How to Get a Car Loan on Disability Support

How to Get a Car Loan on Disability Support

March 15, 2018    Financing & Leasing

Every province has a financial support program for residents living with mental and physical disabilities. If some or all of your income comes from a disability support program, it’s still possible to secure a car loan — it just requires a bit more work. In this post we’ll explain how to get a car loan if you can only work part time, or not at all, due to a disability.

Why you might need car financing on disability support

Very few people can afford to buy a car outright and for the vast majority of people, financing is the key to getting a vehicle. If you live with a disability, you might also be looking for a car with adaptive equipment, such as a wheelchair power lift, hand pedals or steering wheel mounted controls. Unfortunately, these kinds of necessary modifications can be pricey and may increase the amount you need to borrow.

Approving disability support recipients for a car loan

For every lender, approving a customer for a loan is about assessing risk and confirming whether the potential borrower can actually afford to make regular loan payments on top of their other responsibilities. Regardless if some, or all, of your income comes from disability support, you will have to meet a lender’s requirements before you’re approved for a loan.
In order to qualify for a car loan in Canada, you need to be a resident, have a valid driver’s licence and make at least $1,500 a month. Reputable lenders will tell you exactly what requirements are needed from a car loan applicant and what’s included in your contract before you sign.

Increasing your chances of getting approved for a car loan while on disability support

Lenders look at all kinds of things to figure out if you’re a good candidate for a loan, including your position on the credit score range, financial records and employment history. To make the loan application process smoother, make sure your important documents are up-to-date and organized.
You should also have current documentation for the income you’re receiving from disability support and any additional income you’re making from a part-time job or occasional work. Additionally, if you’ve lived in the same home for a long time, this shows stability and can add to your creditworthiness.

Make sure you have a good debt to income ratio

If you’re able to, pay off any outstanding debts before you apply. Having an existing debt load make you a risky borrower and lenders are more likely to approve financing for customers with good debt to income ratios.

Consider getting a cosigner

Getting someone to cosign on your loan can also improve your chances of being approved, especially if you have less than stellar credit. A co-signer guarantees that you will repay your debt to the lender; if you can’t for any reason, your co-signer will cover what’s owed. A trusted family member, guardian or friend with good credit is usually a good candidate. Find out how cosigning a car loan works.

Finding the right lender

Banks and other financial institutions have strict guidelines for potential borrowers because of their rules and regulations. Dealership, or in-house, lenders offer more flexibility for those with bad credit or low income. Learn more here about in-house financing.
However, some car dealers have given the industry a bad name with their unprincipled business practices. These dealers sometimes prey on folks who have poor credit and are desperately looking for a car loan. When you’re shopping for financing, it’s important to find a company that you can trust.
Birchwood Credit Solutions offers easy vehicle financing from a trusted brand. When processing your application, our advisors go beyond your credit score and look at your whole financial picture — they even look for ways to help you improve your credit. Find out how our hassle-free application process works and get in touch today.

Rebecca Lake
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