How to get a Student Car Loan in Mississauga, Ontario, Canada?
Posted on August 14, 2017
Are you a student in Brampton or Mississauga? Tired of taking the bus to classes or work? Many students dream of owning a reliable vehicle for the sake of ease. Sometimes it can be challenging to access financing as a student, but more lenders are trying to make the process of obtaining a car loan a little bit easier. The steps below can help increase your chances of qualifying for a car loan while you’re a student. When it comes to loan applications of any kind, research and preparation are vital.
Step 1: In order to apply, you’ll need proof of enrollment, either your student number and or an official document attesting to your student status. Some lenders also impose age-based restrictions on who can apply for a student car loan, meaning that not all students may qualify for student auto loans. For example, some offer car loans only to people aged 18-24; other lenders might be more flexible.
Step 2: Keep your grades up. That stellar GPA can in some instances boost your chances of securing a loan if the lender has a program that rewards academic excellence.
Step 3: Earn an income you can prove. You’re busy studying, but an income that shows the lender you’ll be able to manage a car payment on top of your Mississauga rent and other expenses is important to certain lenders. Now, not all lenders will require income reporting for a student car loan, but even if they don’t, make sure a car payment is actually within your budget. The goal is to buy a car and add to your credit score, not damage it with unpaid loans, right? Any such budget must include insurance, as well as fuel, parking and maintenance costs.
Step 4: If your budget allows for a car payment, check your credit score in advance of submitting the loan application. Equifax and Transunion are two top credit bureaus in Canada, and they can provide you with your current score. Most lenders do expect to see some sort of credit history on your file, such as a credit card in good standing. Many younger applicants lack an established credit history; a co-signer will likely be required for a car loan.
Step 5: Time for more research: decide which car you’d like to buy. While used cars can often seem cheaper in terms of flat upfront cost, many new cars come with built-in maintenance programs and solid warranties. Compare the cost of a used versus new car before making your final budget. Some makes and models are also more expensive to insure; factor that in as well.
Step 6: Pre-approval from a bank can also hedge your bets for loan approval. And don’t be shy: mention your student status up front in case the bank offers special programs. The bank will usually require a Social Insurance Number, other identification, and information about your employer and your monthly income.
Step 7: Hit the dealerships. You can do this before visiting a bank or submitting a loan application. In fact, many auto dealerships in Brampton and Mississauga have good relationships with lenders. The finance personnel at a dealership can walk you through a student car loan application, too. You will still need a SIN number and identification, proof of income, etc.
Step 8: Shop around. Don’t buy the first car that catches your eye on the salesfloor. Ask precise questions about available loan programs at each lot. Banks and dealerships are competing; as a student, you really want to make sure you get the best rates and terms for your personal needs. Make sure the loan limits (upper and lower) truly reflect the car you’ve selected. And ask about down payments. A larger down payment can sometimes allow for lower interest rates; lower down payments can trim up-front costs if that works best for your situation. Find out what’s possible before you commit.
Step 9: Negotiating the exact terms of your loan is another important stage. Ask about interest discounts, especially those tied to rewarding academic excellence. Your lender may have an existing relationship with your academic institution; be sure to mention your school and ask about such perks. Find out about loan term flexibility and whether you can get an extension that lowers monthly payments. Keep in mind that if you go that route, you’ll end up paying more for the car over a longer period of time. If you go with this approach, work to get the lowest possible interest rate. Lastly, see if the lender offers automatic payment discounts. Seemingly small discounts can add up.
Step 10: Patience. You may opt to wait until you qualify for a grad loan. If you have difficulty qualifying for or affording a car payment as a full-time student, quite a few lenders have grad loans. These are often accessible to those with a limited credit history. It’s never a great idea to acquire a traditional student loan to buy a car. Many student loans strictly specify what the funds can be spent on, and the interest rates for student loans are usually much higher. You can find a co-signer for your car loan, but it’s really only best to do so when you have the capability to keep up with payments and honour not only the loan, but your co-signer’s trust. Defaults impact the co-signer’s credit rating as well as your own.