Financing a vehicle isn't as difficult as it often appears, but you still need to know some basics if you want to get the best chance for approval if you have poor or bad credit.
Below are some frequently asked questions we see at Wheaton Honda in Edmonton. If you have any additional questions about the financing process not answered below, feel free to give us call at toll free: 1 (866) 463-7885, local: (780) 463-7888 or visit our dealership in person.
If you're looking for where to apply for car financing or leasing, fill out our no-obligation online credit application.
How can I purchase a car with poor or bad credit?
In order to give you the best chance of approval if you have poor or bad credit, Wheaton Honda needs as much information as possible (job information, past and current credit information, etc.) so we can accurately assess your credit standing and find the right lender for your needs.
Wheaton Honda deals with over a dozen major lenders including ones that can help you get approved even if your current bank has said no.
Please let us know of assets such as tax-free savings, RRSP's or personal savings so that we can show lenders why they should lend you the money to purchase a new or used vehicle and also let us know of any credit issues such as a reposession, bankruptcy or unpaid collections so we can best structure your deal to lenders.
What if I have outstanding debts or collections?
Please try to pay off any and all collections and take care of any judgments against you before seeking credit.
While credit card debt and other loans or debt obligations are not an issue, if your credit bureau has a record of a defaulted or written-off loan it will make it more difficult for you to get credit.
Can we finance additional products?
Most people don't realize that accessories can be easily added into their monthly payment. So, if you're looking for different rims, a remote starter, lift kit, or maybe even a fancy new turbo in a new or used car?it all can be built into your financing.
You can have the car or truck you want, your way, and customize it the way you want. Drop by our parts and accessories department to see the options available for your desired vehicle.
What factors affect my ability to get approved?
In addition to your history of credit, job stability and residence are two huge factors that influence approvals. The longer you have been at a residence, held the same job or worked in the same field, the more stable you appear to lenders.
Say you're a plumber and left one company you have been at for 5 years for a better-paying job in the same industry. The bank will see that you are in the same line of work and so this would be unlikely to affect your ability to get approved.
Do you have any special programs for new buyers or students?
Let us know if you are just graduating or have graduated in the past two years, as Wheaton Honda has special programs for graduate students. Manufacturer programs can change, so please ask one of our financing professionals what is currently available.
I'm looking to purchase a house in the near future. Will leasing a vehicle affect my credit rating the same way that financing does?
Yes, leasing will affect your credit in the same way as financing. Lenders use the same process of polling your credit bureau as is done with financing to determine your credit information.
How do I use a vehicle loan calculator?
To get the most accurate estimate if your monthly payment with a loan calculator, you must know the following:
1. The actual price of your vehicle.
Don't make assumptions about the discount the seller will give you, as this will often lead to disappointment if payments turn out to be higher due to a higher selling price.
2. Decide on your term (do you want a shorter or a longer term?
The longer the term, the lower the payment. Terms vary from 12- to 96-month terms. A traditional car loan is 60 months, while 72-, 84- and 96-month terms are available on new or gently used vehicles.
Interest rates are at historic lows, so consider whether you want a lower rate with more money in your pocket (longer term), or take a shorter time with a higher payment that lets you pay it off sooner.
When using the loan calculator, use a term that makes sense. (You probably wouldn't take out a 96-month term on a used 2009 car.) When calculating your term, keep in mind how long you will be keeping the vehicle and whether you may be selling or trading early.
3. Factor in warranty coverage
Have you factored in extended warranty coverage? People sometimes forget that a new or used car may break down, leaving them with bills of thousands of dollars for repair costs.
An extended warranty that covers your vehicle for as long as your financing term lasts (especially extended 72- 84- and 96-month terms when you have budgeted X dollars for a payment) will mitigate most unforeseen costs that could arise.
Most people are on a budget, and it helps to have the peace of mind of extended warranty coverage during and after your financing term is up.
Do you offer any sort of credit insurance?
