Car Loans: Everything you need to know

In an ideal world, if you need to buy a car, you may be able to chalk up the cash and pay it off in one go. But with all the responsibilities and expenses, it is near impossible for the average Joe to do so. So, what do you do instead? Car finance or car loans can be the easiest and most accessible way to finance your car dreams. But it is also important to do your due diligence before delving in to apply for a car loan. Special Interest Automobiles, trusted auto technicians in Ontario, explain what you need to know.

How do I get a car loan?

While it is easy to apply for a car loan in Canada, getting it approved is a whole new ballgame! If you are buying a car from a dealership, the staff there usually are adept at handling paperwork and getting you through the application process. However, if you are buying from a private seller, you may have to maneuver through the car loan application process on your own. Special Interest Automobiles outlines the steps to follow below:

• Fill out the application form with your personal and financial details, as required by the lending organization or bank.
• You may be asked to submit several other documents such as income documentation, expenses, notices of assessments and other supporting paperwork.

The last step is to wait for the lender to approve your car loan, which can take anywhere between two days to two weeks.

What are the requirements for car loans in Canada?

There are several lending organizations that offer car loans in Canada and they may have their own specific requirements for the application process. However, there is some basic information that all of them need to process your application. These include:

• Government-issued identification
• Proof of residence
• Income proof
• Proof of insurance

Apart from these documents, you will be required to be the eligible age to own a vehicle in your province as well as consent to a credit rating check. Generally, a credit score of at least 650 is encouraged by lenders to approve loan applications. However, this score may vary from lender to lender.There are situations where buyers may have a bad credit score due to mismanagement or unforeseen circumstances. However, all is not bleak and they can still apply for a car loan. However, they must meet one or more of the following criteria to help their application:

• Use a cosigner who has excellent credit.
• Be able to put down a down payment.
• Proof that despite the financial challenges, your monthly income is stable (cheques, stubs etc.)

How do you pay off a car loan?

Once your car loan is approved, it is imperative you manage your finances to ensure all your payments go through on the specified dates, without any hassles. Follow these tips from Special Interest Automobiles for a seamless payment cycle every month:

• Always make payments in full and on time so your credit rating is not negatively affected.
• At the beginning of every month, ensure your budgeting is correct so you do not miss a payment.
• Schedule direct payments through your bank to make the process easier.

You also have the option to make larger payments than what is prescribed in your loan application. This is a great option if you have come into some ready cash and can help reduce the overall term of your car loan too.If you need more information on car loans and the application processes, contact our auto sales division in Cambridge today!