If I Pay Extra On My Car Loan Does It Go To Principal?
Find out if your extra car loan payments will go straight to your principal and how these payments will affect your car loan.
Good credit is a priceless financial tool for most Canadian consumers. Having good credit can help borrowers gain access to affordable credit products when they’re trying to finance big-ticket items such as a car or house. If you have poor or no credit, gaining access to these credit products can not only be difficult but a lot more expensive.
If you’re thinking about applying for a loan, whether it’s a mortgage, car loan or personal loan, it’s best to improve your credit as much as possible before applying. At Loans Canada, you can find a number of credit-building products to help you.
A secured credit card is one of the best and easiest ways to grow and improve your credit scores. It works just like any other credit card, except you have to provide a security deposit which will act as your credit limit. You’ll then be able to access your secured credit card to make purchases up to that credit limit, which you can reuse as you pay back the balance.
Once you start using your secured credit card, your credit activity will be reported to one or both credit bureaus in Canada (TransUnion and Equifax). If you use your secured card responsibly by making payments on time and in full, you’ll be able to build a positive payment history which can help improve your credit scores.
Secured credit cards do require the user to provide collateral in the form of a security deposit. But, this is often as little as $75 and will be returned should you decide to close your account (your balance must be repaid in full before you close your account to get your security deposit back).
Annual Fee | Interest Rates | Min. Deposit | ||
Refresh Financial Secured Visa | $12.95 | 17.99% | $200 | Learn More |
Neo Secured Card | $0 | 19.99% – 24.99% | $50 | Learn More |
Plastk Secured Visa Credit Card | $48 (+$6 monthly fee) | 17.99% | $300 | Learn More |
Capital One Guaranteed Secured Mastercard | $59 | 19.8% | $75 | Learn More |
For those who are looking to grow their credit scores and save for the future, a savings loan is a great option. Unlike a regular loan, a savings loans does not provide any upfront cash. Rather, you’ll make affordable monthly payments to your lender who will keep your money in a secure trust. Each payment you make will be reported to one or both credit bureaus, which will help you build credit. At the end of the program, the lender will return all your payments minus any interest and fees.
The great thing about the savings loan is that you’re not only growing your credit, you’re also saving for your future. Whether you’re interested in improving your credit scores or want to build one from the ground up, a savings loan can help you.
If your bad credit has gotten to the point where you’re having trouble getting approved at all, a guarantor loan might be the right product for you. In this case, you’ll need a trusted friend or family member who has strong credit and finances to co-sign your loan. This means they take responsibility for the loan in the event that you start missing payments.
Good credit, bad credit, credit scores, credit ratings, and credit reports, there is a lot to know about credit and sometimes it can be very overwhelming. The one thing you need to know for sure is, good credit can open multiple financial doors. Here are some benefits to having good credit:
Credit Range | Estimated Interest Rate Based On Credit Range | Explanation |
Excellent Credit Score (760 - 900) | 1.5% to 10% | Borrowers within this credit range will usually be able to qualify for the best interest rates. |
Very Good Score (725 - 759) | 3% to 17% | Individuals in this credit range will also generally qualify for the best interest rates. |
Good Credit Score (660 - 724) | 5% to 29.99% | Interest rates offered to borrowers within this credit range are typically very affordable, but may not be as low as the excellent credit range. |
Fair Credit Score (560 - 659) | 15% to 35% | Borrowers who fall in the “fair” credit score range may not only find it difficult to qualify for a loan but will usually be charged much higher interest rates. |
Poor Credit Score (300 - 559) | 18% to 46.96% | Borrowers with poor credit generally have a hard time finding a lender who will approve them. They are also charged high-interest rates due to their risky credit profile. |
If you want to grow your credit score and are interested in one of the above options but aren’t sure where to start, we can help! We specialize in matching Canadians, across the country, with the best possible credit solutions.
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Find out if your extra car loan payments will go straight to your principal and how these payments will affect your car loan.
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