Car Loans - Auto Loans Canada Car loan is a type of personal financing granted for the purchase of a vehicle. They work like other types of debt whereby the lender loans a certain amount of money for a specified interest rate. The debtor agrees to pay back the same amount, plus interest over a set period of time. The loan is repaid in the form of regular payments. Interest normally applies from the date the financing is granted. The borrower gradually pays off the principal, together with the interest. Applicants with an excellent credit history will not find it difficult to obtain a auto financing. However, leasers and first-time buyers with no or little credit history may need a cosigner with an excellent or very good credit history. The credit of the cosigner allows for the approval of the lender, but cosigners do not have ownership in the vehicle. Dealerships also offer to arrange auto loans on behalf of clients. It is important to check their numbers. Some dealership quote lower payments than the banks, and borrowers get lured. However the dealer’s offer may come with a term of 40 months while the bank’s offer may go with a term of 36 months. When applying for a loan for vehicle, most lending institutions will require information about the last two years of residence and employment. The applicant has to prove income by showing tax returns, pay stubs, and other relevant documentation. The same is typically required for those who are self-employed. Clients who make a joint application will need to provide information for both applicants. Residence information is required to assess the borrower’s housing costs. Lending institutions want to see whether the applicant rents or owns a home and what the mortgage payments or monthly rent is. The lender may also request information about assets, if any, and other sources of income. While this information is typically optional, it can help establish the borrower’s ability to handle larger amounts of debt. The applicant may have to provide information about the automobile to be purchased. These details are usually optional. Those who can give information should specify the model and make of the vehicle, if it is a used or new car, what is the size of the down payment, and other relevant details. Applying for a loan is easy if you have an excellent or very good credit history. However, applicants with tarnished credit score still have a chance of being approved. Some lenders specialize mainly in dealing with borrowers who have poor credit score. They even lend money to clients who have declared bankruptcy within the last 7 years. Such auto financings are offered to customers living in all territories and provinces in Canada. Financing with people with bad credit are featured with a very high approval rate – usually above 90 percent, fast and easy application process, and online application, which reduces the paperwork to a minimum. The loan may come with no or minimum down payment.