Car Financing Options for New Canadian Immigrants
Diversity in Canada is rising and only increasing at a record rate. The Canadian public is no longer atypical, it’s impossible to recognise a true Canadian in the streets today. People of all ethnic backgrounds, creed, size, height and weight are now making valuable contributions to the state and changing its identity and culture. Just take one look at the restaurants in Toronto, and the diversity in the cuisine is all the proof one needs. Canadians historically embrace change and diversity, and that spirit will only strengthen further as time continues to roll on.
Canada is perceived as a friendly nation, which is a major contributing factor in current immigration levels. Clearly, no society is totally accepting, and some people will take exception to strangers, whom they identify as different from the indigenous population. However, the government has insisted that anyone who wishes to make a life for themselves in this country is welcome to do so. Generosity is a Canadian value and acceptance will become more prevalent as cultures begin to mix.
One potential barrier to entering Canada is the bureaucratic system which immigrants must go through when starting a life here. Getting a job, applying for residency, visa applications or health cover, it can all seem like an impossible task, as people become bogged down in mountains of paperwork.
Where on Earth Do You Begin?
Getting a car loan (whether with a standard credit score or with a totally new credit history) is another one of these bureaucratic systems with plenty of obstructions. The odds are, you will need a car at some point. After all, you’re living in the modern world, in a society that has become dependant on the motor vehicle for shopping, working or even just merely sightseeing. And cars, as I’m sure you’re aware, are costly.
Some of us are lucky enough to be able to afford to buy a car up front, but the majority of people will need to find a way to finance their purchase, most often with a new credit car loan. Typically, new immigrants to Canada fall into this category. We understand how difficult it can be to consider your options among all the other decisions one has to make when immigrating to a new country.
Keeping that in mind, we’ve decided to come up with a guide to securing new credit car loans as an immigrant new to Canada. Because there’s such a huge amount of information out there, even the most innocuous of Google searches can throw up overwhelming numbers of blog posts and articles. That’s why we’ve decided to focus on the most important points, which will hopefully serve as a useful jumping-off point for your own further research. It’s impossible to comprehensively cover every aspect of the process, but by highlighting the most important details you should become familiar with, we hope to make the overall journey to securing financing for a car as an immigrant to Canada as painless as possible.
Read on to discover all of the most important things you need to take into consideration while you go about trying to get yourself a car loan.
Which Documents Will You Need?
Bureaucracy is famously pernickety, and getting a new credit car loan as an immigrant in Canada is no exception to the rule. There will be paperwork, and much of it is generic, which can counterintuitively make things more difficult, since it looks easy but small mistakes aren’t tolerated. This system enables the government to serve as many people as possible, but sometimes it leads to precisely the opposite situation, with many immigrants new to Canadian shores finding it hard to get themselves a new credit car loan. The specificity of your own situation is another factor that makes things complicated. Most of these documents are complicated, and what is required by others may not apply to you, and vice versa.
We’ll go through the most crucial documentation you need to have in order before you begin your journey towards getting a new credit car loan. Where applicable, we’ll do our best to point out helpful ways you can make life easier for yourself. We strongly advise you to get all your ducks in a row before you even begin the process of looking for a new credit car loan, since that’ll save you tons of time, stress, and potentially money in the future.
Obviously, you’ll need a driver’s license. Even this simple matter is a little tricky, though, because you can’t simply use your old one in Canada, no matter where it comes from. However, you may be able to swap your old license for a Canadian one, depending on your driving experience and where you obtained your original. Driving standards do tend to differ from country to country, so in some cases this will not be possible. It all depends on where you’re coming from, and how the Canadian bureaucracy considers the driving standards in that country. Regardless, if you seek to swap your license, you will need two additional documents. These are a Canadian citizenship card, and something referred to as an ‘abstract’.
