What to consider BEFORE you apply for car financing

When preparing to finance or lease a vehicle, it is important to understand a few things in advance.

Financial institutions do not give out “open-ended” approvals. This means there is an expiry date on an individual’s approval. Anyone’s job, family, overall financial and credit situations can fall apart rapidly overnight. Because of these reasons banks are hesitant to do car approvals longer than 21 (business) days.

Many times people say “oh I was applying just to see if I’d get approved for when I am ACTUALLY ready – in 6 months!”

Even if someone does get an approval now, it is worthless passed the 21 (business) days mentioned above, because the approval may not exist for one reason or another after that period.

As a general rule of thumb it is important to keep in mind that credit should always be taken advantage of – when it is OFFERED and available by a financial institution – as it may not always be there going forward.

Contrary to popular belief, a person’s credit rating is not as important of a factor to get car financing approval as their job situation. Credit history tells the story of your past, where the job situation tells the story of your future – your ability to pay back the car loan – going forward! And at the end of the day, that is more important to a financial institution than what you may or may not have done with your Rogers, Bell, CapitalOne accounts etc.

To prepare for the application process, you need 2 things to begin (and only 2 things):

*one (CLEAR) photo of your driver’s license. Corner to corner – no letters or numbers missing!

*one (CLEAR) photo of a recent pay stub from the last 30 days or so. Corner to corner – no letters or numbers missing!

That is usually more than enough info to secure a pre-approval with zero $0 down payment. In some exceptions, the bank may ask for your social insurance number if you have a common name and city (i.e. John Smith from Toronto, ON.) or very limited credit history.


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