How difficult is it to get a car loan as a new Canadian?

As a new Canadian, one of the first things you will want to do is get a vehicle. A car makes it convenient to make trips to work, school, the grocery store, and so forth.

To purchase your car, you will likely need a car loan. As a newcomer to Canada, there are several things you need to know to get a car loan. Read on to learn everything you need to know.

What Documents Do You Need to Buy A Car?

Before you can secure car loans in Canada, you will first need to make sure you have the appropriate documents in place. There are two types of documents you will need:

• A valid provincial driver’s license
• A valid car insurance policy

Getting a valid provincial driver’s license depends on your home country and how much driving experience you have. You may be able to trade the license from your home country for a provincial license, or else you can get credit for the experience you already have.

To exchange your license or use your past experience as credit, you will need to have three pieces of ID:

• Your Canadian Citizenship card
• Your old (foreign) driver’s license
• An official abstract document

An abstract document must have been written in the past six months and include the following:

• Letterhead, emblem, logo, symbol, or coat of arms from the authority that issued your license
• Your legal name and date of birth
• The date you first received your license
• The number of your driver’s license, it’s class and current status (active or expired), and the expiry date
• The date the abstract letter was created

Once you have a valid provincial driver’s license, you can get car insurance. However, you won’t need car insurance until you actually purchase a car. That being said, it’s a good idea to research insurance plans beforehand so you know what you can expect to pay and what’s required of you to be insured. Furthermore, you will want to be able to activate your car insurance policy as soon as you’ve purchased your vehicle.

How to Finance Your Car

When you buy a vehicle, there are different ways of paying for it. You can take out a least, you can finance it with a loan, or you can purchase it outright with cash.

To obtain a car loan, you will need to have a decent credit score. A credit score is basically a rating on how trustworthy banks or other money lenders consider you to be. It tells the lending company how probable it is that you will be able to pay back the money they loan you.

As a new Canadian immigrant, you won’t have a credit history, and that will make it difficult for you to take out a car loan because lenders will see you as a risky, unknown entity. However, there are ways you can build your credit score quickly:

• Obtain credit cards: credit cards are a safe way to establish a trustworthy credit history.
• Pay your bills: pay your regular bills (energy, rent, cell phone, etc.) in a timely manner and in full.
• Take out smaller loans: take out small loans and pay them off on time and in full.

That being said, even if you do all the things listed above, it may take you over a year to build a credit score that’s good enough for car financing approval. Therefore if you need a car right away, your best bet is to buy a used car with cash.

Summary

As a newcomer to Canada, there’s a lot you’ll have to deal with, and obtaining a car is a large part of that. Depending on your circumstances, it might be very simple for you to buy or lease a car, or it may take some time. Hopefully, this guide has helped you understand the steps you need to take so you can get a car as soon as possible.