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How Hard Is It to Get a Car Loan?

Most potential car shoppers feel at least some anxiety when it comes to actually getting a loan. Since pretty much nobody has enough money to just buy a car without financing, it’s a necessary part of the process.

You’ll learn just what it takes to get car loans in Hamilton. While the different methods have some differences, especially when it comes to the timeframe and effort put in by you as the shopper, there are also plenty of similarities.

Armed with this knowledge, you’ll feel more confident about applying for a car loan and making that step towards your ultimate goal.

Securing a Loan

The very idea of looking for car loans in Hamilton might be enough to fill your mind with a rush of anxiety. That’s understandable, because when you apply for a loan, you’re being judged on things you usually keep quite private.

To disclose intimate financial information to strangers, especially people you might never see face-to-face can be unnerving. In addition, you run the risk of rejection, since not all car loan applications are approved.

Discussing your finances with strangers can be stressful.

For these and many other good reasons, it’s natural to wonder how hard it is to get car loans in Hamilton. To get a thorough answer, you need to understand the process and your own situation, since these are the factors which directly affect your chances of getting an approval.

Applying for Credit

Banks don’t just how out a loan for getting a car to just anyone. They want to avoid too risky of a situation, which is why you must go through the approval process.

Information Needed

You’ll need to provide a fair amount of information to a lender before being considered for any car loans in Hamilton.

For starters, you’ll need to supply your full legal name, current address, and driver’s license number, and other identifying info. You’ll likely be asked if you rent or own where you live and how much you pay each month. The lender will also want references, which can be family or friends.

In addition, you’ll need to supply information on how much you make each month. This is generally done by providing a few pay stubs. The lender also wants to know where you currently bank and the account numbers you have. This might involve a voided cheque or a pre-authorized debit card transaction.

You will also need to agree that the lender can pull your credit history and check your score. Of course, those are huge factors when it comes to the lender’s decision.

With all the information requested, the lender can see how comfortable it is with lending money to you with the purpose of buying a car. Supplying those kinds of details about your life can produce quite a bit of anxiety. After all, it’s the kind of information you don’t talk about typically with anyone else. You might not even think about it when alone.


In these modern times, applying for car loans in Hamilton doesn’t even require you to change out of your pajamas.

Many lenders have a website where you can fill out all the information. They often have an option to scan documents like your pay stubs and upload them into the system, so you submit truly everything from the comfort of your home.

You can apply for a car loan online.

One of the nice things about applying for a car loan online is that you often get an instant approval for a loan. That approval tells you the maximum amount of money the lender is willing to lend and other terms surrounding the loan. It’s nice to have in hand, because you can then look at cars for sale and know which ones are most definitely out of reach, as well as which you can get the money together to buy.

Using the online loan application process can speed things up considerably, when you get an instant approval. There are times when you don’t get that approval right away. Usually that’s because of poor credit or no credit, requiring someone to go through the application carefully and maybe even follow up with you on some items.

At a Dealership

When you apply for car loans in Hamilton by visiting a dealership, the process is actually quite similar. You’ll need to fill out a form with your information, plus bring the kind of documentation you would have uploaded to a website. Of course, most car dealers now offer online loan applications on their websites, if you prefer to do that before going to the physical location.

Once you’re at the dealership, if you forget any items, you’ll have to get them and return to the dealership. Unless you live nearby, that could delay the whole loan approval process by a day or more. It’s best to contact the dealership in advance and clarify exactly what documentation you should bring, helping to avoid that kind of a situation.

Using a dealership, you leverage the finance team. The entire job of the finance team is to get people approved for loans. They’re essential to the dealership selling cars, meeting quotas, and making money. In many cases, dealerships work with dozens of lenders, each one catering to different types of borrowers seeking to get car loans in Hamilton. That fact alone helps you with qualifying for a loan.

Since the dealership makes money when it sells cars, the finance specialists will often only present your loan application to lenders which they think are likely to approve it. This means getting approved for a car loan is even easier, because the dealership staff will do much of the legwork for you.

