You may be wondering about the particulars of how a car loan in Canada works. It helps to understand the mechanics (pun intended!) of auto loans before you apply because you can increase your odds of approval.
Here are some quick answers to some of your most common car loan questions.
How do I get a car loan?
The process of getting a car loan is quite simple, the hard part is getting approved! When you go through a dealership or online retailer, you can fill out an application to organize financing in the same place that you buy the car. If you go through a private seller, you usually have to do more of the legwork and apply to your bank yourself.
There are three simple steps:
- Step 1: Complete the lender’s car loan application. Provide all necessary personal and financial information as required by the lender.
- Step 2: Submit other required documentation the lender needs. For example, you may need to submit notices of assessments, income and expense documentation, other debt obligation supporting documents, and the make and model of the vehicle you want.
- Step 3: Wait to be approved by the lender. This can take a couple of days or a couple of weeks depending on the lender.
Is it better to get a car loan from a bank or dealership?
Besides banks and dealerships, there is a third option that is starting to emerge in online retailers. That means there are three ways to apply for an auto loan in Canada:
Bank: Toronto-Dominion Bank, BMO, RBC, CIBC, and Scotiabank offer car loans among other financial institutions. These are great places to get approved for an auto loan if you have good or great credit. Banks can be frustrating to work with because of multiple in-person appointments, lots of paperwork, and they typically only cater to customers with higher credit scores.
Dealerships: When you find a car you like, dealerships will often offer finance options at the point of sale. Dealerships are convenient because you can get the car and the financing in one place. However, most dealerships focus on their “prime” business and don’t have the resources to help bad credit and no credit applicants. Furthermore, there are usually some extra dealer fees that come with buying a car at a dealership so make sure you’re clear about this before you sign any paperwork.
Online vehicle retailers: Canada Drives reinvented the dealership experience for the 21st century. Our online-only business model means no brick-and-mortar stores, and those savings get passed onto the customer. There are also no dealer fees to worry about. Furthermore, Canada Drives partners with a multitude of prime and non-prime lenders (including some of The Big Five banks) to help customers facing all types of credit situations. You can shop, buy, pay, and finance 100% online—no in-person appointments required!
