Canada needs immigrants to help offset its aging population. If you are new to Canada, welcome home! Our Binbrook auto loans team will provide you with some helpful information on how to get a car loan when new to Canada.
By the time you finish reading this, you will be able to shop for a car with complete confidence.
Debt is a fact of life in Canada
Some new immigrants to Canada are amazed by just how much we rely on debt. In the past, having debt was considered taboo and avoided at all costs, but now, everyone uses debt because everything is just so darn expensive.
A new car will set you back $50,000, and who has that much cash available to put on a new car?
If you have that much money, you should put it inside your RRSP or TFSA for retirement.
The average Canada has a car payment of $500 per month, so consider having a car loan when new to Canada as a part of being Canadian, just like ice hockey and maple syrup.
How to get a car loan
Lenders will look at two things before issuing a car loan. The first thing that lenders are going to focus on is your credit score.
There are two credit reporting agencies in Canada, TransUnion, and Equifax. These companies keep detailed records of everyone’s credit report and score, you can access your report for free, but businesses need your expressed consent before they can check your credit.
To get a car loan with a competitive interest rate, your credit score should be over 660; you can still get approved for a car loan in Binbrook with a score under 660, but the borrowing costs are higher.
After the lender has looked at your credit report, the next thing they will focus on is your income.
Lenders are going to request your latest payslip and income tax assessment; they need to determine what is your average monthly income so they know what the maximum loan you can afford.
If you are curious, the lenders will approve a loan up to thirty-five percent (35%) of your gross monthly income.
So take all of your current debts and add them up plus the projected monthly car loan payment; if it exceeds 35%, you will need to get a smaller loan or reduce your total debt.
The best place to get a great car loan
Since this is your first time buying a new car, you want everything to go smoothly.
Do not try to get a car loan approved by yourself; shopping online is great for smaller purchases, but you are buying a car and dealing with serious amounts of money.
Instead, you should go through a dealership in your area; the dealership will have cars you can test drive and access to the best car loans in all of Canada.
When you go through a dealership, you will have complete peace of mind knowing that everything will go smoothly without any hassles at all.
Now that you know how to buy a car in Canada, you can contact your local dealership today; they would love to hear from you.
Click here to get approved for a car loan when new to Canada today! we have a team of credit specialists ready to help you find a vehicle suited to your needs and will work with you no matter your credit score.
For any questions or concerns, please don’t hesitate to contact us here!