How to get a car loan in Canada
Its not matter in which country you are one need a car , bike to move from one place to another because one can not reach every where by walk or not one can relay on the public transport that you have to wait for that to arrive and then you can reach your destination.
Car in Canada
Having a car is a luck every person I think wishes to have a car especially in Canada because it has many tourists and historical sites that one should not miss while his stay in Canada so a car is must to explore all the exciting spots of Canada. To have car you need a lot of money because owning a car needs some financial support so before planning to buy a car or selecting a car you should arrange money for this deal.
After arrival in Canada its a big decision to buy a car by thinking to finance it from some car firm or financing company if you wish to finance your car then go through this article to where we are providing full guidance how to get a car loan in Canada.
Car loan or auto loan:
First we will discuss that what is car loan and will try to give you complete information about this topic let’s start. Car loan or auto loan is specific amount of money borrowed from a dealership or a bank to buy a vehicle. The car loans have specific time period with in which you have to return the borrowed money in specific installments..
Payments of the car loans are usually monthly , weekly or bi weekly that is payment after each two weeks. You have to pay these installments until the borrowed amount is cleared. At each payment period the borrower is supposed to pay portion from loan plus interest rate also.
Buying a vehicle or car I think is the biggest achievement and investment of life but for that you monthly income will be disturbed for years if you are buying a car by taking car loan. So be well prepared for it and pay back each installment on time avoid any problems.. For car buying you should have best negotiation skills which will help you to save thousands of dollar in your deal so be careful when you are negotiation about the cost of a car.
Preparation for car loan:
Before getting a car loan you also have to do some preparations that will help you to be in a proper position to negotiate about the cost if car so look at some steps that you should follow prior to car loan:
1- Setting budget:
The best preparation should be started from budget setting that is you should have a look at your monthly income if you are having a good and enough monthly income its means that you will be able to pay the loan amount at time but if you are not stable financially then its mean you will face difficulties in paying the loan back. While setting a budget you should look for all the expenses not only the purchase price but also the fuel expenses, insurance , maintenance etc. To own a car you have to bear all the expenses and keep in mind that these are all the things to pay to own a car.
You should consult with the social adviser who will inform you about all the expenses and regulation to avoid any extra surprises that you should be ready for every condition.
2- Auto’s value:
Once you are satisfied with your budget then you should do some research to know that which car is best in the market now a days and what are its costs. Before negotiating you should check the cost of that car you desired from different sources.
3- Discounts:
Keeping an eye on special offers and discounts is also a good step to save your money while doing a car deal because many times some cars dealership provides an affordable discount offers that can really help. Employee prices offers are the commons offers that are offered by the car dealership but also keep in mind that this offer is not valid for each car and each model so first check that your desired car model owns this offer or not.
Sometimes some dealers also provides 0 interest offer to the customers with good credit score. These loans does not applies interest to a certain time period but if the time up then you will be supposed to pay some extra charges.
4- Negotiation:
Once you are ready with all the steps then you should go ahead to finalize the deal with the dealer by negotiation.
- * You should consult with your dealer so that you and your dealer have the same goal. Be confident in your research and trust your dealer.
- * One should not be afraid to change the dealer if the previous dealer is not negotiating according to your will.
- * The best way to get a best deal is the research of best prices from different dealership that will benefit you more.
- * For a better experience you should keep in mind all the expenses of owning a car to avoid any sudden surprise.
Document required for car loan:
For getting a car loan first of all one should get ready with the required documents so that you should not face any difficulty or delay in the car loan so let’s have a look of required documents:
1- Driving license:
It is obvious to all of you that to own a var or to drive a car on rent also you are needed to have a valid driving license that should be valid and accurate. Even when you go for renting a car the agents asked for driving license so car loan is huge responsibility that’s why driving license is must for this step.
The driving license proves the identity of driver and also proves that he or she is over 18 year age. Because its the minimum age that is required to get license that you are legally allowed to drive a car be a cause driving of minors can lead to accidents.
