Can You Get a Car Loan While on EI in Canada?
Can You Get a Car Loan While on EI in Canada?
Posted on August 17, 2022
If you need to get a car loan and are currently receiving EI benefits, you may be wondering if you can use those benefits as part of your income calculation for a car loan.
While you are obligated to pay taxes on the EI benefits, lenders do not treat this as income because it is a government benefit with a clearly defined end date.
Lenders want to issue loans to borrowers who will be receiving consistent income into the foreseeable future.
While this does present some unique challenges, if you stick with our Smithville car loans team until the end of the conversation, we will show you what step you should take so you can access the most competitive car loan possible.
Budgeting for inflation
The first thing you should do once you’ve figured out a way to generate income beyond your EI benefits is to create a new budget.
Inflation in Canada is at levels never seen in four decades, these higher costs need to be incorporated into your budget, or you will find yourself in a situation where you are not able to make ends meet.
When drafting your budget, something you need to make room for is a car payment which can easily set you back $500 per month.
After establishing your budget, you also need to consider creating an emergency fund; if something happens and your income slows down, you will be able to keep up with your commitments.
Reviewing your credit score and credit report
After your budget has been completed, the next thing you will need to do is start working on your credit score.
Sign up with Credit Karma today to access your real-time credit score and report for free.
There is no cost for this service, and you will be able to track your credit score. The median credit score in Canada is just over 650.
If your score is under that mark, you will need to work on raising it. To get access to the best auto financing in Canada, your credit score should be 700 or higher.
If you want to know the best way to raise your credit score, focus on keeping up to date on your obligations; even missing one single payment can lead to financial hardship.
Your credit score is not only important when applying for a car loan, but your credit score also impacts whether you can work at certain jobs or even rent an apartment, so this is something you must take seriously.
How to secure the best car loans in Smithville
There are numerous websites that advertise car loans, but most of them fall short of being able to deliver the best deals.
To secure the best car loans in Canada, you need to work with a dealership in your area, a dealership that will take its time to understand you and your financial needs.
If you're ready for a car loan, we'd love to help with that! simply fill in the form below to get started.