Financing Frequently Asked Questions
When setting up financing there are a few things we will definitely need:
- At time of purchase please make sure you have a valid government photo ID. Driver’s license is most preferable, but if that isn’t available then a passport would also work. Ontario Health Cards are not valid.
- While we don’t always need to provide a bank with Proof of Income, it would be great if you could bring it with you as it could save us having to bother you for it after the fact if the bank does ask for it.
- Before taking delivery of your new vehicle we will need a void cheque (or Pre-Authorized Payment form) from the bank account that you’d like the payments to be withdrawn from.
- Also before delivery we will be verifying that you have obtained insurance coverage on the new vehicle, so please contact your broker and provide us with the relevant details (insurance company, policy number, etc).
Any finance loan that we set up will always be an open loan, with interest accumulating daily. This means that you can pay out your loan at any time and you will immediately save on any future interest charges.
There are several factors, but the two biggest are debt ratio and payment history. Your debt ratio tells the bank if the new car loan is affordable. Debt Ratio is the amount of money going out monthly to pay debts vs. the amount of money coming in each month from wages/pensions/etc. Your payment history shows the bank if you have a good track record of making your loan/credit card payments in full and on time.
After that, some other factors could be your credit score (provided by either Equifax or TransUnion), how long your borrowing history is (a couple late payments aren’t a big deal if they were spread out over 10 years, vs. someone in their early 20s who already has a few late payments), how large any past debts have been (if your biggest loan was for $10,000 and now you’re trying to borrow $50,000 a co-signor may be required), how long you’ve been at your job (often but not always a three month minimum is required), length of term (the longer the term the higher the risk for the lender), and your equity position on the new loan (do you have any money down or a trade in? Do you owe money on the trade?) are all factors that are considered.
If you have any concern at all one of our Financial Services Managers would be happy to discuss your own personal situation and advise the best path forward. We can even pull your credit bureau report and help you calculate debt ratio and even submit your application for a pre-approval.
Everyone budgets differently, but one standard rule amongst most lenders is that they don’t want to see your debt ratio go above 40%. Your debt ratio is the amount of money going out monthly to pay debt vs. the amount of money coming in each month from wages/pensions/etc. A simple example would be someone making $5000 per month ($60,000 per year). 40% of $5000 is $2000, so a bank would like to see the combination of any debts (mortgages, line of credits, credit cards, car payments, etc.) stay at or below that $2000 number. So, let’s say you have a $1100 monthly mortgage payment, $250 line of credit payment, and $50 minimum credit card payment, that would leave you up to $600 per month for a car payment.
To collect the necessary information to submit a credit application takes less than 5 minutes. You can do it in person, online, or over the phone. Basically we need your name, date of birth, social insurance number (if you are willing to provide it), home address (along with mortgage or rental details), and employment info (employer, job title, income). We will take care of the rest!
The major credit-reporting agencies below can provide you with information about your credit rating and history. You will see things like active credit along with their current status, as well as past credit experience. Information stays on your credit bureau for seven years.
Website – www.equifax.ca
Toll Free Number – 800-465-7166
Website – www.transunion.ca
Toll Free Number – 800-663-9980
We are well equipped to do our best to provide you with some of the best borrowing terms you can qualify for. We have had many celebratory tears shed in our finance office from customers who couldn’t believe they were approved and for the rate that they were getting. Here is a little detail on how we differ from most car lots:
- We have lending agreements with eighteen different banks, credit unions, leasing companies and financial institutions. That means we probably deal with your bank! Many of our partners specialize in clients with recent bankruptcies or who had short term temporary life events that hit their credit bureau hard (divorce, illness, job loss) but who have recovered.
- Our biggest benefit to you is our ‘Subvented Subprime’ program through FCA. Let’s say you qualify elsewhere for a loan in the 9.99% - 13.99% range – depending on current month incentive programs, you should qualify for special ‘subvented’ interest rates of as low as 4.99% on brand new vehicles! Which vehicles qualify depend on the month in question, but usually include the Ram 1500, Grand Caravan, and often a few of our award-winning Jeeps. That interest subvention program can save you upwards of $10,000 of interest!!!
- We have been around since 1921. We are not going anywhere. It is our goal to make this buying experience an absolute pleasure and get you on the road to permanent credit recovery, so that you will purchase many more vehicles from us down the road. You will not be treated as a ‘second class’ customer here because you don’t have perfect credit.
We won’t make the promise here that we’ll guarantee an approval, but we have some excellent tools to do our absolute best to get you into a loan with fair and reasonable terms. Those places that say they’ll guarantee an approval will typically have interest rates as high as 29.9%. We typically don’t want to put someone into those terms, nor do we carry the type of older/high mileage vehicles that are required to make those deals work. Financing a $10,000 car over five years at 29.9% would end up costing over $23,000 once taxes/fees/interest is calculated.