On March 24th the Canadian Lenders association published an open letter to the Government of Canada addressing their concerns about the BCAP.
Loans Canada: The Country's Best Loan Comparison Platform
For the average Canadian, owning a car is a necessity. Whether you need to get around a small city or drive long distances for work, being without a car, even for a short period of time, can be a serious inconvenience. This is why at Loans Canada we work hard every day to help Canadians, just like you, get approved as quickly as possible for the car loans they need.
Loans Canada can help you find the car financing you need at the affordable rate you want. Whether you’re looking for a new car or a used car, we have the best solutions for you.
After you’ve filled out our free application, you will be matched before the end of the day with a local dealer that will very likely approve your car financing application. We work with a wide range of dealer partners across Canada to get you the best match possible for your situation.
What is the Difference Between a Car Loan And a Personal Loan?
The most notable difference between a personal loan and a car loan is that a car loan is always secured against the purchased car, while a personal loan may or may not be secured against an asset.
Car loans are short term loans. They normally go for something like two to five years but can extend to up to seven years.
Before buying a car online, check out this article.
Car Loan Myths
There is a lot of information out there about car loans and auto financing. But unfortunately it’s not all true and can make the process of finding the car you want, a good dealer and a lender all the more complicated. Here are a few car loan myths you should know about.
- You need to make more than $30,000 a year to get approved for a car loan. Of course there are certain requirements you need to meet before you can get approved, but this is not one of them. Canadians who make significantly less than $30,000 get approved for car loans every day.
- If you’re self-employed you can’t get approved. As long as you can prove your annual income you can get approved for the auto financing you want.
- Bad credit, no loan. This is completely false. The majority of Loans Canada’s auto loan applicants are credit constrained and they still get approved.
- Certain provinces are harder to get approved in. Loans Canada can provide any form of auto financing to anyone living in Canada. The province you live in won’t hinder your chances.
How Do I Apply?
We do our best to find you the most affordable rates possible. The best way to find out your ideal rate is to fill out our free, quick and easy application: you’ll know if you qualify within the hour. We want you to get the car you need and want, so follow these steps and you’ll be one step closer.
Step1: Get Organized
Figure out what kind of car you want and what your monthly budget is.
Step 2: Fill Out Online Application
Next, you’ll need to fill out our online application; it’s easy to follow and won’t take up too much of your time. Once you’ve submitted the application you should hear back from us before the end of the day.
Step 3: Get Matched With a Dealer
Once you’re approved you’ll be matched with a dealer who will provide you with the financing you need. Soon after you’ll be driving the car you’ve always wanted.
What Do I Need to Apply For a Car Loan?
Our car loan application process is simple but you’ll still need a few things before you can be approved. Our main goal is to provide you with the financing you need to make sure you have the following information and then start filling out the application today.
Employment or Income: You’ll need proof that you can afford to make your car payments on time.
Driver’s License: You’ll need a valid driver’s license and be of legal age in your province in order to be approved for a car loan.
Current Address: Our online application will ask for your current address. This information is necessary for all car loan documents.
Bank Account: Having a bank account is the easiest way to make preauthorized monthly payments to your lender.
Down Payment: Down payments aren’t always necessary but in some cases, it’s a good idea to have at least some money set aside for a down payment. Depending on your dealer you can ask about zero down financing. Also, if you have an old car don’t forget to ask your dealer about trading it in.
What to do after your car loan application is rejected? Find out here.
Who Can Qualify For a Car Loan?
Anyone can apply. We’re open to working with anyone, regardless of their financial circumstances. We know how important a car is and we want you to own the vehicle you want, whether you’re finally splurging on the car of your dreams or are in need of a comfortable minivan to drive your kids to and from soccer practice. We want to help you out:
- No matter what you’re credit score is
- Even if you’ve filed for bankruptcy
- If you’re new to Canada
- If you’re self-employed
- If you’re recently divorced and having financial troubles because of it
Can I Still Get a Car Loan With Bad Credit?
A lot of used car dealerships advertise bad credit car loans, in fact, they sometimes even advertise car loans provided without any credit checks. This is because often the only thing that these sellers are looking for is income and job stability. They are more interested in your ability to pay down a loan than they are in your past credit history.
Having good credit will always help you get financed with a lower interest rate, and will improve your chances of being approved, but note that it does not guarantee these potential benefits.
