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Student Car Loans In Ontario: Your Guide to Getting Approved

Posted by on Jun 01, 2023 - Archived under Uncategorized

If you’re off to college, having a car is part of the journey. If you don’t have the cash to buy one outright, you may have to consider an auto loan. That’s what we’re discussing today. Our auto loan team outlines options for those financing a car loan as a student.

 

Here’s what students need to know about auto loans.

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Save For The Down Payment

Down payments serve a couple of purposes. They reduce the amount you have to borrow and make lenders happy. Saving as much as you can takes time but can mean the difference between affording a specific car or qualifying for a car loan as a student, or not.

 

Auto loan companies like down payments as they show commitment. They much prefer borrowers who have their own money at stake as they are less likely to default. This can make the difference between being accepted and not.

 

Get a Job

To qualify for a car loan as a student, you’ll need a source of income to pay for it. For the lucky few, that could mean an income from parents or other source.

 

For the majority of us, it means getting a job. Working is part of many college students’ lives so isn’t a big deal but may mean not having so much time for study or for enjoying the college experience.

 

The fact is, if you don’t have sufficient income to make the monthly payments, you’re not going to qualify for the loan.

 

Build Your Credit Score

As a young person, you won’t have a high credit score as you won’t have been able to access credit. That needs to change.

 

Difference Between having good vs bad credit for a car loan

 

While you can access an auto loan with low credit, you get much better rates with good credit. Use a credit card, use a cell contract that reports your payments, and make sure to always pay everything on time.

 

Here are some general tips for improving your credit:

 

Understand the basics of credit: Learn about how credit works, including the concepts of credit scores, credit reports, and the factors that influence them. Credit knowledge will help you make informed decisions and build a positive credit history.

 

A great resource for learning more about credit scores is Investopedia. Check out their content here.

 

Get a credit card: If you don’t already have a credit card, consider applying for one. Student credit cards or secured credit cards are often easier to qualify for. These cards are designed for individuals with limited or no credit history.

 

student holding a credit card

 

Once you have a credit card, use it responsibly. Make small, regular purchases and pay the full balance on time each month. Timely payments contribute positively to your credit history and show lenders that you are a responsible borrower.

 

Pay bills on time: Timely payment of bills, including rent, utilities, and other financial obligations, is crucial for building a positive credit history. Late payments can have a negative impact on your credit score.

 

Be patient: Building a strong credit history takes time. Be patient and consistent in your efforts to demonstrate responsible credit behavior. As your credit history grows, your credit score is likely to improve.

 

Use a Co-signer or Co-Borrower

If you need a car loan as a student in a hurry, you can use a cosigner to guarantee the loan or a co-borrower to come in on it with you.

 

A cosigner guarantees your loan but doesn’t own the car. They commit to repaying the loan if you default for any reason.

 

A co-borrower is in on the loan with you and part owns the car. It turns your auto loan into a joint loan which gives them legal title to the vehicle as well as responsibility for servicing the loan.

 

Either can help someone with low credit qualify for an auto loan as long as you know someone with good credit willing to work with you.

 

Set Your Budget

CNC How Much to spend on a car

 

We always recommend setting a budget before you start looking for cars. Ever heard the term ‘champagne taste on lemonade money’? That’s very true with cars.

 

Most of us have a tendency to want cars that are out of our budget. Having that budget already in mind before you go shopping should stop you falling in love with something you cannot afford. We say should…

 

Your budget should include your down payment or trade in and the amount you could borrow to come up with a usable figure. Use an auto loan calculator to do the rest.

 

Pre-approval For a Car Loan as a Student

Auto loan preapproval is a litmus test to see if you would qualify for the amount you want to borrow with the credit score you have.

 

It’s a dry run to see if you could qualify without having to apply for a loan. If you don’t qualify for the amount you want to borrow, lower the loan amount or increase your down payment, whichever you’re most comfortable doing.

 

Dixie Auto Loans Pre-Approval Form

Dixie Auto Loans Pre-Approval Form

 

Find a Good Cheap Car

Try not to be tempted to buy something expensive while you’re in college. If you’re a new driver, you will ding the car and while you’re on campus or living in student neighbourhoods, crime can often be an issue.

 

You wouldn’t want any of that to impact your car. We recommend buying a good quality, ordinary car to attract fewer thieves while offering a comfortable, reliable drive!

 

If you’re ready for a car loan, we’d love to help! simply click here to get pre-approved online today.

Dixie Auto Loans