What Do You Need To Get A Car Loan In Canada?

What Do You Need To Get A Car Loan In Canada?

November 23, 2023    Budgeting Advice , Financing & Leasing

Are you currently in the process of buying a car? Are you finding it confusing or frustrating – maybe both? If so, just know this feeling is very common! Not only is buying a car a big financial commitment but figuring out the financing piece of the puzzle can feel daunting.

If you’re wondering about how to get a car loan here in Canada, there are some important things to do. Not only will these steps help you feel more confident about your decision to buy a car, but you’ll also have the information you need to increase your approval odds. Win-win!

GET FAMILIAR WITH YOUR CREDIT SITUATION

When buying a new vehicle, understanding your credit situation is key. Whether your credit is good or bad, understanding where you’re at will help you make informed decisions throughout the car loan application process.

If you decide to work with us at Birchwood Credit, we will help you gain insights into your credit situation. Once we understand where you’re realistically at, we can help guide you to make smart decisions about a car loan.

DECIDE ON YOUR BUDGET

The next step (and another very important one) is to decide on your budget. Be realistic about what you can afford – remember that the monthly payment for a brand new, fully loaded truck is going to cost much more than the payment for a compact sedan!

Here at Birchwood Credit, people often come to us with a vehicle in mind, but they aren’t sure what they can actually afford. Part of our auto loan process is to work with our customers to help them understand their overall financial situation, which then allows us to determine a great vehicle AND monthly payment that works within their budget.

We also have a nifty car loan calculator to help you determine your budget before you start shopping.

MAKE SURE YOU ARE ELIGIBLE

Eligibility requirements for a car loan vary by each lender, but these are some of the basic ones you will likely need to meet:

  • Be a resident of Canada
  • Have a government-issued piece of identification
  • Be the age of majority in your province or territory
  • Have proof of income
  • Meet a minimum income requirement
  • Give consent to a credit check

CHOOSE YOUR LENDER WISELY

Some car dealerships have unfortunately given the industry a bad name with their ‘fly by night’ business practices. They sometimes prey on people who have bad credit and are desperately looking for a car loan. When shopping for an auto loan with bad credit, it’s especially important that you work with a reputable lender that you can trust.

AVOID APPLYING FOR MULTIPLE LOANS

When applying for a new car loan, some buyers get caught up in applying with multiple lenders over a short period of time. Multiple credit inquiries can actually have a negative impact on your credit score and knock it down. That’s why it’s important to do your research and only apply with the one(s) you trust and feel good about.

Be aware that some dealerships will toss your car loan application to multiple lenders to see which ones will approve your car loan. This is especially common with dealerships that don’t lend their own money. At Birchwood Credit, we finance the vehicles we sell with our own money, so we will never send your application around to other lenders.

GET PRE-APPROVED

The hardest part of the car buying process is often the pre-approval step! One of the most frustrating feelings is finding your dream vehicle and going through the steps to purchase it – only to find out you weren’t approved for the loan. For this reason, we recommend getting pre-approved before getting too deep into the vehicle selection process.

Whether you’re applying with a bank, credit union or dealership, standard pre-approval processes normally include:

  • Completing an application either in-person or through an online form
  • Providing personal and financial information including a credit check
  • Submitting other required documentation, if necessary
  • Waiting to be approved by the lender, which can sometimes take days or weeks

The pre-approval process at Birchwood Credit is designed to be simple, easy and completely hassle-free. All you need to do is fill out the quick application on our website and we can have you pre-approved and shopping quickly. It takes less than three minutes to complete!

CAREFULLY REVIEW YOUR LOAN AGREEMENT

Did you receive good news? It’s an exciting feeling to hear that you’ve been pre-approved – but don’t rush to sign off just yet! Make sure you carefully review the loan offer and pay special attention to things like interest rates, fees and repayment terms. You want to fully understand what you’re signing up for so that you can pick the best loan for your budget and needs.

AUTO FINANCING FROM MANITOBA’S LARGEST AUTO DEALER

At Birchwood Credit, we provide our own in-house auto financing. This means we are the ones providing our customers with the loan to purchase their vehicles. Taking this approach allows us to accept customers who are not approved for a car loan through traditional financial channels due to bad credit.

We are the only in-house vehicle financing operation in Manitoba that truly lends our own money. The best part? Lending our own money means more approvals, better repayment terms and better rates. Apply today and get pre-approved within 24 hours!

Rebecca Lake
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