Life and credit insurance can be added to your payment for very low cost depending on your budget and life situation:
In case of accidental loss of life, life insurance will pay out the amount remaining on your car loan and leave the vehicle as an asset to your family, estate or loved ones. Unlike an estate which can take months or years to settle, the life insurance benefit is usually is paid out in less than 30 days.
Some plans include a living benefit, which means if you lose your hand at the wrist, foot at the ankle or experience a permanent loss of sight in one or both eyes then your car loan would also be paid out in full.
Accidental and health insurance, better known as credit protection insurance, is a benefit steps in to make up your monthly payments if you are unable to work due to sickness or injury.
This coverage protects you anywhere in the world, 24/7, and you don't have to be hurt at work to gain this benefit. It is paid directly to the lender, and thus does not interfere with other plans or coverage you may have.
It's like getting a raise when you need it the most. There are several plans to choose from, so please talk to your financial services manager to find the best plan to suit you and your lifestyle.
How can I get the lowest monthly payment on my vehicle?
There are a variety of ways to ensure you get the lowest payment possible on your next vehicle:
1. Negotiate the best price.
Typically dealers and private sellers will negotiate a bit with you on price.
2. Stretch your term.
Choosing a longer financing term will bring down your monthly payment, and with a low fixed interest rate it is often the best solution for most buyers.
3. Try bi-weekly payments.
By making a payment every two weeks instead of once a month, the bank gets their money faster and you pay less per-payment than if you make a monthly payment.
Depending on the way you get paid from work, this option may be superior to making a larger payment once per month.
4. Figure out how much you are financing.
Banks and lenders offer substantially better rates for vehicles that are at least $10,000, while they may charge an extremely high interest rate (or no options at all) for financing on vehicles $8,000 and less.
The way to get around this may be to add an extended warranty or other options to your vehicle to increase the value and help bring down your interest rate while adding protection for the length of your financing term.
You will generally find better financing rates when you are spending more, while your rate is also based on your credit and what you qualify for.
5. Want a better rate? Use a better lender!
Car loans in Canada are open loans, meaning you can pay them off at any time without penalty. However, with most lenders, when you decide to make extra payments or put down a lump sum it would not reduce the dollar value of your monthly payments.
If you took out a car loan with a 72-month term, and after four months you decided to put down $2000 dollars, your 68 remaining payments could drop to 63. But you would not get any instant gratification for putting money down on your loan as you still pay the same dollar amount per month.
Certain lenders like the General Bank of Canada and Bank of Montreal treat this situation differently. When you make additional payments or put down a lump sum with these lenders, they can recalculate your monthly or bi-weekly payment so you will be paying less per month for the remainder of your loan.
For example, say you have a monthly payment of $500 and you decide to put down a lump-sum payment. Your monthly payment could drop $500 to $440 for the remainder of your loan, over the same number of months.
This can be helpful when you're shopping for a car with strict number in mind, but can't seem to negotiate to the monthly payment you want. Use this tip to bring the payment into line with your budget, or to make a monthly payment that you're already comfortable with a little more cozy every month.
Can I pay off my vehicle loan early without penalty?
The simple answer is yes. At Wheaton Honda, all of our finance contracts that we put to paper are conditional sales contracts. This means that our loans are all free of payout penalties, and are totally open.
There are three main reasons for this:
It saves money for our clients. We work for your trust, and we want you to be happy. By making additional payments to pay off your loan sooner, it saves you from paying more interest, and it gets you out of debt faster. Vehicles should be tools, not burdens.
Often a client's financial position changes during the course of a loan. If down the road you find yourself in greater financial standing and want a new vehicle, we can then blend your old loan into the financing of a new car. Everybody wins. But had there been penalties for early repayment, then we would not have been able to do this quickly and easily for you and our clients.
It often happens that a client wants to take advantage of a deal that's too tempting to miss out, while at the same time a financial asset they have been waiting on is finally ready to mature. The funds weren't there initially when they got their first loan, but now they are. Those clients can then afford to get that new vehicle at the special offer right away, and then pay off their previous loan immediately once their windfall comes in.