A Quick Guide to Easy Car Loans in Canada
Finding a car loan that works for you can often be very confusing, especially if your credit rating isn't perfect. But today—whether you have bad credit or no credit—it's easy to get a car loan. You just need to know where to look...
The banks and lenders available through most dealerships are less likely to approve you for auto financing if you have a low (or no) credit score. While it may seem that all hope for getting a vehicle is lost, there are places that help car buyers facing all kinds of credit situations get the auto financing they need.
And the best part? It takes less than 3 minutes to apply, and you can do it from the comfort of the sofa!
Get preapproved for your car loan online
Canada Drives works with customers in every province. When you complete an application, one of our dedicated finance specialists will work out all of your options and discuss the best ones with you. Then, we'll match you with a local dealership partner that can help your credit situation. This can all happen within a couple of days.
Just knowing that you can get approved online for a car loan (even with low or no credit) is the first step in the right direction. However, there are some things you should keep in mind when applying.
It's a good idea to know what kind of monthly payment you're happy with before you apply. It also helps to understand what lenders look for before they approve you. Having this information at the ready will make our speedy application & approval process go even faster.
This 3-minute read offers a few simple considerations to make our auto finance preapproval process even easier!
Read more: How to Qualify for Car Financing with Bad Credit in Canada
Understand your monthly payment
First thing's first. Once you decide what kind of vehicle you want (truck, SUV, passenger car), it's important to know how your car loan monthly payment is calculated so you know what to expect. Two people purchasing the exact same vehicle can potentially have very different payments. Loan payments are determined by numerous factors but there are three main points to be mindful of.
1. The principal is a major aspect of the lender’s car loan payment calculation. The principal is the total cost of the vehicle you purchase. This figure also includes any fees charged by the dealership or lender when purchasing your vehicle.
2. The term of your loan greatly affects your car payments. It is the length of time that one must make payments for. There is no standard term for a car loan. Typically the loan term can be anywhere from 36 to 84 months (3-7 years) but it may be possible to have a shorter or longer loan term. If you choose a shorter term, payments may be larger, but your loan will be paid off faster.
If you would rather have a longer loan term, then you will be able to spread your payments over a longer period and therefore make your payments smaller. Whether or not someone wants a longer or shorter car loan term is up to the borrower. The borrower needs to keep their finances/budget in mind and pick the term that will grant them affordable payments.
3. Traditionally, your credit rating dictated whether or not you got approved for a car loan. Thankfully, online services like Canada Drives mean that is no longer the case. However, the better your credit score is, the better your interest rate will be. If you want to secure a lower interest rate for a potential car loan, a cosigner or down payment are options that can help you do this.
To help you understand what your monthly payments will be, try out our car loan calculator.
Understand lender's criteria
There are a few simple details that lenders will look out for before approving you for auto financing. They need proof that you have a:
- bank account
- reliable source of income
- home address
Firstly, you must have a bank account so that lenders can receive monthly repayments with ease. You will be asked to provide recent bank statements.
Once lenders have established that you have a bank account, they will want to make sure that you are employed or have a steady income. They need to know that you can afford to make your payments on time.You will be asked to provide paystubs.
Typically it's required that you make a minimum of $1800 per month and you have been at your current job for at least 3 months. The longer you have been in employment, the more confident the lender will be of your ability to repay the loan. If you only work part-time and make less than the minimum amount, you may want to consider asking a trusted friend or family member to be your cosigner.
If you are unable to maintain full-time employment due to a disability, there are a few lenders willing to provide financing to those who get their income from government programs. That includes programs like ODSP and CPP.
Your home address is a key detail that lenders take into consideration when determining whether or not to approve you for a car loan. Lenders want to know where you live in case they need to get in touch with you or send you anything regarding your vehicle financing.
Get approved for auto finance today!
Canada Drives makes auto finance easy – even if you have bad or no credit! Apply today, get approved in a few hours, and you could be driving your new vehicle by the end of the week!