How to Improve Your Chances of Being Approved for a Car Title Loan￼
Studies show that 49% of Canadians under the age of 65 are struggling to meet their financial commitments, and many are falling behind on their bills. When you begin to fall behind on your finances, it makes it harder to keep up your credit rating.
While your credit score does not affect whether or not you can get approved for a car title loan, it does affect your being approved for mainstream lending from the banks. Do you want to learn more about how you can improve your financial standing to increase your chances of having your loan application being accepted by banks in Ontario, Canada?
Keep reading this guide for the top tips to follow when you are trying to increase your credit rating.
Improve Your Credit Score
Having bad credit can seriously affect your chances of having your bank loan application approved. While it is not the only thing that lenders look at, they view someone with a bad credit score as a risky borrower.
This makes it much more difficult to get accepted for a loan! To make it easier to get bank loans, you first need to find ways to improve your credit score.
There are some steps that you can take to immediately improve your credit score. This includes asking for higher credit limits, paying your bills on time, and paying your credit card balances strategically.
Check Your Credit Report
Not only do you need to improve your credit score, but you also need to start regularly reviewing your credit report for errors.
This is what lenders see when they are looking at your loan application, so you can look at the report to see what you need to improve upon. Plus, this makes it easy to identify any mistakes in your credit report.
If there are any small or large errors, this can impact your ability to get a bank loan. However, it will not affect your chances to get a car title loan, as title loans are based on the equity in your paid off vehicle. You can contact a credit reference agency to amend these errors.
Show Financial Stability
Next, you need to prove that you are reliable if you want to get accepted for a bank loan. Showing financial stability will take a while to be reflected in your credit score, but it will show lenders that you are a safe person to offer a loan.
Demonstrating financial stability can include paying your bills on time, staying within your credit limit, and paying more than the minimum amount on your credit cards each month.
Balance Debt-To-Income Ratio
Balancing your debt-to-income ratio is another important way to show financial responsibility and prove that you are good with your finances when you’re seeking a loan in Ontario.
The debt-to-income ratio is how much debt you owe over your current income. If you have a high ratio, it shows that you have a lot of debt compared to the money you have coming in.
While this may not seem like a big deal, it shows lenders that you may not be able to pay off your loan if too much of your income is being spent on other types of debt.
Typically, you should be using less than 40% of your monthly income for your debt.
Remove Damaging Financial Ties
Often, people are tied to other people financially, which can hold them back when it comes to their credit and financial standing. This is common if you have a joint account with housemates or partners that have bad credit.
If they have bad credit and are affecting your joint account, it will also affect your credit score.
To make sure your credit is entirely in your hands, you can close any of these joint accounts! Removing these types of damaging financial ties will increase the chance of you getting accepted for a bank loan.
Review Your Financial History
Because you know what credit reference agencies are looking for, you can review your financial records and find ways to improve them. Make sure you look through your financial statements and other records of your debt, current loans, and more.
There may be changes you can make that will immediately improve your financial standing. For example, you can settle existing loans, close some of your credit cards, and more.
Save for a Deposit
Something else that will help you get a car loan easier is having a large downpayment. When you have a big deposit, you will not need to borrow as much money from your lender, and you will not have to pay as much for your monthly payments.
Because you will be asking for a smaller loan, it will improve the odds of your application being accepted.
This can also help you lower the interest rate on your loan!
Get a Guarantor Loan or Cosigner
If you are not able to get a loan by yourself, you can also get another type of loan. For example, you may want to look into a guarantor loan or have a cosigner on your loan! A guarantor is someone else that can help you get credit.
Essentially, they will promise to repay the debt if your financial situation changes and you are not able to pay it. On the other hand, a cosigner is immediately responsible for paying off the debts.
Still, both of these options lower the risk for a lender and makes it easier to get a competitive rate when applying for a car title loan.
Need a Car Title Loan?
When traditional lenders will not accept your loan application, there are still ways that you can get a car title loan. Following these tips will increase the chance that you will be accepted for a bank loan, but if you cannot obtain one, then try to get a car title loan. Car title loan lenders do not look at your credit, but rather the equity in your paid off vehicle.
If you need help getting accepted for a car title loan, Fast Action Finance can help. Our car title loan company in Ontario offers the highest loan approval rate in the industry for people that are not accepted by traditional lenders.
Contact us to learn about our loan services and get approved today!