1. Auto loans are secured.
 
Secured credit is a type of loan that is backed by collateral, in the case of an auto loan, the collateral is the vehicle. Secured loans tend to have a lower interest rates compared to unsecured loans. In order to get your credit rating back on track, you need to prove to lenders that you can responsibly manage a healthy mix of credit. Paying your monthly bills on time and in full will improve your credit score but opening up a new form of credit can add to your mix of credit and help you rebuild your score as you work to pay off your debt.
 
2. You need credit to build credit.
 
In order to build credit, you cannot miss any payments or make late payments. The auto loan should also be open for at least a year, as it show a pattern of responsible payment history which is what builds a credit score.

3. Car loans are easier to be approved for than other loans.

Subprime loans are available to borrowers who apply for an auto loan with a credit score that falls below average. Generally, Canadians with an overall credit score under 670 are considered subprime. At Kootenay Auto Loans, we deal with many unique lenders for every type of credit, including for subprime loans.