How To Get A Car Loan Without A Cosigner In Canada
Cosigning pertains to the act of signing for another person’s debt. A cosigner assumes legal liability for a loan. He guarantees to pay it off himself in case the borrower fails to do so. This arrangement is preferred by most lenders because it reduces the risk of losing money to the borrower.
People with little or bad credit history are oftentimes required to have a cosigner when applying for a loan. Because of the risk involved, only a few are willing to be a cosigner. As a result, a lot of people, especially those with less than perfect credit, have difficulty acquiring the car loan that they need. This article aims to lend you some tips on increasing your chances of getting approved for a bad credit auto loan even without a cosigner.
Stable Employment History
Checking an applicant’s employment history is a standard procedure especially if you opt not to get a cosigner for your auto loan. Your lender would check your monthly income to determine if your salary can sustain the monthly payments of your loan. Usually, the minimum monthly income requirement for most lenders is $1,800 before taxes and other deductions. Therefore, your net income (after taxes) would roughly be $1,500 to $1,600. Although there are still lenders in Canada who are willing to give you an approval despite having a lesser monthly income, your chances of securing a fair car loan rate (with no cosigner) is better if you can meet the minimum salary required. If you are a seasonal worker, Click Here for practical car financing tips.
Bringing Money Down to the Table
Making a down payment is the ideal thing to do when acquiring an auto loan. Even if you can’t really make the recommended 20 percent down, $500 or $1,000 is good enough to secure your approval. A down payment shows the lender that you are financially equipped to take on this auto loan without the need of a cosigner to back you up. Moreover, you are saving money by making a down payment since your principal debt is significantly reduced. With a smaller principal debt, your monthly interest payment is also lowered thereby saving you money in the long run. If a down payment is not possible, don’t worry, there are still financing options that won’t require a down payment or cosigner. Click Here to learn more about them.
Choose a More Affordable Vehicle
Don’t get too carried away when car shopping. If your credit is not that great and you don’t want (or can’t) a cosigner for your auto loan, choose a vehicle that is relatively cheaper than the average price. Coupled with your stable employment history and adequate monthly salary, you won’t have any problem getting approved for a car loan without someone to cosign your loan.
Shop Around Different Lenders
The requirements and interest rates involved in an auto loan vary per lender. It is always worth your while to shop around different lending institutions if you want a no-cosigner car loan deal. Generally, banks are more strict with their requirements than lending institutions and credit unions. Although in a credit union, you need to be a member of their organization for a given period of time before allowing you to avail of their financing options. If you don’t have the luxury of time to wait, you will have more chances of getting approved if you apply to a reputable lender. New Car Canada for instance, provides car financing (for both new and used car) without the need of a cosigner or down payment regardless of your credit. As long as your monthly income is at least $1,800, you can get approved in less than 24 hours.
If both your credit and monthly salary is not sufficient to qualify for an auto loan without a cosigner, you can opt for a cosigner option for now and then refinance your loan later on. By making the necessary improvements on your credit (such as making on-time payments) and if somehow, you can raise extra income from a second job, you can refinance your current car loan for a new one in order to get rid of a cosigner. Look for auto loan offers that have a lower interest rate and more lenient requirements.
There are many lenders out there who are willing to finance your car purchase without a cosigner. Here in New Car Canada, we provide instant approval even with a terrible credit. Also, we don’t require any down payment or cosigner. If you have a stable monthly income, you are more than welcome to apply. Just fill out our 1-minute online application and get approved the next day. Car financing is fast and easy with New Car Canada.
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