Applying for a car loan online allows you to compare lenders and speed through the application process. But to avoid hurting your credit score, only submit a full application to the lender you’re most interested in.
Car Loans Canada
Min. Loan Amount: $7,500
Max. Loan Amount: $55,000
Interest Rate: 3.99% to 29.90%
Loan Term: 12-84 months
$0 down options available
All credit scores considered
Quick and simple financing
Safe and secure loans
Car Loans Canada
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
Fill out the online application. This will likely include giving the lender information about yourself, your finances, your credit and the car or loan amount you’re interested in. Be honest and make sure you provide accurate answers to avoid any trouble later on.
Gather supporting documentation. You may be able to upload your documentation directly to the loan application, or you may need to fax or email them in.
Wait for the lender’s decision. Once you’ve submitted your application and supporting documents, your lender will either notify you of its decision or ask for further information. In many cases, lenders can give you approval or preapproval almost instantly after submitting an application while supporting documents and other requested information are still pending.
Review and sign the contract. If approved, your lender will send you a loan contract for review. This contract contains vital information including your loan term, repayment schedule and interest rate, so take your time reviewing it. After reviewing, if you’re comfortable with the terms, you’ll sign the contract and return it to your lender, who will then distribute the funds to the vehicle seller.
What do I need to apply for a car loan online?
The information and documentation you need to complete the application will vary by lender. But in general, you should have the following on hand:
Personal information. This includes information such as your driver’s license number, contact information, income and residential status.
Employment information. This includes details regarding your employment history to help your lender assess your stability as an applicant.
Requested loan details. You’ll need to provide your requested loan amount along with your preferred method of repayment.
Driver’s license or certified ID. Your driver’s license or other valid identification is used as proof of your current address and to help your lender conduct a credit check. If your credit history is an obstacle, it’s possible to get apply for a no credit check car loan, but this also has its drawbacks.
Proof of income. These include bank statements, pay stubs, financial statements, rental income statements or anything else serving as proof of the income declared on your application.
Proof of insurance. Depending on the lender, you may be required to provide proof of insurance on the car you plan to purchase.
Vehicle details. Some lenders may ask you for information about the vehicle you’re planning to buy — including the make and model — as well as the seller’s asking price, name of business and address.
Compare a range of online car loans
Pros and cons of applying for an online car loan
Quick process. Many lenders can come to a decision on the same day you apply and, in some cases, you can get funds disbursed in as little as one day.
More options to choose from. You’re not restricted to just banks or credit unions when applying for a car loan online, giving you a wider selection of lenders to choose from.
Convenience. Applying for a car loan online is usually more convenient than having to apply in person at a dealership or bank.
Easy to over-apply. Lenders may deny your application if they see you’ve been applying for too many loans within a short period of time. Doing this also lowers your credit score.
May come across shady lenders. When considering your online car loan options, it’s easy to come across a lender you’re not familiar with. Research the lender’s website security, business practices and borrower reviews to make sure it’s legit before applying.
What should I avoid?
When applying for any car loan — online or in person — try to avoid the following:
Getting into too much debt. Since car loans involve a lengthy financial commitment, make sure you can afford the repayments required by your lender.
Getting mixed up with shady sellers. Avoid any seller that tells you to falsify information on your loan application. Not only is it illegal, but you carry all the risk while the seller carries none. In addition, make sure you’re fully aware of the car’s condition before buying it. Have any used car you’re interested in inspected by a mechanic not connected to the seller.
Applying for a car loan online is easy, but that doesn’t mean it’s a good idea to apply for multiple loans at once. Instead, compare your options before getting started and only apply to the lender you’re most interested in.
It depends on whether you’re able to prove you can pay. If you’re in this situation, you may still be able to qualify by using another asset as additional security for your loan. You can also ask your lender if you could use a cosigner.
Since you’re likely to be required to put up your vehicle as security for your loan, your lender will have the right to seize your vehicle if you default on your payments.
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over six years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at the IT Journalism Awards. Elizabeth's passion is writing about innovations in financial services (which has surprised her more than anyone else).
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