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:

      1. 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.
      2. 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.
      3. Online Pre-Approval: Canada Drives provides a simple online application that will help you get pre-approved for a car loan without leaving your home. Getting pre-approved for a car loan before you start shopping for a car is a great way to save time and avoid the stress of traditional loan applications. When you get pre-approved you will know exactly how much you can afford – so you don’t waste time looking at cars outside your budget. Canada Drives goes even further by matching you with a dealership in your area who has a selection of cars that fit your pre-approval terms. It’s definitely the easiest way to buy a car.

    Visit Approval Guy to get pre-approved today!

    How does interest on a car loan work?

    The interest rate the lender charges depends on the lender’s set prime rate, the borrower’s credit score and the vehicle attached to the loan. Every payment you make is composed of part interest and part principal. Your payment stays the same, but the interest and principal payment breakdown differ every month. Usually, interest is larger at the beginning of the loan and gets smaller and smaller as the loan’s term goes onward.

 — Ask me! Approval Guy