s a problem that can totally disrupt your way of life. And if you happen to be strapped for cash or have poor credit, then resorting to bad credit loans in Alberta may be your most viable option.

If your credit score is not at a permissible level, there are still options available for financing. In this article, we will be covering how to get an online car loan fast even if you have bad credit.

What is a Poor Credit Score?

Your credit score is nothing more than a simple 3-digit number between 300 and 900. This seemingly innocuous number informs potential lenders how risky you are to loan money to. There are two credit agencies in Canada, Transunion and Equifax, that assemble your credit score. And they consider many variables when deciding which number you become earmarked for. A number on the higher end of the spectrum demonstrates that you’ve acted responsibly while a number on the lower end indicates the opposite.

Free tools such as Mogo allow you to check your credit score to see what your current standing is. Having a credit score that is 650 or above qualifies you for a more conventional loan, while anything below that will restrict you to a bad credit car loan.

Can I Qualify for a Car Loan With Bad Credit?

The simple answer is: of course! Let’s be honest, bad credit happens to good people. And in such cases, we’ve got your back! The downside is you won’t be able to qualify for the lowest interest rates or the best terms regarding your loan. However, getting cash loans in Alberta is still possible, even with bad credit.

You can still finance your car for a period with bad credit car loans, in that sense, it’s similar to a traditional loan. However, right there is where the similarities end. Here are two differences between a conventional car loan and a bad credit car loan:

The moneylender: You might not meet the proper qualifications for a loan from a credit union or a bank, in which case, you’ll have to go with a non-conventional lender
The prime interest rate: Having poor credit entails that you’ll have to pay a higher interest rate since you’re more likely to be a liability to the lender, while good credit means you can apply for loans using more traditional methods that will usually provide lower interest rates and reduced monthly payments

The Process of Approval for a Poor Credit Car Loan in Alberta

When it comes to getting approved for a bad credit car loan in Alberta, there is a little more involved than the quality of your credit score. The lender will look into all the variables available to make a decision on whether or not you qualify. Here are a few of the factors they will investigate:

Size of down payment: If you save a down payment that is large enough, it communicates to the lender that you are both prepared for the loan, and somewhat financially responsible. The bigger the down payment, the better it will be in the end. If you have a sizable down payment, you will have a smaller payment each month in addition to lower interest rates
Income statements: Your lender might ask you to provide certain information in regards to your income as well as bank transactions. It would be prudent of you to have at least a few months worth of your accumulated income and banking history at hand
History of employment: To ensure you are reliable, dependable and trustworthy, your lender may ask for proof of employment. This can come in the form of recent pay stubs, check deposits from employers, etc
Affordable car: When it comes to bad credit car loans, cheaper loans are much better. Think about it, you’re going to be paying a higher interest rate simply based on your poor credit score. If you tack on an expensive car payment to your already inflated interest rate — you’re just asking for financial trouble. The sensible thing to do is go for the smallest payment possible

How to Improve Your Credit Score

Just because there are plenty of options available for financing a vehicle with poor credit, doesn’t mean you shouldn’t do anything to improve this area of your life. Here are a few ways you can begin the process of improving your credit score:

Pay on time: Regardless of where the money is due; your internet, phone, electric bill, etc, pay every time, on time. This is not just about money, it’s about integrity; be a good person and pay when the payment is due, it makes everybody’s lives easier
Minimum payments: Sometimes you hit a rough patch in life financially, it happens. However, that is not a pass to ignore your monetary obligations. Make the minimum payments for as long as you have to until you regain your financial footing and can begin paying more again
Keep credit usage rate low: Refrain from spending any more than 35% of the credit limit that’s available to you

Conclusion

There are ways to work with bad credit in Alberta. Even though certain privileges will be withheld, you can still qualify for a car loan that fits both your needs and your budget.