How to Qualify For a Car Loan: Our 2 Minute Guide

How to Qualify For a Car Loan: Our 2 Minute Guide

Posted on April 20, 2022

Most people will qualify for a car loan of some kind. Even those with less than perfect credit scores can access finance in one form or another. The trick is to look as appealing and as low risk as possible to attract the lowest interest rates.

Our Welland auto loan team have put together this post to outline everything you need to know about qualifying for car finance.

Requirements to qualify car loan in Welland

There are some requirements you’ll need to satisfy to qualify for an auto loan in Welland. They include:

Credit score – Your credit score will need to be sufficiently high to qualify for the amount you want to borrow. The better your score, the more you can borrow and the lower the interest rate.

Income – You will also need sufficient income to be able to demonstrate you can afford the auto loan. Typically, you’ll need in excess of $1,500 a month in income but there are exceptions to this. As long as your spare cash is sufficient to repay the loan, you should be fine.

ID requirement – You will need proof of ID, proof of address, a full driver’s licence, proof of income and of work and tax returns or bank statements. A lot of work goes into ID verification to avoid fraud and money laundering as well as to verify you are who you say you are.

Debt to income ratio – Your debt to income ratio is how much debt you have available versus your monthly income. You will need sufficient spare income to be able to make auto loan payments without putting your finances under strain.

Steps to qualify for a Welland auto loan

There are several specific steps you need to take in order to stand the best chance of qualifying for an auto loan in Welland.

Find out how much income you have left over each month – Use a budget planner to outline your income and outgoings to accurately calculate your disposable income each month.

Check your credit report with TransUnion or Equifax - Check your credit score, check your debt to income ratio and check your entire credit history for mistakes and errors.

Use an auto loan payment calculator to see how much you could afford – There are dozens of calculators online. Use one to assess how much you can comfortably afford to pay each month.

Get preapproved for an auto loan – Preapproval is a dry run of an auto loan application. It will tell you if you are likely to be accepted for the loan amount you’re asking for. Most preapprovals do not leave a mark on your credit report but some do so be careful of which you use.

Get your paperwork in order – All those ID and income requirements above will need to be satisfied with paperwork. Get everything in order, keep copies of everything for your own records and prepare them for the application.

Apply for the auto loan – Once everything is in place, contact our Welland auto loan team so we can find you a competitive loan. We can help you with every part of the application process too!

When you’re ready for a car loan, get in touch with the London auto loan experts at Northway Ford for great deals on auto finance.

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