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How to get a car loan in Canada

How to get approved for a car loan 

Buying a car is an exciting life event, and most Canadians will need a car loan to obtain their preferred vehicle. Whether buying your first car or adding a new vehicle to the household, understanding how to get a car loan in Canada is the first step.

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How to get approved for a car loan

Once you commit to buying a car at a dealership, you are essentially applying for a car loan through them. Before doing so, you can research some aspects of auto loans. 

Specifically, compare the dealer’s rates and the bank’s rates. They’ll each have different promotions, and you may be able to negotiate a lower interest rate or better terms.

Lenders prefer to approve applicants who have a credit score of over 650. Higher scores are better on applications, so you can take time to increase it and apply for an auto loan later.

Preapproval for car loans in canada means determining how much the dealer or bank will offer you and how much you can afford. Providing a down payment or having a high credit score can determine the outcome of the preapproval.

Preapproval for car loans in canada means determining how much the dealer or bank will offer you and how much you can afford. Providing a down payment or having a high credit score can determine the outcome of the preapproval.

The contract details are important, so be on the lookout for information regarding prepayment or insurance policies.

When you have gone through the process, you can apply for a car loan at the lender or dealership of your choice

What are the requirements to get an auto loan in Canada? 

The requirements to get an auto loan can be different between individual lenders, but you can expect them to ask for some of the following. A bank or credit union is more likely to set these requirements, while alternative lenders may verify other factors.  

  • Adequate income—making at least $1800 monthly is usually the standard minimum.  
  • Good credit score—the better your credit score, the more likely you’ll get approved for an auto loan.  
  • Driver’s license—the license must be valid and not expired. Some dealerships may allow learner-level licenses.  
  • Low debt-to-income ratio—lenders don’t want to place too many financial obligations on you, so the ratio will help them determine if you can manage car loan payments well. 
  • Age requirement—you must be at least 18 years old to purchase a car and have it registered in your name.  

Can you get approved for car loans with an alternative lender? 

Getting approved for a car loan at alternative lenders can be more effortless than getting approved with traditional financial institutions. One alternative lender Canadian homeowners can turn to for a car loan is Alpine Credits. 

Alpine Credits offers home equity loans, a type of loan unique to homeowners. If you are a homeowner with some equity in your property, you can access it as a lump sum. One of the best characteristics of home equity loans is that their approval criteria aren’t as demanding as they would be at banks or credit unions.   

You can calculate your home equity by subtracting your outstanding mortgage balance from the appraised value of your home. The larger the amount of your mortgage that you have paid, the more equity you likely have, which means the bigger your loan can be. Home equity loans provide a wonderful opportunity for homeowners because credit scores and financial information are unnecessary.  

home equity loan equation from Alpine Credits

Conclusion: home equity loans to buy a car 

A car can be an important tool in your daily life. Not only is it a memorable occasion, but owning a car can be a valuable investment. Regardless of your financial background, Alpine Credits believes that the finances to meet your goals should be available to you.  

Through home equity loans, homeowners can access their equity in the form of cash that they can use towards any financial need, including a new vehicle. Unlike banks, Alpine Credits only focuses on the amount of equity in your property rather than your credit report or income.  

Contact Alpine Credits to learn more about home equity loans and what they can do for you. You can get connected with a Financial Solutions Specialist right away to talk about your options and to get answers to your questions. If you have enough equity in your home, you are eligible for a home equity loan, and you could be approved.  

Frequently asked questions

Car loans are either directly from the auto dealership or from a financial institution. Dealerships already collaborate with a specific bank, but you could get better interest rates if your bank differs from the dealer’sYou can also get a car loan using the equity on your home at Alpine Credits.

Lenders prefer a credit score of at least 650. You can still be approved with lower scores, but your interest rate may be higher.

Qualifying for car financing involves having a driver’s license, a strong credit score, and a steady income. Without meeting those factors, success on your car loan may be challenging with traditional banks. However, if you own a home and have been paying down your outstanding mortgage, you may qualify for a home equity loan to purchase a car.