How to Get Accepted for a Car Loan in Canada: 2 Minute Guide

How to Get Accepted for a Car Loan in Canada: 2 Minute Guide

Posted on June 10, 2022

Thinking about applying for an auto loan in Lincoln? Want to improve your chances of being accepted for a car loan? Think you may be a borderline case and want to get that loan? Our team has come up with a few ways to improve the chances of being accepted for an auto loan, whatever your circumstances.

None of these will guarantee you'll get accepted for a car loan but they will heavily improve your chances!

Know your credit score

Knowing where you are should give you a better idea of where you need to go. Part of that is knowing your current credit score. The higher your score, the higher the chances of being accepted for the loan and the lower the interest rate you’ll be charged.

Check your entire credit report with either TransUnion or Equifax.

While you’re there, check your whole credit report for errors. Have any mistakes corrected by the organization that made it or talk to TransUnion or Equifax and request they correct your report.

Improve your credit score if necessary

If your credit score could do with improvement, begin that right away. The earlier you start, the more time you have to improve the score. That could be paying down debt, having mistakes corrected, create more of a positive payment history or something else entirely.

Credit scores take months to improve by any significant degree so the earlier you begin, the better your score will be.

Save up for a down payment

The earlier you can begin saving the better. Down payments reduce the amount you need to borrow but also reassures lenders. If they know you have your own money at stake as well as theirs, they are usually more predisposed to lending.

We recommend between 10-20% down payment as a minimum. If you can put down more, great.

Set a realistic budget

A common reason for being refused an auto loan in Lincoln is asking to borrow too much. That could be too much for the credit score you have or too much to be able to afford the repayments.

Either way, using an auto loan calculator and getting prequalified for the loan can both help. If you need to borrow less and get a slightly cheaper car, that’s what you need to do.

Get your paperwork together

Lenders require evidence for everything so make sure you’re prepared. Lenders need to be reassured that you’re telling the truth in an application as they don’t know you.

That means having proof of ID, of your address, proof of savings, of income and of outgoings. You can use bank statements, wage or salary statements, official paperwork, utility bills and anything with your name and address printed on it to help prove your case.

Shop around for lenders

Lenders are all different and each has different lending criteria. If you don’t get prequalified with one type of lender, try another. Don’t stick to the mainstream banks, work with auto loan experts like us to access a much wider pool of lenders with a much more open minded approach to lending.

Sometimes it’s just knowing who to approach about a loan that makes the difference. That’s something our Lincoln auto loan team can help with.

If you're ready for a car loan in Southern Ontario, we'd love to help with that! simply fill in the form below to get started.