Car Loan Options for People on ODSP or Disability

July 22, 2019

Every month, we consult Canadians with disabilities. They often want to know whether they can get approved for an auto loan while receiving assistance from the Ontario Disability Support Program (ODSP) (or other provincial programs.) Yes, you have options, but there are a few extra considerations. Here’s what you need to know and how you can boost your chances of approval.

You’ve been to the bank. You’ve visited dealerships. Finding the car you need with reasonable financial terms shouldn’t be so difficult, but unfortunately, that’s the reality for many low-income individuals. When it comes to loans for ODSP recipients, the entire process can take far too long and may eventually end in frustration and disappointment. And when you have a disability, there’s the added challenge of finding a vehicle that’s modified and customized to your unique needs.

The good news? You have options. 

Being on ODSP income support or another provincial assistance program does not disqualify you from getting a car loan, nor will a new car loan affect your ODSP eligibility. 

But there are a few considerations to be mindful of. 

Let’s discuss a few questions you might have related to your new car purchase. 

How can I get approved for a car loan on disability?

If you have a disability and are on income support, there are a few things you can do to increase your chances of getting approved with the best possible loan rates. We cover a few short-term and long-term strategies. Combining all three strategies will be your best bet for getting the car you need and the financial terms you want.

Two short-term strategies...

If you need a car immediately, here’s what you can do to boost your chances of approval:

1. Find a cosigner: Like with any loan, a decent credit rating and a cosigner are the most surefire ways to increase your chances of getting approved with the best auto loan rates. That said, remember that your cosigner will be responsible for payments on your loan if you can’t pay.

Make sure this is an avenue you feel comfortable going down. Worst case scenario, would non-payment ruin your relationship? Take the time to consider and discuss potential issues with your cosigner before either of you sign anything.

2. Find a dealership that specializes in low-income programs: This may require a bit of research on your part. Like with any loan application, your credit score may get dinged every time you apply, so mitigate the damage by shopping around beforehand. Also, talk to your plan advisor to see if they have connections to trustworthy lenders who specialize in ODSP car loans.

Alternatively, Canada Drives specializes in low-income car loans. We connect Canadians facing all types of financial situations with dealerships that are prepared to work with them.

Whether you’re on ODSP or another provincial assistance program, we can help you secure the approval for the vehicle you need.

One long-term strategy...

3. Focus on improving your credit: If you don’t need a new car immediately, you should be thinking about improving your credit score as much as possible. With many lenders, your credit history usually plays a big role in deciding whether or not to approve your application. The good news is, you can boost your credit score substantially in less than 12 months.

The better your credit is, the more likely you’ll be able to get approved without a cosigner. You may also benefit from better interest rates.

If you have bad credit, you can improve your credit score by:

  • paying off debt
  • keeping balances low
  • making all of your monthly payments on time
  • check for errors on your credit report and dispute them

For more tips, check out this guide from the Financial Consumer Agency of Canada on how to improve your credit score.

Will a car loan affect my ODSP eligibility?

If the car loan is for your primary vehicle, the loan will not affect your eligibility. 

Generally, loans are not considered as income if they’re used towards “disability-related items and/or services approved by the Director”, according to this ODSP info sheet.

Transportation is an essential disability-related service, so as long as your car loan is going towards a primary vehicle, you should be good to go. If you require a loan to modify your vehicle, this is also considered an essential disability-related service, and would not affect your eligibility.

According to the Ontario government, your primary vehicle is considered an “exempt asset”. Exempt assets are the possessions or property that are not factored in when determining ODSP eligibility. That said if you try to acquire a second or third car with a car loan while on ODSP, it may affect your eligibility if the value of the vehicle is over $15,000.

If you’re unsure, talk to your ODSP caseworker about any eligibility questions you may have, or check out this ODSP vehicle-specific guide from the Ministry of Ontario.

Also, if you receive money as a gift from a family member or a friend to help you buy a car or as a down payment on a car, ODSP will not count that cash gift, as long as it’s towards your primary vehicle.

Does ODSP pay car insurance?

Monthly ODSP income support is made up of two parts: basic needs and a shelter allowance. This financial assistance is meant to help with the costs of food, clothing, and shelter. ODSP does not provide funds specifically for the payment of car insurance or car payments. Please contact your ODSP caseworker for more information.

What about personal loans for ODSP?

Some low-income customers think their options are limited when it comes to getting a loan. Banks have strict lending criteria while payday lenders prey on those that are in need of quick cash.

Personal loans are a safe and accessible middle ground. With an installment loan, you’ll enjoy a reasonable interest rate and monthly repayment plan so that you can budget accordingly with no surprises. Visit Fresh Start Finance for more information.

What about other provincial disability programs?

This information is not only meant for Ontario residents. Whether you receive BCEA, SAID, or AISH, most provinces are like the Ontario Disability Support Program; they allow one vehicle up to a certain value to be used for daily transportation needs and is considered an exemption. Some provinces have additional low-income support programs that also overlap with how their respective disability programs operate.

Use this handy Benefits Finder from the Government of Canada to find out what benefits you could be eligible for.

Can you apply for an ODSP car loan online?

While banks have strict criteria that make loan approvals challenging for low-income individuals, there are trustworthy alternatives you can turn to. Whether you have bad credit or good credit, cosigner or no cosigner, Canada Drives works hard to help you secure the vehicle you need.

We work with hundreds of car dealerships all across Canada, and select dealerships are set up to help people who receive their money from government-funded programs. Apply online today using our secure, fast, and easy application to see what you could be eligible for.

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