Can I Get a Car Loan With Unpaid Collections On My Credit?

Obtaining a car loan with unpaid collections can be a daunting task for many Canadians.

Unpaid collections can significantly impact your credit score and make traditional lenders wary of extending credit.

While banks and credit unions might not be feasible options for those with unpaid collections, there are still potential avenues to explore in securing a car loan.

In this article, we will discuss some alternative options available to individuals seeking car financing despite having unpaid collections on their credit reports.

1. Get Yourself a Co-Signer

Having a co-signer with a strong credit history can greatly improve your chances of securing a car loan with unpaid collections.

A co-signer essentially becomes equally responsible for the loan if you default, providing the lender with additional assurance that the loan will be repaid.

Make sure to choose a co-signer who has a good credit score and is willing to take on this responsibility. If you're not sure whether or not a co-signer would be right for you, click here.

2. Make a Larger Down Payment

Offering a larger down payment can demonstrate your commitment to the loan and may convince some lenders to overlook unpaid collections.

A substantial down payment reduces the overall loan amount and decreases the lender's risk. It can also show that you have the financial means to make regular payments.

3. Dealership's Credit Rebuilding Programs

Some car dealerships and lenders offer credit rebuilding programs designed to help individuals with poor credit histories improve their credit scores.

These programs often include educational resources on financial management and credit repair.

By participating in such a program and demonstrating responsible financial behavior, you may increase your chances of getting a car loan.

4. Explore Non-Traditional Lenders

While we won't delve into specific lending companies, some non-traditional lenders specialize in providing loans to individuals with less-than-perfect credit.

These lenders may be more flexible in their lending criteria and might be willing to overlook unpaid collections if other aspects of your financial profile appear promising.

5. In-house Financing Through Dealerships

In-house financing is an option that doesn't involve third-party lenders or traditional banks.

Some dealerships in Canada offer this type of financing to customers, even if they have unpaid collections on their credit reports.

In-house financing works directly with the dealership, allowing them to make their own assessment of your creditworthiness and financial situation.

These dealerships may be more lenient towards individuals with less-than-perfect credit histories.

We don't offer in-house financing at Northway Ford, but with over 20 years of experience, we have a vast contact list of potential lenders that can work with you. Click here to start financing today.

You Can Get a Car Loan With Unpaid Collections

Securing a car loan with unpaid collections in Canada may be challenging, as it limits your options with traditional lenders.

However, there are still several potential avenues to explore, such as in-house financing through dealerships, finding a co-signer, offering a larger down payment, or participating in credit rebuilding programs.

Non-traditional lenders can also be considered, provided you conduct thorough research and ensure their legitimacy.

Remember that it's essential to be cautious and transparent about your financial situation when seeking a car loan with unpaid collections, and always strive to improve your creditworthiness for future financial endeavors.