How Much Can I Get Approved for a Car Loan?

Factors That Affect Your Car Loan Approval

Below are the most important factors that affect your car loan approval:

Your Credit Score

Your credit score is the most powerful factor that determines how much you can borrow for a car. The higher your credit score, the more likely you are to get approved for a higher loan amount. 

Your Monthly Income

Your monthly income is also a major factor in determining how much you can borrow. Your tenure, whether you’re employed full-time or part-time, and your debt-to-income ratio will all influence your car loan approval. 

Auto Loan Pre-Approval

The best way to know how much you can borrow for a car is to apply for a car loan pre-approval. This gives you a ballpark figure to work with and lets you know how much you can afford to borrow.

Down Payment

The amount of money you put down for a car loan is another important factor that determines how much you can borrow. The higher your down payment, the less you have to pay in interest over the life of your loan.

Car Loan Interest Rates in Canada

Car loan interest rates in Canada vary from lender to lender. But on average, they range between 4.5% to 10%. Moreover, the interest rate you pay on a car loan will be determined by your credit score, the type of car you’re purchasing, the term of your loan, and your down payment.

It is important to note that auto loan interest rates in Canada are subject to change without prior notice. Lenders have the right to revise interest rates at any time, so if you are shopping for a new car or looking to refinance your existing loan, be sure to check out car loan interest rates from different lenders on a regular basis.

Estimated Interest Rates Based on Credit Scores

To give you a rough idea of the current interest rates on car loans in Canada, here’s a quick look at what your car loan interest rate would be, according to Canadian Auto Brokers.

Excellent Credit Score: 800-900 (Interest Rate: 3.49%)

Very Good Credit Score: 720-799 (Interest Rate: 3.99%)

Good Credit Score: 650-719 (Interest Rate: 4.5%)

Fair Credit Score: 600-649 (Interest Rate: 10%)

Poor Credit Score: 300-599 (Interest Rate: 15%)

As you can see, the interest rate on your car loan is directly influenced by your credit score. If you have a good credit score, you will be able to borrow more money and pay less interest over the life of your loan.

Lenders That Offer Car Loans in Canada

If you are looking to purchase a new car, you can apply for a car loan from any of the following lenders:

CIBC Bank

CIBC is a traditional financial institution that offers car loans of up to $100,000 with interest rates between 3% and 12%. They offer a repayment term ranging from 12 months to 96 months.

BMO Bank

BMO is another bank that offers auto loans in Canada with interest rates ranging from 6% to 8%. Their repayment term ranges from 36 months to 96 months. You can take advantage of BMO’s online loan calculator to get an estimate of how much you can borrow for a car.

Canada Prime Autos

Canada Prime Autos offers car loans of up to $75,000 with a repayment term between 12 months and 96 months. Their interest rates vary depending on your credit score and the type of car you are purchasing.

Conclusion

Buying a car is a big financial decision. So it is important that you do your research to make sure you are getting a good deal. There are many things to consider when purchasing or financing a new car. However, you can take comfort in knowing that there are many different lenders that offer car loans in Canada. With this knowledge, you will be better equipped to find the best car loan for your needs.