How Hard Is It To Get A Car Loan?

Posted by on October 01, 2019 @00:02:43 EDT

These days, it’s very difficult for most of us to function in everyday life without a car. As well as being a fantastic way to secure your own personal freedom, most of us need cars—to get to and from work, to handle the weekly grocery shopping, to go out with friends, to see family, and so on. The list really is endless, and unless you live in an area with exemplary public transport services, you’re probably not going to be able to make it around day to day without an automobile of your own.

That being said, it’s not always straightforward to actually get yourself a car. Unless you’re one of the lucky few that can save up enough capital to pay for the vehicle up front, the chances are that you’re going to need to secure yourself a car loan in Toronto in order to finance the automobile.

Car loans are a famously complicated and divisive topic, with seemingly everybody on the internet nowadays offering up their own opinions on the matter, and no matter which article you read in order to hopefully arm yourself with the information you need to make a car loan in Toronto a reality, the likelihood is high that the author will tell you that their information is the be-all, end-all of the entire topic.

How Hard Is It, Really?

Of course, that can’t be the case. So what on earth is someone supposed to do if they’re simply trying to figure out how hard it’s going to be to get themselves a car loan in Toronto? Any search of the internet throws up hundreds upon hundreds of results, and hardly anybody has enough time to browse more than a few at a time, considering the fast-paced lifestyle most of us have been forced to lead by the recent technological boom.

With that in mind, we’ve decided to come up with a list of some of the things which will make it tricky to get a car loan in Toronto. Hopefully, by perusing this article, you’ll be able to identify the problem areas which are likely to hamper your efforts to secure an automobile loan, and can as such refine your overall situation in the way that’s most conducive to actually getting approved for a vehicle loan.

It’s worth bearing in mind that everybody’s financial situation is different, and there’s nobody who knows the ins and outs of your own financial health better than you do. As such, this list can’t be a one-size-fits-all guide, and it’s not intended to be, either. There are plenty of factors which will increase the difficulty of securing a car loan in Toronto which won’t be listed here, simply because they tend to be more specific and as a whole less applicable to the car-driving population in general.

However, if you’ve read to the end of this article, you’ll find yourself in possession of enough information to be able to carry out your own further research. Think of it as a way to arm yourself against the massive amount of content available on the internet at the moment: once you have a rough idea of the state of play, it’s much easier to distinguish between various articles yourself than it would be otherwise.

But that’s enough preamble. Let’s get straight into the discussion of how hard it is to get a car loan in Toronto, by focusing on some of the main problem areas which have, in our extensive experience helping people secure vehicle loans, proven to throw up the most difficulties in the process as a whole.

1: A Poor Credit Score

A credit card with a digital tracking device.

This is without a doubt the most common difficulty we come across when trying to help people get themselves car loans in Toronto. As a matter of fact, people stressing about their bad credit scores is such a ubiquitous issue that we’ve come up with a number of specialized services which are specifically designed to help somebody with a less-than-ideal credit score secure approval for a car loan: you can find more information on those here. That aside, however, let’s get into the question of why exactly a bad credit score makes it hard to get a car loan in Toronto.

The crux of the matter is that a bad credit score is effectively a way of representing to the buyer (read: dealership) that you, the lender, hasn’t always been completely reliable when it comes to paying back your financial obligations, and that as such they’re going to be taking on a degree of risk by lending you the money you need to buy the car.

In comparison to somebody with a stellar credit score, who is going to be offered the most favorable terms possible when it comes down to the nitty gritty of what a car loan agreement in Toronto actually entails, if you’ve got a poor score you’re going to get a significantly worse offer, which is going to wind up having the effect that the amount of money you pay towards the loan will be significantly higher in the final analysis.

The two main ways a poor credit score can affect the car loan in Toronto you’ll be able to get yourself are interest rates and the length of the loan in terms of months. Money paid in interest never goes towards the value of the car. Instead, it’s a way of directly offsetting the risk taken on by the lender.

Keeping that in mind, it’s not a big jump to realize that the riskier the proposition is, the more you’re going to have to pay in interest, which will practically work out to higher rates, where a rate is a percentage of the overall value of the loan.

