Andriy moved to Toronto six months ago. He found a job, but getting to work without a car takes a long time. He wants to buy a car for $20,000, but he doesn’t have a credit history in Canada yet, and the dealer immediately offers him financing. Many newcomers are in the same situation when looking for a car loan in Canada.
You can also consider a credit union. Buduchnist Credit Union, also known as BCU Financial, offers car loan in Canada with loan terms of one to five years. You can get a loan to buy a new or pre-owned vehicle.
What Problems Do Newcomers Face When Applying for a Loan?
Andriy went to the bank knowing which car he wanted, but the loan officer immediately asked about his credit history and how long he’d been working at his current job. For someone who has lived in Canada for only a short time, these questions can be hard to answer.
Here are some typical problems:
- No Canadian credit history.
- Not enough work experience to show a reliable income.
- Loan agreements full of complicated terms.
Things can be easier if you know what the bank will ask beforehand or find a financial institution that understands newcomers and is willing to work with them.
Car Loan from Credit Union: How Does It Work
The car costs $20,000, and Andriy pays $5,000 upfront as a down payment. He borrows the remaining $15,000. With a five-year loan and an example interest rate of 6.99%, as listed on BCU’s website, his monthly payments would be about $297. Over five years, he would pay around $17,820 in total, including $2,820 in interest. Rates can change, so it’s best to check the latest rate before making a decision.
How to Get a Auto Loan from a Credit Union
At BCU, the process involves four steps:
- Choose a car and check the price with the dealer.
- Talk to a financial advisor at a branch.
- Provide your documents, including ID, proof of income, credit history, and details about your assets and debts.
- Sign the loan agreement at a branch or online if you live in Ontario.
You’ll normally hear back within a few business days, so you can visit the dealer once you get an answer.
Why Choose a Credit Union Over a Bank?
A credit union cares about its customers and may look at more than just the details on your application. If you’re new to Canada and don’t have a credit history yet, this can work in your favor. You may also get perks like flexible loan terms, a fixed interest rate, and the option to pay off up to 20% of your original loan amount within 12 months without a penalty.
To find the best credit union for car loans, compare rates and fees at two or three places before making a decision.