Types of license:
There are three different types of driving license that are:
- * learner’s permit
- * intermediate license
- * full license
One should know that if he or she is having a learners permit then you can’t insure your car until you have got the intermediate license so its good to get a full license before buying a car for full rights.
2- Residence proof:
The next requirement of getting a car loan is that you should show a proof of residence that you are a resident of Canada by showing any one from the following:
- * recent bill
- * statement sent to your address
- * Utility bills
- * bank statement
- * lease agreements
- * government-issued IDs
- • tax documents
- * insurance policies
One can show any one from the above documents instead of carrying all of them.
3- Proof of income:
Next an applicant of car loan is required to show a proof of income to the lender so that the lender for your car should be satisfied that you are able to pay out his loan in your monthly income. The income conditions from different lenders may be different but the rules set by Canadian government is that car loan can be approved to those who are having monthly income between $ 1200 to $ 1800 per month. This is very important because when your income is not enough to pay the installments of loan then it us very difficult to pay the loan that can lead to many problems.
Credit check:
Next process by which the lender can decide that you are able for the loan or not is the credit check that is they will check your credit history because the credit history is a record that you are able to repay the loan and in how much time. Mostly this record is sumed up in your credit score that is a three digit number that gives the lender a quick idea that they should approve the loan or not by knowing your credit condition.
If the sum up digit is higher then your ability to repay the loan is high and if the sum up digit is lower then chance of repaying the loan is less. The scoring system is mentioned below for your knowledge let’s check it:
- 350-650: Below average
- 650-725: Good
- 725-760: Very Good
- 760-900: Excellent
Some lenders want an excellent ranging credit score while some have minimum credit score requirements but keep in mind you are not eligible for a car loan only on the behalf of credit score.
Car loan for new comers:
Those who are new in Canada should be upset due to not having any credit history because different lensers have different loan requirements so you should consult your lender that they have some special requirements for new comers to finance a car in Canada. The resident or temporary workers working for more then three years may be able to provide a down payment to ensure re back of the loan.
How to get a car loan:
Here are some steps that you have to follow in order to get a car loan:
Step 1: Visit auto dealership:
The first and important step of getting a car loan is to visit auto dealership near to you that will help you to find a good vehicle of your choice.
Step 2: Selection of vehicle:
The next step is to select a vehicle that you want to have and the negotiate its price.
Step 3: Apply for loan:
The next step you can ask the dealer to apply a loan from an appropriate lender that is ready to finance a car for you.
Step 4: Special financing offers:
Some of the dealers provide some special financing offers such as putting off interest amount if the loan re back period. This offer is possible for some of the applicants that have high credit scores.
Best deal:
One of the top notching matter you should deal before applying for a loan from a lender is a number that is interest rate.
Interest rate:
It is amount of money that you have to pay on the top of real amount of loan is called interest rate that is set by the lender on the basis of time period of pay back of the loan its mean that the lengthy is the pay back period the greater will be the interest rate.
So before selecting a lender for your car loan you should know about the interest rate from multiple lenders from which you can select a best one for best deal to save more money.
Car loan from bank or a dealership:
After knowing all the essential information a question may arise in your mind that you should get a loan from a bank or a dealership then we are here to guide you about this confusion. Mostly people are aware about two ways of getting car loan that is bank or dealership but their is also a third way of getting car loan is online retailer that you can also approach.
* Bank:
Different banks of Canada such as Toronto-Dominion Bank, BMO, RBC, CIBC, and Scotiabank are offering special offers for car loans for the ease of their customer.
* Dealerships:
When you want to own a desired car then dealerships are also a best options that will offer you to finance your car. I think the dealerships are convenient because you can get a car and finance in one place.
* Online pre approval:
In Canada the drivers are also offered and online pre approval system by that service you can be pre approved for a car loan online without going out of your home on your hall couch you can be approved for a car loan.
Thats all about your search if you go through this article fully then I think you can easily find a car loan that is I think a great chance for you to own a car in Canada because no one is so rich that he could directly buy a car without loan only well settled citizens are able to do so.
Good luck for getting your own car in Canada is a sperate joy because one can enjoy exploring the different and amazing locations of Canada in your own car that one can not enjoy in public transport.
