Interview: Open Banking With Gary Schwartz, President Of The Canadian Lenders Association
Posted on September 8, 2021
The Loans Canada team sits down with Gary Schwartz of the Canadian Lenders Association to talk about open banking.
Car Loans Newfoundland and Labrador
Compare and Save With Loans Canada
Written by Bryan Daly
Best Car Loans Newfoundland and Labrador (Online) September 2021
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Note: Loans Canada does not arrange or underwrite mortgages or any other financial service. We are a simple referral website that provides free educational resources to help Canadians make better decisions.
Any Newfoundland and Labrador consumer can take advantage of the benefits that come with a solid car loan. If you’re one of those hopeful drivers, you can use a car loan to:
- Build, repair or improve your credit – Your lender or dealership should be relaying your car payments to one of Canada’s two credit reporting agencies (TransUnion/Equifax). If you’ve been making those payments on time and in full, your credit score will gradually rise, improving your whole credit report.
- Drive a car that’s normally not affordable for you – Even factory floor models can be expensive, so a car loan can help you pay for one by stretching out your payments over a more reasonable schedule.
- Get a new vehicle following an accident or breakdown – Either of these events can leave your current car completely undrivable. It’s best to get something more reliable if you want to get to work on time.
- Change your lifestyle for the better – A new hybrid can save you money and be good for the environment. A new minivan can help you start a family. Don’t skip out on a great car just because the junker you have now is “good enough”.
The Way Bad Credit Changes Your Car Loan
If your credit is as worn out as your old vehicle, meaning your credit score is below 620 (Canadian credit scores range from 300-900), it can change your car loan in various ways. For instance:
- Bad credit can make you a risky Newfoundland and Labrador borrower. Some lenders and dealerships might not approve your application.
- Those that do approve you may give you a higher interest rate. A higher interest rate can cost you thousands more over the life of your car loan.
Don’t worry, you can still get approved if you:
- Apply for a “secured” loan – Your odds will improve and your interest rate may be lowered if you offer your lender in in Newfoundland and Labrador some security upfront, such as your home, piece of land or another valuable asset. Just know that your asset will be at risk of seizure and sale if you don’t make your payments responsibly. To learn more about asset-based financing, watch this video.
- Save for a down payment – Another way to earn your lender’s trust is to make a down payment for your car. This should give you a higher approval chance, a better interest rate, and a shorter overall payment term.
- Find a bad credit lender/dealership in Newfoundland and Labrador – If you don’t qualify with conventional lenders and dealerships, you can seek one that deals specifically with bad credit borrowers, of which there are many in Newfoundland and Labrador.
Want to know about bad credit loans in Newfoundland and Labrador? Click here.
If you’d prefer to raise your credit score, you can always:
- Improve your credit profile – Making responsible payments for all your other loans and credit products is a good first step. It takes time and effort, but it’s still one of the most efficient ways to improve your creditworthiness.
- Avoid credit inquiries – When a lender in Newfoundland and Labrador is considering you for a car loan, they’ll perform a “hard inquiry” to examine your credit report for signs of financial delinquency. Every hard inquiry deducts points from your credit score, which is why it’s best not to apply numerous times within a few months.
- Request a higher credit limit or use less credit – Straying too close to your credit limit (common with revolving products) can also harm your score. Use a maximum of 30-35% for the best results. Trying to manage your revolving debt? Check this out.
- Dispute credit reporting errors – It’s essential to maintain the health of your credit report, which contains a history of your credit activity over a certain number of years. Errors caused by improperly relayed information, spelling mistakes, fraud and identity theft can ruin your credit score before you even notice.
Trying to decide between a new car and a used car? Check out this infographic.
Your Options in Newfoundland and Labrador: Vehicle Trade-Ins
Any car loan can be costly in Newfoundland and Labrador, even when you’re approved for a low-interest rate on a reasonably priced vehicle. One money-saving option is to trade in your used vehicle.
Here’s what the process looks like:
- You must already own or be in the process of financing a vehicle that’s still got some market value to it. Get it inspected and appraised for a better idea of that value.
- The same type of inspection process will likely be performed at the dealership.