If you’re unsure of your credit history or even if you’ve been rejected by other lenders, no matter what your unique situation is, getting approved for a car loan is still possible. However, it helps to be prepared. Before you apply for any type of loan, especially when you have bad credit, you should be as prepared as possible. This includes, but is not limited to:
- Organize all necessary documents and papers
- Have an idea what you can afford to pay each month
- Know what type of car will best suit your needs
- Have a good understanding of where you stand financially
Potential lenders like to see that you’re prepared to deal with them; this shows them that you’re interested in the process and that you are willing to work with them to get the car loan you want. Another reason why preparation is so important is that it helps make the process go as smoothly as possible. The more prepared you are the easier it will be for you to communicate with your lender and provide them with all the information they need.
What are lenders looking for when financing a private sale auto loan? Click here.
How To Get the Best Car Loan
Working with the right type of lender will allow you to get the car financing you need, at a rate you can afford. At Loans Canada we work with a wide variety of lenders so we can make sure you’re matched to the best possible lender for your unique needs.
Never settle for a loan that you aren’t completely sure of. There are predatory lenders out there who are looking to take advantage of people in need of financing. Accepting a loan that you can’t afford to pay back, could land you in a financial situation you aren’t prepared to deal with. In order to help alleviate some of the financial stress associated with car loans, we suggest you always:
- Look for a loan before you set your sight on a car. Looking for a lender before you decide on a specific car will prevent you from being disappointed when you find out you can’t actually afford the car you really wanted.
- Only allow your credit to be pulled once. More than one hard credit pull within a short period of time can do serious damage to your credit score. Make sure you decide on one lender then allow them to do one credit check.
- Choose a shorter term. If you’re given the option to extend your loan over a longer period of time so that your monthly payments are smaller, think twice as a shorter loan term will end up costing you more in the long run.
Avoid These Car Loan Traps
Because of your low credit score, a potential dealer or lender may try to take advantage of you. To prevent this from happening, avoid the following traps:
- Markups. A lender profits from getting their borrowers to take on more expensive loans. Stick to your plan and only accept what you know you can afford.
- “Buy here, pay here”. While not all “buy here, pay here” dealerships are predatory some try to prey upon the desperate in order to get high returns out of their loans. Make sure you research your dealership first.
- Yo-Yo financing. This pertains to dealerships that offer in house financing, like “buy here, pay here” dealerships. They allow you to take your car home before your loan is completely approved and then in a few days say that your loan application has been rejected. Since you already have the car, they trap you into accepting stricter loan terms so that you can get approved.
Should I Lease Or Finance My Next Car?
When you’re in the market for a new vehicle, choosing between financing and leasing can often be a difficult decision to make, especially since both come with their set of pros and cons. Below, we’re diving deeper into each option to help you make the best choice based on your unique needs.
Leasing a Car
One of the easiest ways of obtaining a car is through leasing. The monthly cost of leasing a car really varies, and depending on your situation you can spend anywhere between $150 to $1000 a month, for differing leasing terms (2-5 years).
The limitations of leasing a vehicle include kilometer limits and the fact that the car doesn’t actually belong to you. Let’s analyze the former first: if you exceed your kilometer allowance, you will be charged a fee for every extra kilometer you drive. This may not be a problem for you if you live and work in the same general area, but if you have to travel far to get to work you’ll find yourself eating up your kilometer allowance faster than you’d like. The other issue comes with the fact that after your lease is over you will have nothing to show for the amount of money you spent as you will need to return the vehicle.
On the other hand, leasing a new car comes with a variety of benefits as well. The reliability of a new vehicle and rarely having to worry about the cost of repairs or maintenance are two of the main reasons why many Canadian consumers choose leasing over financing.
For even more information on leasing vs. buying, check out this article.
Financing a Car
If you are in dire need of a car, you can always find financing for one. You can finance either used or new cars, and the financing rate is usually in the single digits. The great thing about car financing is that the loan you are provided with is secured against your car. Lenders like security and the risk of you defaulting on your loan is offset by the fact that the lender has a lien on the title of your car until your loan is repaid.
Qualifying for a car loan isn’t too difficult either. Your credit score is relevant, but really not that important. Most used car lots advertise bad credit car loans, and this is because car loan lenders are really more interested in other financial factors such as your income and ability to pay down your loan. If you have enough income to cover the financing costs of a car, then you are well on your way to getting approved.
Looking For The Right Car Loan to Meet Your Needs?
Loans Canada works with a variety of lenders and dealerships to help Canadians all across the country get behind the wheel of the car they need with a financing option that works best for them.
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