The financial industry often feels confusing and cruel, especially for those who suffer from less than perfect credit, especially if they weren’t always able to keep up with those monthly payments. While it’s true that there are some cutthroat elements out there, it is possible to find a situation in which you’re set up to succeed, even with obstacles in your way—even with car dealers and auto financing. Learn how obtaining vehicle financing can actually be a great financial move if your credit is lower than you’d like.
1. Demonstrating Responsibility
For better or worse, your credit history is the financial CV used to determine whether you’re responsible or not. The credit score is a short form summary of that history. It’s a very one-sided picture, especially if your credit history shows a lot of missed monthly payments and other difficulties. Obtaining auto loans and faithfully adhering terms of each loan allows you to demonstrate in concrete terms that you are, in fact, responsible.
2. Establishing Trust
Ultimately, the responsibility judgement associated with credit isn’t personal. It’s about trust. And unfortunately, it’s starting to become a symbol of trust not only within the financial industry but for employers as well. That means an employer, if you sign a release giving them the right to do so, can pull up your full credit history and see, in detail, how much money you owe where, how many payments you missed, and everything else. Demonstrating responsibility on your credit score by repaying your auto loan can be a good way of showing that you’re on the right track after a rough period.
3. Building Self-Confidence
Additionally, a bad credit car loan can be an opportunity for you to prove to yourself that you know what you’re doing and can make good decisions. Confidence is an underrated quality in our financial lives. We don’t often talk about the inner, emotional parts of our financial lives, opting instead to be purely analytical and calculating, but believing in yourself is essential to living a good life. Making those payments on time will feel great.
4. Putting a Better Personal Finance Plan in Place
In order to make those on-time payments, you’re probably going to need to take more control of your finances. That’s not to say that you were totally out of control before, but being as careful as possible will benefit you greatly in the long run. That may mean creating a separate savings budget to ensure you have extra money for car payments or emergencies just in case. It may mean taking stock of your daily spending habits and cutting out some unnecessary expenditure to give yourself more breathing room. Your car loan can be a useful motivator in this regard.
5. Improving Credit Over Time
As you start to rebuild trust and confidence with a smart financial plan and reliable payments, you’ll gradually rebuild credit and move into a place of greater security. This will take some time, but you’ll get a huge jump start just by having the loan in place and starting to make timely payments. As you start making allowances for your monthly credit payments and make your financial picture more positive, you’ll learn more about how to navigate the financial system and feel more empowered in a system that often seems designed to make us feel powerless.
6. Having an Asset for Collateral
Some bad credit loan options allow applicants to use their cars to “secure” the loan. This makes some lenders feel more comfortable working with those who have bad credit. There’s a big caveat for this one, though. If you default on the loan, the lender can legally take your car away from you. If you aren’t absolutely certain you can pay the loan back on time, you’re essentially signing up to lose your car AND hurt your credit at the same time. It would be better just to sell the car and get a better deal than to lose it to a bad loan.
7. Having an Asset for Emergencies
It’s not ideal, but having a car to sell off in the case of a serious emergency can prevent you from having to do further damage to your credit by running up credit card bills or missing payments. This scenario is heavily dependent on the terms of your auto loan. Make sure you understand the terms of your loan, including when or if you get to take possession of the car after you complete your payments and satisfy the requirements of your loan agreement. Some predatory lenders sneakily include terms that allow them to take possession of the car once payments stop, even if you’ve been perfectly faithful to the terms of the loan.
8. Enjoying Job Security
Of course, having a car is also a necessity if you want to be a reliable employee in a situation where public transportation isn’t an option. Only a few of Canada’s larger cities make public transportation a realistic option for the average worker and if you’re one of the millions of people who live outside these cities, you need your own set of wheels to show up to work on time. Having a steady job will make meeting payment requirements during the credit rebuilding process that much easier.
9. Exercising Personal Freedom
Finally, there’s something to be said for the satisfaction and happiness that comes when you have the freedom to go where you want to go when you want to go there. Whether it’s taking a road trip with your family or driving to your favorite restaurant for a treat-yourself lunch, a car is a great investment in your own happiness. Happiness lowers stress, which can help you see to your responsibilities and keep your financial health on the mend.
If you have less than perfect credit, DriveThruFinance wants to help. We specialize in providing auto financing loans to good people who’ve fallen on hard times. Our unique credit check and car financing loan application process allow us to look at the total picture of who you are, not just your credit history.