Now that you know the basics surrounding personal loans and what a loan is, you can start to dig into the details. We encourage you to read our other articles on loans if you haven’t already. Check out TransCan Leasing’s loan portion of the credit education center for all things loan-related! On this page, we will be going through the details of getting a car loan. Buying a car can be a scary and difficult process. However, we hope to ease some of your fears by providing the answers to your most frequently asked questions. Continue reading below to understand the basics of how a car loan works in Canada.
How to Get a Car Loan:
Getting a car loan is a fairly easy process. The most challenging part of a car loan is getting approved. Depending on where you choose to buy the car, the application process will be slightly different. Generally, online retailers and dealerships will let you complete the application in the same place that you purchase the car. However, if you go with a private seller, there is usually more work involved. For instance, applying at a bank, organizing the necessary documentation, etc. Getting a car loan can be boiled down to filling out the application, providing the necessary documentation, and then waiting to be approved by the lender.
Where to Get a Car Loan?
There are various places where you can apply for a car loan in Canada. However, you’ll want to choose the right option for your current financial situation. For instance:
- Bank: Banks are one place where Canadians can find car loans. Institutions like TD, BMO, RBC, CIBC, and Scotiabank all offer car loans. Although, if your credit score is low, your chances of being approved are slim to none. Banks also require extensive paperwork and in-person appointments.
- Dealership: Much like banks, dealerships will only cater to clients with high credit scores. This is because they often lack the resources to help Canadians with low or no credit. However, dealerships are a convenient option because they allow you to finance and get the car at the same place. Dealerships are also known to charge extra fees, so be cautious when signing off on anything.
- TransCan Leasing: TransCan Leasing is a Canadian company that provides auto leasing services to Canadians who have poor or no credit. Unlike banks and dealerships, TransCan Leasing offers auto financing to help you rebuild your credit. Going with a company like TransCan Leasing is perfect for those looking to get back on their feet after bankruptcy or students with little to no credit history.
Interest, Requirements, and Paying-Off Your Loan.
Interest on a car loan will vary depending on the customer, the car being financed, and the lender’s prime rate. Typically, the interest will get smaller as you get towards the end of your loan’s term. Finding pre-approved car loans can help you budget and determine what is affordable for you.
In Canada, most lenders require:
- Government-issued identification
- Proof of car insurance
- Proof of income
- Being the age of majority in your province or territory
- Proof of residency
- Permission to check your credit rating
In order to build your credit score or maintain its health, you’ll want to make payments on time. If you frequently miss payments or pay in partial amounts, your credit score will suffer. Payment history is the biggest determiner of a healthy credit score. Typically, payments will be due each month. However, lenders can differ. You can set up pre-authorized payments to ensure you don’t forget.
Budgeting for a Car Loan.
Cars are expensive to own. Although, if you budget correctly and choose a car that suits your needs, they can be relatively affordable. When budgeting for a car loan you should also consider the following:
- How much do you commute?
- How far do you travel day-to-day?
- What are gas prices like?
- How is your car on gas?
- What is your driving history like?
- What kind of coverage do you want/need?
- Have you considered monthly and yearly maintenance fees?
- Tire changes for winter and summer?
- Are brakes being done?
- Oil changes?
- Have you set aside an emergency fund for any unexpected car repairs?
- Have you considered the tax and admin fees on owning a vehicle?
- Do you park your car in any pay parking zones?
- Will you need to pay for parking at work or school?
- Do you often visit the hospital or downtown in your city?
For more information on car loans, contact us at TransCan Leasing today! We’d be happy to help you find a car loan that suits your needs. Be sure to read through our credit education center for more information on how to build your credit. We look forward to working with you soon.