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Car Loan FAQ

Questions About Financing A Vehicle?

Our exceptional customer service and support makes getting a car loan seamless.

Cars on Cars Calgary specializes in providing used car loans for people struggling with bad credit.

If you have bad credit, have been through a bankruptcy, repossession, new job, consumer proposal, or divorce, it is still possible to obtain a car loan with the help of our accommodating team of professionals! Simply complete our secure application process to determine how much you are approved for. We’ll contact you right away and provide you with a selection of vehicles to choose from.

We have inventory in stock so you can be driving a quality used vehicle in just a few days! Auto loan interest rates are determined according to the current condition of your credit. A score between 300 and 629 is considered special finance. Special finance rates in Alberta will usually fall between 10% and 29.5% depending on your score and present circumstances. 

Will my credit score drop every time I check it?

This myth isn’t true. Checking your own credit report is what’s known as a “soft inquiry”, which does not affect your personal credit score. Only “hard inquiries” made by a creditor or a lender when you apply for a car loan can drop your credit score. These “hard inquiries” can typically bring your score down by 3-5 points.

Will my poor credit history affect me for the rest of my life?

It’s not as bad as it may seem. With enough time and patience, all poor-credit situations can be improved. A credit score is only one small factor that helps determine the credit approval or car loan process. All situations can be rectified and with the help of our finance experts we can guide you to improving your current credit score.

I don't understand all of the terms! What do they mean?

Aside from one’s credit score, another factor that impacts the loan approval is the debt service coverage ratio (DSCR). The DSCR is the ratio of cash that the buyer has available to pay their debts against their principle loan amounts. The higher the ratio, the easier it is to obtain a loan, however common lending standards suggest that 30% is an industry standard. As an example, if you make $10,000/month and have $3,000 in monthly expenses, you may have trouble getting approved for another loan at a preferred interest rate.

Annual Percentage of Rate (APR), Nominal APR, and Effective APR are all descriptions of the annual interest rate, rather than monthly fees and rates; they’re the charge of financing expressed as a rate over the year. Effective APR is your fee plus the compounded interest rate, whereas Nominal APR is the simple-interest rate for the year.

How do I restore my credit score?

It is more important now than ever for people to understand the importance of bad credit repair, and acquire the skills necessary to overcome their bad credit situation. Your credit score can impact you in many different ways, from the type of bank account you can get, to the interest rate that you pay when you take out a loan. Individuals with good credit scores will likely pay interest rates as low as 4%, but those with poor credit scores can pay up to 29%.

The question is- how do the people with bad credit scores get out of those situations? Although these high rates may be discouraging, they can be reduced over time with good planning and timely payments. By not missing your payments, and gaining the trust of your lender, you’ll likely be eligible for a lower interest rate within 12 months or less.

How do I get a car loan with a poor credit history?

Cars on Cars Calgary is here to help you repair your credit rating, and ultimately lead you toward a better financial future. Our experienced team can provide you with the best methods to restore your credit situation. There are a variety of programs available today that teach you how to properly manage your debt. Cars on Cars Calgary specializes in acquiring the perfect car loan for you, even if you have a poor credit history.  Apply today to get approved!

Should I be worried about bad credit?

Many Canadians are struggling to pay their bills on time, and as a result are being penalized as reflected in their bad credit scores. Although a bad credit rating is never good to have, it is not always as bad as it may seem. The main difference between a regular car loan and a bad credit car loan is the interest rate that the buyer has to pay.

For example, if we take an average interest rate for a good credit car loan of 5.9%, and an average interest rate of 15% for a bad credit car loan, the difference in monthly payments on a 2 year term, $10,000 loan is only $42! If an extra $42/month allows you to own a car so you can get to work and transport your family, then it’s not all that bad. Keep up with these payments for up to 12 months, and you’ll stand a greater chance of rebuilding your credit and lowering your interest amount.

To avoid worsening your poor credit situation, it is important that you do not over apply for loans, and most importantly don’t apply for loans that are beyond your means. When applications are submitted to 5 lenders or more at a time, the financial institutions see this as credit hunting, which is heavily frowned upon. It can be beneficial for you to speak with one of our credit specialists to determine an amount that you’d likely get approved for before you actually apply.

What is negative equity and what do I do about it?

Negative equity occurs when a person takes on a loan for a vehicle and then applies for another vehicle loan before the first one is fully paid off. The remaining amount from the first loan will then get added on to the amount of the second loan; the difference between the two amounts is what’s known as negative equity. This is not usually problematic if it happens once, but if it continues to happen, it may get to the point where the individual will never be able to pay off their total debt.

To prevent situations like this avoid impulse buying, and purchase reliable vehicles that will stand the duration of the loan. Additionally, ensure that your loans are paid off before you apply for another one. This is a key factor in securing the prosperity of your financial future.

For the best chances of loan approval remember the following:

  • Pay off as much small debt in your name as possible
  • Keep your credit card debt under 50%
  • Do not inquire about your credit by applying for other loans if you already did not receive approval
  • Always do your best to keep debt to a minimum!
  • Credit Can Affect Your Life More Than You May Realize – Borrow Wisely!