Have you been trying to get through the arduous process of buying a car? The process can be daunting for everyone at first. Getting a car loan, however, can make this process a bit easier for some people. You might now be wondering how car loans work in Canada. Understanding the basics of loans before applying to get a bank loan for a car can always make the process of approval easier.
How to Get a Car Loan?
The process is getting car loans is simple; getting approval is the more challenging part. If you go to a dealership, then the dealer will help fill the application and submit it on your behalf. Through a private seller, you have to do more work on your own. The three significant steps are as follows:
- Complete application for the car loan: For this, you need to provide all the financial and personal information that the lender requires.
- Submit all the other required documents the lender asks for: For instance, you might need to submit proof of income, assessments, expense documentation, and other ones such as debt obligation supporting documents. You may also be required to present documents of the model and make the car you hope to purchase.
- Wait for approval: This process may take a number of weeks or days, all of which are based on the lender.
What Requirements are There for Getting a Car Loan in Canada?
Each particular lender’s loan requirements vary slightly. However, below we have listed some basic loan requirements you can expect from almost every lender:
- Proof of income
- Proof of residency
- Identification issued by the government
- Be the majority age in your territory or province.
- Evidence that you have car insurance from a well-known company You may get quotes here https://www.surex.com/Insurance/auto-car/halifax, for example
- Consent to have a credit rating check
Can you Afford to get a Car Loan?
You may already be aware that cars are not cheap. But if certain smart moves are made, they can become affordable, even for the more money-conscious individuals. Here are certain things you might want to consider if you are currently trying to decide whether or not you can afford to get a car loan:
- Parking fee
- Repairs and maintenance
- Admin tax and fees
Dealership or Bank for the Car Loan?
Apart from dealerships and banks, there is now a third option that has come to fruition: online service providers. So now you have three ways of applying for a car loan in Canada:
- Banks: BMO, CIBC, RBC or the Toronto-Dominion Bank, and Scotiabank are well-known banks in Canada that offer car loans. They are just some of the great places to get approved for your car loan, given that you have excellent or good credit. However, it is essential to consider that banks can become frustrating to deal with due to the amount of paperwork and many in-person appointments. They usually only entertain customers with very high credit scores.
- Dealerships: If you are shopping for a vehicle through dealerships, they offer a few finance choices during the sale. These options will be available for the vehicle you select. In comparison to banks, dealerships are more convenient to get the financing and car in one place. It is once again essential to notice that many dealerships also do not have the required resources to help applicants with no credit or bad credit. They tend to focus on their primary business.
- Online service providers: The third and newer option is online providers, such as Canada Drives, that have recently started to emerge. They are more flexible than the other two options as they help customers with all kinds of credit situations, connecting them with dealerships and lenders that can help. The application with this service can be made online, from the comfort of your home. Until the service finds a car in the area you love, you do not have to go for in-person appointments.
When it comes to credit score, usually having one of at the very least 650 is needed to be approved for a car loan quickly, but it does depend on the lender’s overall preference at the end of the day. There are no known minimum credit scores that are widely accepted. A few lenders also consider other factors like your income, apart from just your credit score and credit report during the approval process.
If you are wondering whether or not it is possible to get a loan with a bad credit score, it is most definitely possible. It always helps to have specific bargaining chips to negotiate a good deal with the lenders. We have mentioned three basic things you should do to increase your chances of getting approval, even with bad credit:
- Try to raise your overall credit score before applying
- Get a cosigner who has good credit
- Save a little for the down payment
Now you probably have a better understanding of how to get a loan for a car in Canada; perhaps it is time to try your luck in this department. Go ahead and apply to try your luck, and get the vehicle of your dreams!