The abstract is essentially a formal letter created in the past few months, which covers a few important points. Your date of birth, driver’s license details (whether it’s active or expired, what type of vehicle does it allow you to drive, etc), the date your license was issued, and an official stamp from your issuing agency will all be required. Some of these may require a few phone calls to the agency itself in your home country, so be sure to account for these requirements ahead of time in order to make the process of securing a new credit car loan as painless as possible.
There are a few different places you can acquire your abstract, and they’re completely dependant on your nationality. The best way to find out is to Google the procedure for your own country — there are too many possibilities to list here, unfortunately!
Should You Buy a Used Car or a New One?
In our opinion, we think a used car is the better option for a new immigrant. Of course, this is only a recommendation, but there are some significant advantages to choosing a used car for your first vehicle when arriving in Canada.
Most importantly, the cost will be dramatically lowered. Used cars are hands down cheaper than new cars fresh out of the factory. This has a lot to do with the fact that cars are depreciating assets, meaning the moment they leave the showroom, their value starts to decline. Vehicles that are a few years old are a better proposition for new immigrants purely because they can be bought at more of a discount. You can’t lease a used car, but you can secure a new credit car loan on one.
Most decisions have advantages and disadvantages, and it’s true that there are indeed some downsides to purchasing a used car. You may not have access to its entire history, for one thing; also, it may have been involved in an accident and have unseen structural issues. A new vehicle, on the other hand, offers peace of mind as it’ll come with a warranty. Cosmetically used cars may look outdated, or the in-car tech might be a little behind the times, but these aren’t serious issues, and the cost-benefit far outweighs them.
Credit, and Why It’s Important
Another vital part of securing the best kind of new credit car loan as an immigrant new to Canada is your credit score. Credit plays a significant role in every person’s life at one time or another, and your ability to access financing is an important factor. For an immigrant, the situation is much more complicated than for somebody who was born and grew up in Canada. You will have no credit history in the country, at all, irrespective of what you had in your home country.
Don’t worry, though: it isn’t all doom and gloom. There are a few simple things you can do to build a satisfactory credit score. One method is to open a credit account and make daily purchases. As long as you repay your debt on time, each month you should see your credit score will start to improve in time. It’s important not to bite off more than you can chew — you absolutely must pay off your balance each month to prove you’re a reliable customer.
Additionally, you could secure a small loan. Pay this back in full and on time, and it will have the same effect on your rating. All this gives the banks a reliable picture of your financial stability and makes you a better candidate for future lending and, of course, better deals.
Your insurance needs to be in place before you can acquire a new credit car loan for a vehicle in Canada, but you can’t apply for insurance coverage until you have a Canadian license. So it’s vital that you follow these steps in sequence. To apply for physical insurance cover, you’ll need to know the details of the specific vehicle you’re trying to insure first. The relevant details you’ll need include the registration number, model and brand, as well as the previous mileage recorded.
Even if you don’t know this information (and it’s quite possible that you won’t, since it’s a lot of data to get on a car you don’t even know if you can afford yet) you can still apply for an insurance quote to get a rough estimate of which costs you are likely to incur. It may feel unnecessary, but it’s an essential step as you don’t want any surprises later on in the process. Basically, it’ll provide you with a rough ballpark figure so you can budget appropriately, and you might even be able to decide at this point if that particular new credit car loan is going to be something you can account for financially.
Normally, a record of your driving history is kept, and a clean record enables discounts to be applied to your insurance premium. However, as a new immigrant, this is neither under your control or necessary, so at least you don’t need to worry about that.
It may seem complicated, but these barriers shouldn’t put you off approaching car financing as a new immigrant. Canada is one of the more flexible countries when considering the circumstances of immigrants, with many agencies working hard to help immigrants adjust and settle into life in their new home. Forearmed is forewarned, and it helps to know what needs to be done to access finance for your first car in the future.
Finally, if you are struggling to get approved for a car financing deal, whether you’re a new immigrant, a student or somebody with credit difficulties, then send us a message here at autoloans.ca or give us a call. We specialize in helping people out with bad credit scores, and we may be able to secure approval for your loan when no one else can.