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When buying a new car with cash isn't an option, auto financing is an excellent way to fund the purchase. And qualifying for a new car loan in Canada has never been easier!
The advantages of an auto loan are well documented:
- You don't have to dip into your savings or drain your available cashflow.
- You get to decide how much your monthly installment will be.
- You do not have to provide any collateral (besides the vehicle itself).
- You can get approved without a down payment.
- Your credit score will improve thanks to positive payment history.
- You'll own the car at the end of the term (compared to leasing).
- Nowadays, you DO NOT need a good credit score to get approved (more on this point below).
But where should you go for auto finance?
Finding the right option can feel stressful, especially when you don't know where to start! This quick rundown will help you determine the best path forward...
Where to get auto financing in Canada?
Traditionally, if you want to finance a vehicle purchase in Canada, car loans could only be obtained through a bank or dealership. But thanks to technology, there is a third option that's emerging as a convenient alternative. Let's take a look at all three options available today.
The traditional way to borrow money, when you borrow money directly from a financial institution, you fill out an application form and meet with the bank manager to discuss the loan. Bank officials look at various factors such as your income, savings, and credit score before making a decision about whether or not to approve you.
The frustration with bank loans is the back-and-forth with paperwork and face-to-face appointments before you get approved for the loan. And if your credit score is low, there is a good chance that your application will get declined. Auto loans from banks are generally only available to borrowers with good credit.
When you apply for financing through the dealership, you usually pick out the car you want AND THEN organize finance. Your dealer will send your application to their inhouse financing division or multiple external lenders (including banks) in the hopes of getting you approved for the car you want.
Unfortunately this process involves waiting for the approval, and if you get declined, your car search was a waste of time. Too many customers are left frustrated and disappointed when—after weeks of car shopping—they cannot get approved for the vehicle they want.
The rise of online auto financing
Online auto financing simplified car shopping for ALL Canadians. Tech companies figured out a way to help car shoppers get preapproved for auto financing BEFORE they start looking at vehicles. Then, each customer is matched with a dealership nearby that has dozens of vehicle options within their price range.
If you decide to use an online financing platform to purchase your new vehicle, you simply fill out a quick application and a consultant will reach out via phone or email to discuss your options. You can apply and get preapproved without even leaving your house. Then, all you have to do is visit the dealership, pick your vehicle, and drive away!
Thanks to advanced analytics, a good credit score is NOT essential for getting approved, which makes these online auto finance companies a very popular option for customers with a low credit score.
Get preapproved for the best auto finance deals
A preapproval does not commit you to a transaction. It simply means you know how much a lender will approve for your next vehicle purchase. You don’t commit to anything until you’ve had a chance to visit the dealership, pick your vehicle, and take it for a test drive. Take it for multiple test drives! If you're not interested, you can simply walk away.
With a preapproval in your back pocket, it'll be easier to find the best auto finance deals in your price range - meaning you can shop confidently for your next truck, SUV, car, or van.
You can get preapproved for car finance in the dealership or bank too, but many of these lenders are not equipped to help you unless you have a good credit score. Furthermore, the convenience of getting approved online means you can get the finance part out of the way from the comfort of the sofa!
How to get approved for auto financing today!
Canada Drives made car shopping easy! Since 2010, hundreds of thousands of customers have saved themselves a lot of time and frustration by getting preapproved online.
We're partnered with over 350 certified car dealersships that offer special financing programs tailored to ALL credit situations. We'll easily match you with a local dealership in your area who can help secure financing for you - regardless of your credit history!
We help customers in every province to get approved for car financing:
Prince Edward Island
Go to the online application and get it done in 3 minutes! Whether you have good credit, bad credit, or no credit, you can get preapproved and driving in your new car as soon as tomorrow!