Car loans (also referred to as auto loans in BC) are like any loan: they allow you to purchase something you don’t have the money for. They do this by charging interest on the money you borrowed. While it would be nice to be able to pay cash for a car; but if you’re like the majority of us it’s just not a possibility to pay outright for a quality vehicle.
When you apply for a loan you will be asked about any down payment you can afford. Sometimes that’s zero dollars, other times someone may have a few thousand saved and can apply that to their loan. This will bring down the total amount borrowed, and save them some money in the long run on interest.
As with any loan, you pay it down on a scheduled basis. Car loans are no different, you usually have options for paying into your loan bi-weekly or monthly. If you happen to acquire more finances once committed to a loan you can often pay your loan down quicker which will save you some money on interest.
You need to be employed (usually for at least 3 months.) Most creditors like to see you making a minimum of $1500 per month. Some of this can come from other places like government assistant and other sources as well. Current pay stubs or other documents will be required.
You will need to provide a void cheque or stamped pre-authorized payment form from your bank. Lenders use this to withdraw your payments directly from your bank account. The lender wants to be able to take the payment directly out of your bank account each month.
We will ask you if you have any savings for a down payment, some people have none, and that’s OK too. But if you do have some you can put towards your vehicle, the lenders like to see that as a sign of good faith, as well it will bring down your monthly payments and save you money on interest.
To apply for an auto loan you must have a valid drivers licence and be of the age of majority (19 in BC.) Every province sets its own age of majority.
The lender requires you to have a current address in order to proceed with the application.