Having the necessary documentation on hand could help you receive a vehicle loan faster when the time comes to apply. For example, lenders are often searching for evidence that you are a good credit risk and will be able to repay the loan. This information and your credit record and score will be used to determine the interest rate you are offered. Here's a checklist of things you'll need for a car loan to get you started.
As a potential car owner, there must be so many questions that usually start with 'How?' Rest assured, we will answer all your questions and clear any misconceptions.
How to get a car loan in Canada?
To apply for a car loan online, the first step is to fill out the form provided by the lender. The main aspects of the form will entail your financial and necessary personal info. The next step is to submit other documents that the lender may need to check, such as expenses or debt-related documents. Lastly, wait for your lender to approve your application.
How about the interest rate? How will that work on the car loan?
The interest rate depends on the lender's rate, what type of vehicle it is, and the borrower's credit balance. Therefore, as a borrower, you pay a bit of interest and the actual amount in the months to come. The interest, in the beginning, will be high but will get smaller as time passes.
How to ultimately pay a car loan?
Car Loans have a set time of payment which can vary depending on the lender. Most car loan payments are made monthly; they can either be; a specific amount automatically deducted from your account, or you can pay a higher amount than the amount decided on to ease your loan payment for the next month.
How do I know which credit score I need to buy a car?
For an auto loan, the standard score is 650, which can help approve your application. However, it mostly depends on the lender's preferences, as they may also look at other factors regarding your application, such as your income and expenses.
How about getting a student car loan? Especially with no credit?
Some lenders look at other factors other than credit balance, such as income or expenses. For example, a student may need to prepare more than a regular borrower by having more credit, making a down payment that can be a large sum, and up-to-date expenses.
How can a car loan positively affect your credit?
If a car loan is handled responsibly by making regular payments on the set deadlines, it will be recorded and show the lender how responsible you are. However, if you miss payments and a credit check is done, your credit score will be affected negatively.
- Online service providers: Such as Canada Prime Auto has a massive database of cars from across Canada, hence giving you a variety of options to choose from. You need to fill in your financial details in their form, and they will connect you to the best dealership.
- Banks: TD Auto Finance, Royal Bank of Canada, Scotiabank, Bank of Montreal, Desjardins, CIBC, National Bank of Canada, and General Bank offer car loans. If you have good credit, then these places are good to go for car loans, the biggest downside to banks is a lot of paperwork and many meetings, and they usually accept clients with high credit scores.
- Dealerships: You can easily pick vehicles and ask about their payment process right there and then. Dealerships can be more convenient, considering the paperwork can be done there and have sales. However, they won't be able to cater to no-credit customers such as students and bad credit.
Requirements for a loan:
Every lender has had a different experience, so they may choose to request other documents to approve you.
- Employment and source of income
- Driver's license
- Bank Account
- Government-issued identification
- Proof of car insurance
- Accepting credit rating check
- Down Payment