- If approved, the dealer will give you a quote based on how much they would be able to resell the car for.
- You should keep your expectations low, as your dealer can’t give you top dollar if they want to make a profit.
- If you like their offer, however, the quoted amount will be subtracted from the initial price of your new car, making it slightly more affordable.
Other Options in Newfoundland and Labrador: Vehicle Title Loans
This will only work if you own your car completely, meaning no payment balance remains. If so, you can leverage your car title in exchange for regular loan money, which you can use however you’d like. Similar to a trade-in, your car will be evaluated and you’ll be given a quote based on your lender’s expectations for resale. Your car title then acts as collateral to secure the loan. If you default on too many payments, your lender has the right to sell your vehicle at auction to regain part of their loss.
For more information about borrowing using your car title, check this out.
Approval Granted: Cars and Vehicles Available for Purchase in Newfoundland and Labrador
Once you’re approved, you should have a whole selection of cars and other vehicles to choose from. However, your selection generally depends on elements such as:
- Your budget – A car loan may only put you in terrible debt if it can’t actually fit into your budget. Always factor your payments, interest rate, and other fees into your list of everyday expenses before you buy it.
Your dealership’s inventory – Before applying, make sure your dealership in Newfoundland and Labrador actually has the car you need. If not, you’ll be putting a hard inquiry on your credit report for no reason.
Your credit, income and employment history – For obvious reasons, your options will be more limited if your lender in Newfoundland and Labrador thinks there’s a chance you won’t keep up with your payments.
However, a decent financial profile will help you purchase vehicles of all kinds, such as:
- Sedans
- Minivans and oversized-vans
- Hatchbacks
- SUVs
- Pickup trucks
- Recreational vehicles:
- Motorcycles, roadsters, etc.
- Motorhomes, trailers, etc.
- Boats, jet-skis, etc.
- Snowmobiles, all-terrain vehicles, dirt-bikes, etc.
Frequently Asked Questions
How can I use my car to get cash?
Refinancing your vehicle is a creative way to get a cash loan and it is potentially a good option for other reasons as well. You can use “cash-out refinancing” to get yourself a cash loan for an emergency. If your car is relatively newer and already has a substantial amount of it paid off, you can turn that equity into cash. Also, if you find that you can no longer budget for your car’s monthly payments, refinancing can help spread out the loan over a longer-term and lower the payments. You might pay more in the long term, but at least you’ll have peace of mind knowing you can make the payments in time. Lastly, another use for car refinancing is to save money. This can be done if you can refinance at a lower interest rate or if you can shorten the term of your loan.
Can I still get a car loan if I have bad credit?
If your credit score is below 650, you may still have some options for car loans. With a lower score comes higher rates, which can be between 8.99% up to 29.99% for non-prime car loans. The exact rate you’ll get depends on other factors as well. New cars will have lower rates than used cars but require higher credit scores to qualify. The shorter the length of the loan, the lower your rate will be — but your monthly payments will have to be higher. Lastly, a higher down payment should also help lower your rate. At a bare minimum, you’d be required to have held a job for at least 3 months, have a valid bank account, and earn between $1600 to $2000 per month. Of course, you’ll also need a valid driver’s license.
Do I get charged a penalty for paying my car loan off early?
In most cases, paying off your loan early will invariably save you money because there is less time for interest to accumulate. This sort of loan is called “open-end”, and some car loans are structured this way. Unfortunately, most are not structured in this way, especially for those who have poor credit. The amount of interest you pay on a car loan is usually precalculated, meaning the total amount of interest you pay is the same whether you pay it off early or not. You can even incur what’s called a prepayment penalty simply for making one extra payment. That said, some of these types of contracts do have what’s called a prepayment privilege. This allows you to make early payments up to a certain amount so you can still save a bit on interest. In some cases, it might still be worth it to pay the penalty and get out of the contract early. Make sure to consult with your lender to determine the full conditions of your contract.
Getting Your Next Car Loan Through Loans Canada
Don’t wait! Apply today if you’d like to get access to the best car loans and other types of loans in Newfoundland and Labrador. Loans Canada has a solution for everyone!
