How to Buy a Car and Get Approved for a Car Loan in Canada.

welcome back to cars unlocked today we have an essential guide for newcomers and immigrants in Canada who want to purchase their first car my name is Christopher the host of cars unlocked and I am a finance manager in the Canadian automotive industry and with the country of Canada taking in 1.5 million immigrants per year I’ve had the discussion so many times of people who are struggling the struggles that newcomers face to secure a car loan and build their credit so I wanted to make this video to educate you and help you navigate some of these murky Waters so you can have a smooth and easy transition to Canada and get your first vehicle first things first congratulations on your journey to Canada we here at cars unlocked understand that having a reliable vehicle is crucial to your success and your transition so let’s get started and if you guys are new to the channel if you found our channel for the first time make sure you guys hit that subscribe button comment your questions below and I’d be more than happy to answer them so it’s important to start with the basics and that’s understanding your credit in Canada because your credit history plays a significant role in all the financial transactions having a strong and established credit history will help you secure the lowest interest rates when you’re shopping for things like mortgages credit cards lines of credits business loans applying for rental applications and specific to today’s topic is getting a car loan your credit score is like your financial report card it reflects your borrowing and your payment history to build a good credit score you need to start using credit credit responsibly here are the steps to help you get started on your car buying Journey step number one obviously this should be the first thing you do when you arrive to the country that’s open a bank account having a bank account is going to show Financial stability in Canada and it’s essential for you to be financially responsible once you’ve started a bank account I would recommend you apply for a credit card there’s lots of credit cards that are designed for newcomers that most of the Canadian major banks have RBC Scotia Bank CIBC all those ones Capital One has specific credit cards that are designed for newcomers to start building credit at Canadian financial institutions these credit cards are easier to qualify so just make sure you bring your proper identification with you maybe call the bank to set up an appointment or try to apply online once you’ve secured your credit card you can start building credit and you want to use the credit card for small purchases and things like gas or groceries $100 here $100 there that you can go home and quickly pay off is going to help build your credit history it’s important to note that the two registered Canadian credit bureaus is called Equifax and Transunion and they recommend that you only utilize 30% of your available credit so what that means is if you have a $300 credit card that you’ve been approved for you don’t want to Max it out at $300 each time you want to maybe put $100 on it like I said 30% well that’s actually 33% put $100 on it use it pay it off and then keep doing that to build your credit showing that you have credit available but you’re not using it is an effective process to build your credit score this process is going to take you about maybe 8 months to a year to establish a prime interest rate and the score you need to get a prime interest rate here in Canada is about 700 so I know this can be a slow process but I would recommend don’t start applying for car loans until your score is established this is going to be completely detrimental to you and I’m going to explain why later in the video so you’ve been using your credit card you’ve established your credit score now it’s time to start shopping for a car but before you start shopping there’s a few things you want to have established the first thing you want to do is make sure you do your research research all your variables including what kind of car you’re thinking of buying what is your budget for the car including all your cost of ownerships Insurance fuel maintenance how much driving you will be doing what type of people are going to be traveling in your car what size of car is important to you now remember the best way for you to get approved is not to go crazy on the car if you choose like a $50,000 vehicle you’re probably not going to get approved you want to choose something low risk for the bank maybe $225,000 or less 2015 maybe newer and you want to be able to put about 30% down this is what I tell clients is the best chance that they will get accepted for a car another option is having a co-signer so a co-signer is someone with stronger credit who is going to vouch for you and they’re going to basically be 5050 responsible for the loan now I would only recommend using a co-signer if you drastically need a car right away and you cannot get approved on your own co-signers can be very very positive and they can come out very very negative and here’s why basically if you have a co-signer you’re 50/50 responsible for the loan if you don’t make the payments the co-signer is on the hook for the payment I’ve seen so many people make mistakes When selecting their co-signers so for example boyfriend might sign for his girlfriend’s car or vice versa a girlfriend might sign for their boyfriend’s car and they do a seven-year loan on a car at a year three they break up unfortunately that’s a sticky situation and that’s not a situation you want to be in you also don’t want to jeopardize that person’s chances of getting a car themselves most of the time if people are new to the country a lot of lending institutions will not allow them to have two car loans so if I co-sign for my buddy Johnny and then 2 years down the road it’s time for me to buy a car they are going to look at my credit beer and they say you already have a car car loan sir you don’t qualify for another car loan so you built your credit you’ve done your research now it’s time for the fun part and that’s narrow down the car and shopping at the dealership or going to the dealership to look at cars now this can be an exciting time it can also be a stressful time so here is my dos and don’ts the first thing you want to do is narrow down what typ type of car you’re looking for and then search local dealerships in your area and find maybe two to three different options that you’re kind of honing in in on or you want to go check out personally and test drive look up the Carfax on the cars make sure you find a trustworthy dealership read their reviews try to find a salesperson that you can trust ideally if there is a department in the dealership or a specific person in the dealership that specifies in financing um specific cars or specific newcomers like yourself I would recommend you try that dealership if there’s someone that speaks the same language to you it might help you overcome any language barriers that happen when you’re shopping do your research about the dealership do your research about the car and now it’s time to call them and make an appointment and check out that car what I do not recommend is that you go on Google and go online and start applying to so many places online this can be detrimental to your your credit I talked about earlier about applying too soon before your credit card’s established and this is a big don’t that I see all the time newcomers will arrive to Canada and within two weeks of being in Canada they will go online and they’ll apply to five six different dealerships there’s so many places all you have to do is punch online how to get approv for a car loan and probably 20 or 30 different places will pop up that you can apply to I would not recommend you apply online and here’s why every single time you apply online that company that you apply to is either going to pass your information on to one of their dealers or they’re going to check your credit and they’re going to start applying you off to Banks so they’re going to apply you off to Banks and if you’re not serious yet about getting a car or if you don’t even know they have the right car for you it doesn’t make sense to be applying is considered as a hard hit on your credit bureau and it’s going to lower your score and might make it harder to get approved for the actual car you want you also don’t want to apply too soon that’s what I touched on earlier earlier if you apply before you’ve established your credit it’s just going to delay the time that you will actually have your credit established because like I said you’ll get a hard hit on your credit bureau your score will go down and your goal is to build your score not lower it so once you’ve narrowed down the car sometimes it’s good to get pre-approved a lot of dealerships like the one that I work at I work at St Katherine’s Nissan so if you guys are in the area and you’re looking to get a pre-approved for a vehicle or have questions about financing do not hesitate to contact me my information is in the description below but most dealerships can grab your information and say hey if you want this car we can check if you’re pre-approved before you even take it out for a test drive or things like that or they can get you pre-approved and say Hey you qualify for a loan of 25,000 and you qualify for a loan of 30,000 let’s go look at some of the options that’s something that I would recommend so that there’s no disappointment right you don’t want to go out there look at a $40,000 car and figure out after the fact that you only qualify for a $20,000 car so it’s important to get pre-approved through maybe a specific finance manager hopefully we can help you achieve your goals of having reliable transportation if we did give us a thumbs up subscribe if you’re new to the channel check out our car reviews we do all sorts of Automotive content more videos like this tips or how to buy a car check them out subscribe comment and we’ll see you in the next one have a great day