June 25 2024,
In most areas in Canada, having access to a car is a necessity. Fortunately, there are steps you can take as a newcomer that will help get you behind the wheel of a new vehicle. This article outlines some handy tips to get you started on your journey towards vehicle ownership.
Decide Whether You Want to Lease or Finance
With your new vehicle, it’s important to decide whether you want to lease or finance it. With leasing, you are effectively borrowing a vehicle from a dealership, and making regular payments over a fixed term. Once the term is up, you return the vehicle to the dealership. With financing, you enter into a loan agreement with a lender and make regular payments over time, but once the loan is paid, you own the car.
What Documentation Will You Need?
Before entering into a lease or financing agreement, you’ll need to provide some documentation to the lender. These documents include a driver’s licence from your Canadian province of residence, proof of residency (which can include items like utility bills, lease agreements, or bank statements), and proof of income (which includes pay stubs or bank statements).
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What Credit Score Will I need?
Generally, you’ll want a credit score that’s considered “good,” which can range from a score of about 650 to above 725. The better your credit score, the better your financing and leasing opportunities will be. A higher credit score is considered less of a risk by lenders, and as a result, these borrowers often have access to better rates or may be able to put less money into a down payment than someone with subpar credit.
How Can I Get a Loan or a Lease Without Established Credit?
There are options for newcomers to Canada who are looking to finance or lease a new vehicle. Some may opt to build up their credit score before applying for a vehicle loan or entering a lease agreement, while others may opt for subprime borrowing. Subprime vehicle loans may require a bigger down payment as part of the agreement, and will probably have higher interest rates, and higher monthly payments than prime borrowing. Subprime vehicle loans are often for shorter terms than prime loans and can be an effective way for borrowers to improve their credit scores, as long as payments are made on time and in full.
Can I Get Help From an Established Family Member?
Another option for newcomers is to partner with someone who has established credit in Canada and have them co-sign a lease or financing agreement. This kind of arrangement helps reassure the lender that payments will be made, as the co-signer is agreeing to take over the lease or loan if you can’t make payments.
Get Financing or Leasing Agreements that Work for You
Once you are ready to finance or lease a vehicle, it’s time to head to your local Dilawri-franchised dealership where you can find plenty of options when it comes to financing a new vehicle, even as a newcomer to Canada. Whether you’re hoping to lease or you’d like to own, you have options!
