Your Next Car Loan Process Made Easy
Vehicle financing in Canada doesn’t have to be so difficult or complicated.
Can You Afford Car Financing Today?
Three main factors are used by lenders to determine how much money you can borrow and how much interest rates you will pay.
Employment History and Income
Lenders prefer to see two years of work history from the same employer. You can still apply for a loan even if your employment is new.
Outstanding Debt and Monthly Expenses
A car loan specialist and you will work well together to determine what monthly budget you have. Add all of your expenses to the equation, as well as any debts, and then figure out how much you can afford for a car payment. Financial experts advise that you limit your car spending to 10% of your annual gross income. If you earn $50,000 annually, your monthly car loan payment should not exceed $416.
You can find great advice in our article “Credit Car Buying Help for Canadians”.
Your credit score
You will be required to sign a credit agreement when you apply for a loan. This will allow you to make final decisions about your loan. Canada has scores ranging from
300 to 900 points. Anything over 650 is considered excellent, while anything below is considered fair- or poor. Many factors can affect this number.
● Pay your bills on time with payment history
● Delinquencies are bankruptcies, charge offs, and collections.
● Balance-to-limit Ratio: Keep your credit limits between 30% and 75%. It is best not to max them out.
● Recent Credit Inquiries: Avoid applying for credit unless there is a real need (like a loan for a car).
● Age of Credit History: The better your credit history, the better. A short credit history is a sign that you are more at risk.
● Different Credit Accounts – It is better to have 3 credit accounts than 3 of the same type. A variety of accounts can be used, such as a bank line of credit, a car loan and a credit card. Not having 3 credit cards.
● Too many credit accounts – It is important not to have too many credit accounts. You can lose points if you have too many credit accounts, especially if there are balances. Next Day Car Loans can help you. We can help you get an automobile loan, regardless of your credit score. Contact us if you’re looking for an auto loan. We can discuss all options with you.