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Car loans for non-residents in Canada

How to increase your chances of approval when you're only living in Canada temporarily.

Are you a temporary resident in Canada and in need of a car? Getting around without a vehicle can be difficult, especially if you’re not living in a major city or populated suburban area. But the good news is that some lenders are willing to offer car loans for temporary residents. You may be subject to more stringent eligibility requirements than other borrowers, though.

How do car loans for temporary residents work?

Car loans for nonresidents are essentially the same as any other car loan, except that fewer lenders offer them and you may need to meet additional eligibility requirements.

In general, you borrow money needed to purchase a car from a bank, credit union or online lender and enter into a contract to make monthly repayments over a set number of years. The loan is backed by the car you’re purchasing, which means the lender can repossess your car should you fail to make your payments. You might be able to take out a car loan, or alternatively, you could apply for a personal loan to buy your vehicle instead.

As a nonresident, however, you may be subject to additional eligibility criteria and stricter terms. Keep these factors in mind when looking for a car loan:

  • Loan term. Most car loan providers offer terms from 1-5 years. However, you likely won’t be offered a loan term that extends more than 3 months before your visa expires. Most lenders only consider your current visa and won’t rely on pending visa applications or extensions — no matter how likely you are to be approved.
  • Visa type. Some lenders will only extend credit to nonresidents holding certain types of visas. Borrowers with student visas or permanent resident status will likely have a greater chance of success than someone on a provisional or seasonal work visa. If your visa has been sponsored by an employer, this will greatly improve your chances of success. While requirements may vary between lenders, some lenders may limit financing to those who have one of the following documents:
    • Permanent Resident Card IMM5688 or IMM5292
    • Work permit IMM1102 or IMM1442
    • Study permit IMM1208 or IMM1442

    Be sure to check with your lender to find out exactly what status and documents you must have in order to apply for a loan.

  • Credit history. As a nonresident, you likely have little or no credit history in Canada. Since lenders won’t consider your overseas credit history, they may place more emphasis on your down payment, income and employment status to help determine your ability to repay a loan.
  • Visa breaches. Many visas have strict limitations on the number of jobs you can hold or hours you can work in a week. While it’s important to maximize your income before applying for a car loan, lenders likely won’t extend you credit if you’ve breached the terms of your visa.

How do I know if I’m eligible for a car loan?

As with all car loans, eligibility criteria vary by lender and may include minimum income and credit requirements. However, not all lenders are willing to work with nonresidents. And those that do may require you to hold a certain visa to qualify. Additionally, lenders may have different requirements regarding how long you’ve been in Canada, how long you intend to stay and your employment status.

Look for banks or other lenders with specific auto financing programs for people with little or no credit history in Canada. These options are great for immigrants or temporary residents who have trouble finding loan options elsewhere.

How can I increase my chances of approval?

Car loans for nonresidents are considered a high-risk endeavor for lenders. Aside from meeting the eligibility requirements, here are some tips to improve your chances of approval:

Can I get a car loan with a work permit?

Yes, you can, but lenders will zero in on the type of work permit you have, how long you’ve been in Canada and how long you intend on staying. Pay attention to these factors:

  • Your visa type. Some lenders may rule you out if you’re on a short-term temporary visa such as a seasonal work visa so your best bet is to apply if you have a work permit that extends for at least a year or two. Your loan will typically only extend for as long as your work permit and passport are valid. If your visa has been sponsored by an employer, this will help your odds.
  • Length of time in Canada. Lenders’ basic requirements usually entail having a permanent address, phone number and bank account. Ideally, you’ll have lived in Canada for at least three months in which you have been gainfully employed, earning a steady income.
  • How long you intend on staying. If your passport is about to expire, or your work visa doesn’t extend beyond half a year, you may have trouble getting approved for a car loan. Aim to show lenders you are here to stay and you have the work permit and employment to make your case.

How do I submit my application?

Many lenders allow applications for car loans to be completed online, making it a simple and easy process. On the other hand, since there are more stringent requirements for nonresidents, an online application isn’t always the best idea. If you’re working to build your credit in Canada and want to apply online, call and ask the lender if they’re willing to lend to nonresidents before submitting an application. Your credit score drops a bit each time a lender checks your credit, so you’re better off not applying to lenders you don’t have a chance with.

Lenders do have a certain amount of leeway when it comes to deciding whether to extend credit to nonresidents. For this reason, an in-person appointment can give you the opportunity to state your case and show that you’re a good candidate something that’s not possible with an online application. Do the groundwork first to work out which lender could be the best choice based on your circumstances. Then, make an appointment to speak with a car loan officer at your chosen bank or credit union.

You should always double check with your lender to see what documents you should bring with you to fill out your loan application, but the following information is typically required:

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Bottom line

Getting a car loan as a nonresident can be difficult, but it definitely is possible. Take the time to call banks, credit unions and online lenders before applying to make sure they have options to provide you with financing. And increase your chances of approval by saving up for a sizeable down payment or by applying with a cosigner.

To learn more about how car loans work and compare lenders, check out our guide.

Frequently asked questions about car loans for temporary residents

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