How Does the Car Loan Approval Process Work?

loan application form or document in bank office showing finance concept

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A car is, generally speaking, one’s second most expensive investment next to housing. Most Canadians simply can’t pay for a vehicle in a lump sum, and opt to finance it. Using your past financial information, your car dealer or financial institution comes up with a loan amount, interest rate, and term. For those with bad credit, or little credit history whatsoever, the process of getting car loan approval looks daunting. Fortunately, you can still get a car loan, no matter your credit score–that’s why YEG Credit is here to help.

Step One: Choose an Affordable Vehicle

The first step in making the process easier on your wallet, is choosing a vehicle you can afford the payments on. We recommend a pre-owned or certified pre-owned car, since they’re usually cheaper but still reliable.

Step Two: Apply for Financing Online

You can usually get a good idea of your finance options and terms by filling out the dealership’s online finance form.

Step Three: Make a Decent Down Payment

The smartest way to save on car payments is to pay as much as you can initially, so you end up paying less interest on a smaller financed sum. Try to save up and put down $500, or even $1000, on the vehicle you desire.

Step Four: Trade-In Your Old Car

Use helpful sites like Kelley Blue Book or Edmunds to know the value of your current vehicle. Then, trade in your current vehicle to lower the cost of your next vehicle loan even further. If you still owe payments on your current vehicle, you can usually transfer the payments to the new car. Make sure you don’t owe more on your current car than it’s worth. If you do owe more on your current car, you should pay off that difference before shifting to a new car.

Step Five: How Your Credit Affects the Loan

The finance office at the dealership, your financial institution, or another lender will gather information like your social insurance number and place of work to piece together your financial health. If you’ve checked your credit score and know it isn’t the greatest, that’s okay. You can still get a car loan, but you’ll likely have a higher interest rate. Your credit score may also make it harder to take advantage of manufacturer deals advertised on newer models, which again makes a pre-owned vehicle a smart investment.

Get a Loan at YEG Auto Credit!

Here at YEG Auto Credit, we don’t judge and help you get a vehicle and a fair loan for it. So get a loan today!