What Does OAC Mean When Buying a Car?

That old rickety rattle trap you’ve been driving needs to be replaced, so you’ve been exploring your options. You want the best deal possible, so you’re doing your homework. “OAC” keeps cropping up on the pricing information, but what does it mean?

For the most part, terminology from car manufacturers, dealers, and lenders is mumbo jumbo for the average car buyer, and acronyms tend to use every letter in the alphabet. Some of these terms are important though, and OAC is one of them.

What is OAC?

The acronym ‘OAC’ is usually found below the estimated monthly payment or interest rate on the vehicle description page. You’ll see it in the fine print at the bottom.

OAC stands for On Approved Credit. It means that approval for the attractive monthly payment or interest rate you see on the price tag is subject to your credit rating. For example, 0% APR financing is usually only available on approved credit. The better your credit score, the higher your chances are of getting approved for this special offer.

Unfortunately, 1 in 3 Canadians have non-prime or sub-prime credit ratings. Even those with near-prime or prime credit ratings may not get access to these attractive OAC rates.

But that doesn’t mean you should give up on finding a great deal...

Don't know your credit score? Find out how to check it for FREE in minutes.

How to get OAC financing

Qualifying for OAC financing when you have less-than-perfect credit is possible. You may get approved for some special offers if you can prove your ability to keep up with the monthly payment. Sometimes a co-signer or down payment will be required to get that stamp of approval.

But whether you qualify for OAC financing today or not, you should always be mindful of building credit so that you qualify for better interest rates tomorrow.

The lender uses your credit score to gauge whether or not you can be trusted to borrow money. Lenders like to see that you make enough money to repay on time and that you are in good standing with all your current credit obligations.

Here are some tips on how you can boost your credit score in just a few months:

Boost your earnings. Easier said than done, but if it’s in your power, extra income such as overtime or side hustle will help. It lowers your debt-to-service ratio, a calculation that estimates your risk profile and your ability to repay the loan.
Never miss a due date. Any credit cards, loans, or utilities that are in arrears look bad on your credit report. Calendarize your monthly payments and automate them if possible.
Lower your overall borrowed amount. Simply put, pay down your debt so you don’t appear overextended. Pro tip: Your combined credit card limit should never be at more than 30%.

Why you don’t need OAC financing to get a great deal

If you want to find a great deal today and don’t have time to build your credit, there are other ways to get the vehicle you need immediately and at a price you’re happy with.

Know the best times to shop: Get strategic about when you visit the dealership. There are times of the week, month, and year to visit car dealerships and save hundreds of dollars on a new or used car.
Learn how to identify a pre-owned gem: Everybody knows that the used car market is the best place to look for a bargain. But there’s a few simple checks you should do and a couple of tools to leverage to help ensure you get the best deal possible.
Learn how to negotiate: Some basic negotiation tips can help you shave a few hundred dollars off the car’s price tag.
Get pre-approved: Getting pre-approved involves knowing how much you can afford before you start browsing vehicles. A pre-approval puts more bargaining power in your hands because your dealer will see that you’re not just a window shopper. You can expect preferential treatment at the dealership because you’re already qualified for finance and viewed as a customer with high intent of making a purchase.

Get pre-approved today!

Since 2010, Canada Drives has been connecting customers facing all kinds of credit situations with great car deals based on details such as their vehicle preferences, budget, and location.

Apply online today (it only takes 3 minutes!) to see what you're eligible for.

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