It’s possible your approval comes through that same day, or even within a couple of hours. Once you have a loan approval, you can then select a car at the dealership, if you haven’t already.

At the Bank

Of course, you can go with the more traditional way to get an approval on car loans for Hamilton by visiting a bank or local credit union in person. If you have a particularly strong relationship with the financial institution, like you own several accounts and have been a loyal customer for years, this isn’t a bad way to go about getting a car loan.

Sometimes, banks and credit unions are known for financing people in particular groups. For example, if your credit score is a certain number of higher. In those situations, you might already know you’re a strong candidate.

When you go directly to a bank or credit union, there is a tradeoff. You’ll need to do more legwork after being approved for a car loan. Dealerships will write up the sales contract and arrange for registering the vehicle, but you must bring the sales contract to the bank and present it, so the loan can be finalized. Exactly how you do that depends on the bank’s procedures.

Reasons for Rejection

Sometimes you don’t get approved for car loans in Hamilton, which can be quite discouraging. This rejection might come as a shock, or it could be confirmation of what you already suspected.

Whichever is the case, you should know there are a few factors which might prevent you from getting a car loan.

Poor Credit

A credit score in Canada can be anywhere from 300 to 900 points. The higher the number the better the score. Paying debts on time, not using credit excessively, and other positive activities can improve your credit score. Of course, doing the opposite will harm your score.

The average Canadian has a credit score of somewhere around 650 points. If you match that number or are close, that means you likely will qualify for any of the standard car loans in Hamilton. With a significantly higher score, you could possible be qualified for excellent terms on a loan.

One way to overcome a poor credit score and still be approved for a car loan is to get a co-signer. This other person is on the loan with you and has a better credit history. If you don’t make the payments on time, your co-signor’s credit file is damaged along with yours.

There are also subprime lenders which cater to people who have lower-than-average credit scores. They might look past a tarnished credit file if you’re willing to put down a large payment up front and/or agree to a high interest rate.

Excessive Debt

Even if you pay your bills on time, having too many debts compared to your income can result in rejection for a car loan.

Lenders have their own standards for how much debt you should have relative to your income. Not only will they look at other lines of credit you have, like your credit cards balance or monthly student loan payments, they also pay attention to what you pay for housing each month.

With too much debt compared to your income, lenders figure you’ll struggle to pay everything back. Most people in a time of crisis prioritize what gets paid, and a car payment might fall somewhat low on the list if a person has quite a few other debts to maintain.

Don’t Give Up

Even though you probably feel discouraged after being rejected for a car loan, that doesn’t mean you should give up all hope.

The lender should provide at least a brief explanation of why your loan application was rejected. This gives you direction on how you can improve your chances in the future. For example, you can be more diligent about paying debts on time as a way to increase your credit score. Or, you might streamline your expenses and pay off debts, if having too great of debts was the problem.

Even when difficult, don’t give up on getting a car loan.

Also, remember that just because one lender rejected your application for credit doesn’t mean every other one will do the same. Where you run into problems with one lender, you might have success with elsewhere.

Do Your Homework

Researching lenders before applying for car loans in Hamilton isn’t a bad idea. This can help you determine which ones are more likely to work with your situation.

Of course, you’ll need to know where you stand with credit and your debts relative to income. You can request from the two credit bureaus in Canada copies of your file. If you find anything inaccurate, there’s a process for disputing those items, which can help increase your credit score.

Through creating an accurate and honest budget, you can see if there’s a problem with your income and debt situation. If so, finding ways to pay certain debts down or completely off could be the solution. That might require discipline and dedication, but the sacrifice is worth the effort.

Getting car loans in Hamilton isn’t a horrible difficult process, whether you do it through a dealership, go to a bank directly, or apply online. Some of these options are more convenient than others, but that’s more a matter of preference than anything.

Of course, issues with your credit file and score, or the amount of debt you have compared to your income can make getting a car loan difficult or impossible. Doing some research into your situation as well as what lenders might work with you beforehand can make the process of applying for a car loan easier.

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