The other way a poor credit score will make getting a car loan in Toronto harder is by increasing the terms on the loan itself. While a longer term loan will lead to lower monthly payments, it’s important not to get distracted by the purely monetary value you’re paying every month, as there are significant downsides to being locked in to a long-term contract. One of these is that the longer you have to pay the loan off, the more money will have to be paid in interest, as interest is charged on a monthly basis. And the more money that you pay in interest, the more expensive the overall deal is.

Another factor that makes being stuck in a super long-term car loan in Toronto is that if something happens and you need to spend more money on the vehicle, you’re essentially paying upkeep on an item you don’t even own—and it’s not hard to see why that’s not the ideal financial situation. Whether it happens as a result of repairs that are needed, or even just a quick tune-up for the suspension, the more you have to pay before you own the car, the worse for your financial health the entire deal is going to be.

2: Unsteady Income Stream

A woman holding some paper money.

Even if your credit score is alright, any lender looking to approve you for a car loan in Toronto is going to need to take a long look at your income. Proof of solvency is typically required even more in cases where the credit score isn’t great, which is one thing that’s worth taking into account. Much more important than whether or not your overall income level is high enough to pay for the vehicle, however, is how steady your stream of income is.

If you work a standard job, this likely won’t present any difficulties for you. Regular pay stubs and paychecks can be regularly produced, and will indicate with a high degree of accuracy just how easily you’ll be able to afford the monthly payments on the vehicle you’re looking to get a financing scheme for.

If you work a slightly less by the book kind of job, though—such as under the table construction work or a range of different freelancing positions—the regulatory of your income could make budgeting and getting a car loan in Toronto that much harder.

There are ways to compensate for it, however, so that it needn’t wreck all of your chances of getting approval for the financing scheme. For one thing, if you work an unusual job, you should commit yourself to needing to provide other sources that can verify your solvency. For example, coming equipped with months’ work of bank statements, while a nuisance, could be a good idea, as it gives the lender a better overall look at the state of your financial affairs.

Another good way to offset the damage of an irregular income stream on your car loan in Toronto is by printing off all of the invoices you’ve sent out in recent history and bringing them with you. Even though you may not have a weekly pay stub, these factors can serve to prove that you are indeed receiving enough money every month to be a reliable bet for the overall financing plan.

3: No Credit History

A question mark illustrated by a long-exposure camera shot

Similar to the credit score issue, the problem of having no credit history is different, as it won’t necessarily entail your having a poor score. In fact, it’s possible to have a decent credit score but still become undone by the lack of a credit history. Credit history is a chronological timeline of payments you’ve made on financial commitments, so it’s plain to see what kind of effect it could have on your overall image as a reliable person to lend money to.

Lacking a credit history is a difficult problem to overcome, and if you have no credit history whatsoever, it’ll make securing a car loan in Toronto so difficult that the best option might just be trying to wait until you can rack up some payments on other loans.

Good options for these kind of history-building loans include televisions, refrigerators, or other similar appliances. They won’t cost anywhere near as much as the payments on a car loan in Toronto, and as such shouldn’t strain your finances too much, making them the perfect choice for building up some credit history.

As well as helping you with the immediate difficulty of securing approval for an automobile loan, any credit history you build up will have the bonus effect of positively improving your credit score, often by large amounts. If you can put off seeking approval for that car loan in Toronto you’ve been aiming for for even a few months, you may find yourself in a drastically improved position, both in terms of your overall financial situation as well as in terms of the actual deal you’ll be able to strike.

While it won’t be an option for every buyer, if you have the liberty to take a little more time, this can be a step well worth taking and comes highly recommended as a means of mitigating the total difficulty of getting a car loan in Toronto.


These three things are the biggest factors that go into making it hard for people to secure car loans in Toronto. Although they’re all closely interlinked, they can all be worked on more or less independently of each other, so if you’re having a hard time getting a loan, devoting a little of your time and money in a regular fashion towards offsetting these difficulties will have a considerable knock-on effect when it comes to the car loan in Toronto you’ll finally get approval for.

By the way, if you’ve been struggling to get yourself approved for a vehicle loan on account of your poor credit score, have you considered getting in touch with the experienced team here at We specialize in providing solutions to people who are having a tough time with their credit score, so it’s well worth picking up the phone and giving us a call. You never know what we might be able to help you out with.

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