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Are you considering buying your first car or getting rid of your old one? In either of those cases, a Nova Scotia car loan could be the best payment option for you. After all, any car can cost a small fortune, particularly if it’s a newer model, and you want something that’s as reliable and affordable as possible.
Reasons a Nova Scotian Driver Might Choose a Car Loan
Apart from making an expensive car easier to pay for, there are other situations where any Nova Scotian would prefer a car loan over other methods of payment, such as:
- To finance a more trustworthy vehicle – While your rust-bucket might have been a cheap purchase, keeping it from breaking down every other month can end up costing you just as much as a new car. What’s better repairing your old car or buying a new one? You can decide after you read this.
- When travelling to and from rural areas – Some Nova Scotians don’t live in an area where taking public transit, walking or biking to work is an option. There are also those who live in the city, but work in a rural area. In both cases, a car loan can help them afford a reliable vehicle with good gas mileage.
- To start a private transport business or impress clients – When you’re establishing a limousine or Town Car service, or if you’re just trying to look good for clients, driving a luxury model can make all the difference. With a car loan, those expensive models won’t be so far out of your price range.
- To take advantage of “vehicle title loans” – Once you’ve purchased your car in its entirety, it becomes an asset that you can leverage for loan money, the amount of which will be based on it’s estimated market value. Your lender will then hold the rights to your vehicle until your loan has been repaid in full.
Check out this infographic to compare purchasing a new car and a used car.
Types, Makes, and Models of Vehicle Available to Nova Scotian Drivers
Before you apply for your car loan in Nova Scotia, It’s best that you get a better understanding of your lender’s or dealership’s borrowing criteria in Nova Scotia.
Your approval and interest rate will most likely depend on elements such as:
- Your regular income
- Your employment record
- Your credit score:
- Good credit score (650 or above) = better chances of approval and a lower interest rate (saving you more).
- Bad credit score (620 or under) = worse chances of approval and a higher interest rate (saving you less).
The healthier your credit and finances look, the more likely you are to be approved for nicer vehicles. However, even if you have bad credit, you should still be able to find a lender or dealership in Nova Scotia who will approve you for all kinds of vehicles, such as:
- SUVs (sports utility vehicles)
- Pickup trucks
- Vans (mini, oversized, etc.)
- Recreational vehicles (trailers, campers, jet-skis, snowmobiles, ATVs, etc.)
Requirements for Nova Scotia Borrowers With Bad Credit
As you can see, drivers In Nova Scotia with bad credit, while approvable by many lenders, may still have a harder time getting their applications accepted and receiving a reasonable interest rate. Obviously, approval will come easier to someone with a credit score of 620 or slightly under than to someone with a terrible credit score of 500 or below. In either case, there are certain things you can do to either improve your credit or, at the very least, get a better interest rate upon approval.
To build, repair and increase your credit score, you can:
- Reduce your credit usage or increase your credit limit – Whatever option you choose, staying as far below your credit limit (30% or less) as you can to prevent your score from further damage.
- Manage your debts more responsibly – If your bad credit is caused by your financial habits (i.e. not paying your credit card bills on time), the best way of reversing that situation is to start making your payments on time and in full to the best of your ability.
- Apply for less new credit – Even if you’re just weighing your options, applying for car loans (or any other loan product for that matter) all over town is not a good idea. That’s because each lender you apply with in Nova Scotia will perform a hard inquiry into your credit report. Each hard inquiry stays in your report for several years and drops your credit score slightly. Your next lender then sees a record of this, assumes you’re not creditworthy and denies your next application.
For some information about bad credit loans in Nova Scotia, take a look at this.
To increase your approval chances in general and earn a lower interest rate, you can:
- Find the right lender or dealership – Even if it’s not good to apply all over, it doesn’t mean you should settle for the first car loan source you come across. Some Nova Scotia car loan sources are more legitimate and reasonably priced compared to others.
- Offer assets as collateral – If you have any valuable property, such as your home or a piece of land, you can use it as a bargaining chip to secure a car loan. Be careful, however, because (like a vehicle title loan) your lender will hold the rights to your asset, meaning you’ll lose it if you default on too many payments.
- Offer a large down payment – A good way of giving your lender in Nova Scotia some faith in your financial ability is to make a sizeable down payment, the amount of which should depend on the overall price of the car itself. This will also help you pay down your total balance sooner, saving you more on interest over time.
I Want To…
Opting For a Trade-In
When you already own a car but you’re looking to upgrade to a more preferable model by way of your car loan, a trade-in can potentially save you a few dollars. This option is not for everyone, as your current vehicle will need to have some value for your dealership in Nova Scotia to accept it.
The process may go like this:
- Start by researching your car. See what models in similar conditions are going for these days. If you want to take it a step further, have your car inspected by a professional mechanic to get an idea of what shape it’s in.
- Bring the car to your chosen dealership in Nova Scotia, where they are likely to do an evaluation of their own. They should soon give you a quote. Keep in mind that they will not pay top dollar for it, because they have to resell it and still make money.
- If you’re satisfied with their offer, you can trade in the car in exchange for a reduced price on your new one.
Wondering if you can trade in a vehicle that it’s paid off yet? Look here for the answer.
Are there penalties for paying a car loan early?
Can I still qualify for a car loan in Nova Scotia with a bad credit score?
What is car loan refinancing?
Your New Car is Just Around the Corner
If a good Nova Scotia car loan sounds appealing to you, talk to our Loans Canada team. We’ll set you up with the right lenders for your financial situation. Apply today!