How to Get Car Financing as an International Student in Canada

As an international student in Canada, having the freedom to go where you want, when you want, is a game-changer. It’s quite a hassle waiting for the bus during heavy snow or in the middle of the July heat, and taking a cab to college may not be something that every student can afford. 

Owning a car will make your life so much easier in Canada. However, the road to car ownership can feel like navigating a foreign territory, especially when it comes to financing. Knowing all the ins and outs of car financing in a new country can be daunting, and in this blog, we're here to simplify the process for you.

Here are the steps on how to get car financing as an international student in Canada:

1. Get your Social Insurance Number

Obtaining a Social Insurance Number (SIN) is a crucial step if you're considering taking out a loan to finance your car purchase in Canada. This is particularly important for significant expenses exceeding $10,000, as such transactions need to be reported to the revenue agency, necessitating the use of your SIN during the process.

To apply for a SIN, you'll need to furnish evidence that you are enrolled in a Canadian educational institution. As an international student or temporary worker in Canada, your SIN will have a unique identifier, starting with the number 9. 

Getting a SIN through Service Canada is quite straightforward. All you need to do is gather the necessary documents and present them at your nearest Service Canada office. 

2. Get a driver’s license

Obtaining a driver's license is a prerequisite before securing a car loan and purchasing a vehicle in Canada. For those who haven't previously held a driver's license, a series of steps awaits. This typically involves the completion of a knowledge test and a road test, all conducted at local government institutions. However, if you possess an international driver's license acquired in your home country, you have the option to validate its authenticity to streamline the process.

In Canada, owning a car necessitates holding a valid driver's license and having auto insurance; these are non-negotiable requirements.

Read: Your Ultimate Guide to Passing the G Test in Ontario

3. Build your credit score

Establishing a credit score is a crucial step if you're new to Canada. Your credit history from your home country won't be applicable here. While there are special credit-building programs for Ph.D. students and other higher education students, most newcomers will need to start building their credit from scratch.

Begin by obtaining a credit card from a well-known and reputable bank. Start using this credit card for your expenses, but make sure to pay off the balance in full every month. This responsible use of credit will help build your credit history.

Read: How to Build Your Credit Score as an Immigrant in Canada

4. Proof of income

Some students may have the advantage of a steady monthly income from their parents or investments. Alternatively, you might be working part-time to support your studies. Here's how to navigate this aspect:

• Ph.D. Students: Benefit from a more secure future income due to advanced studies, which aids in financing.
• Employment Income: Provide wage slips or salary statements if currently employed to verify income.
• Alternative Income: Use bank statements to showcase funds from sources like investments or allowances without traditional employment.
• Part-Time Work: Supply proof of employment and income from part-time jobs, and share bank account details to demonstrate a regular salary during the loan assessment.

Ideally, an applicant should be making $2000+ per month in income. For those who do not yet have a job, exploring opportunities to earn money becomes crucial. This not only helps with car payments but also allows you to avoid high interest rates and cover maintenance expenses, ensuring a smoother ownership experience.

5. Make a downpayment

Lenders prefer knowing that they'll receive their money in full over the loan term, and a down payment can expedite this process. A substantial cash down payment serves as both a commitment and a safeguard for the dealership. It ensures that you adhere to the agreed payment plan and ultimately reduces your long-term financial burden.

By contributing a larger portion upfront, you'll have the opportunity to pay off the balance sooner, steering clear of any penalty fees imposed by the dealership. This down payment not only lowers your monthly expenses but also contributes positively to your growing credit history. Once you've met the necessary criteria, you'll be ready to purchase your car.

Read: 5 Benefits of Making a Down Payment on Your Car Loan

In conclusion, as an international student in Canada, owning a car can significantly enhance your freedom and convenience. These steps will not only help you get a car loan but also ensure a smoother ownership experience, making your Canadian journey even more enjoyable.