Understanding Car Loans: The Ultimate Checklist for Finding a Car Loan

Cars are expensive, but they’re also necessary for life in Canada. Indeed, if you have a car, it’s hard to imagine a day of commuting, running errands, seeing friends and picking up kids without a vehicle to get you from point A to point B.

Don’t have a car and want to buy one? Here’s the good news: whether you have good credit, bad credit or somewhere in between, there’s an excellent chance you’ll be able to qualify for a car loan in Canada with LendingArch.


The first step in finding the best car loan for you is understanding exactly how loans work.

Getting the best car loan is critical to buying the car you want. Armed with the right information about loans, you’ll be driving off into the sunset in your dream car in no time.

Here’s everything you need to know about car loans in Canada.

Your Application Checklist

When it comes to applying for a car loan, you’ll typically need to fill out an application and pass a credit check. After that, you’ll receive loan offers.

At LendingArch, we do things differently. Our finance specialists believe that you are more than a credit score, so we work with you to ensure you’re in control of the car loan process from start to finish.

If you’re looking for a car loan in Canada, you’ll start by supplying us with the necessary information and then we provide you with loan options.

There’s no hard pull on your credit score and if you’re part of the nearly 15% of Canadians with bad credit, there’s no need to worry about whether or not a bad credit score will prevent you from getting a loan.

The best part? We partner with a variety of lenders and car dealerships who agree with our philosophy.

Here is the information you need to provide in order to start the application process:

1. Employment and Income

Most lenders want to know about your employment history and where you currently work. You’ll also be asked to provide your monthly income and type of employment (full-time, part-time, self-employed or unemployed). Some forms of government assistance will also count towards your income total. If you’re unsure what to include, you can call 877-669-0432.

2. Driver’s License

Your driver’s license has two functions—identification and proof that you’ll be able to drive the car you’re purchasing.

3. Address

Your address is important because it will help LendingArch find the dealership or lender that is closest to you.

4. Bank Account

You won’t need to supply your bank account information during the initial application with LendingArch, but you will need it further along in the process so that payments can be set up directly from your bank account.

5. Down Payment

You’re not required to have a down payment to apply for a car loan, but even $200 can make a big difference in lowering your monthly payments and showing the lender that you’re a responsible loan candidate.

How Payments are Calculated

It may seem like car loan payments are calculated with a secret formula, but the truth is that monthly payments are calculated based on three factors: principal, term and interest rate. All three of these factors work together to determine your monthly payment.

Here’s a breakdown of what each of these financial terms mean:

Principal: This is the total cost of the car and includes everything—fees, vehicle cost, upgrades and taxes. This is the initial amount you are responsible for paying back to the lender.

Term: This is the length of your car loan. Most car loans have two to six year terms, but the length is typically referred to in months—24 to 70 months. However, shorter and longer terms are possible.

Interest Rate: This is a percentage that is charged by the lender. Calculated as a percentage of your principal, the interest rate is essentially the “price” of a loan.

In the same way you exchange money for an item at the grocery store, you exchange money for a loan with a lender and the interest rate is the “price.” Interest rates are determined based on a variety of factors and are calculated separately for each applicant.


Getting a Car Loan with Bad Credit

LendingArch firmly believes that you are more than a number on your credit score. For this reason, we work closely with you to find a car loan that works for your unique financial situation. In Canada, “bad credit” is typically defined as someone who has a credit score that is lower than 550.

Whether you have no credit, bad credit or have declared bankruptcy, LendingArch welcomes all applicants.

While your credit history may affect your interest rate and other factors, LendingArch works with you to find the best loan.

This may mean finding you a car loan if you have no credit or bad credit. With a 98% loan approval rate, we work hard to ensure that your financial needs are met.

The Car Loan Timeline

Finding the right car and deciding on the make, model and color you want can take time. Yet, applying for a car loan only takes a few minutes.

Beyond that, you’ll be approved for a loan and on your way to a dealership within 24 hours. Here’s how it works.

Step 1: Submit your application

The LendingArch application requires all of the typical information—address, income, and employment. It also asks about your preferred monthly payments and car type.

It only takes a few minutes to fill out the loan application online. Once you’re done, hit “submit.”

Step 2: Pre-approval

A few seconds after submitting your application, you’ll receive a pre-approval. This is the loan amount and interest rate for which you have been preliminarily approved.

Step 3: The Call

After you’re pre-approved, you’ll get a call from a member of the LendingArch team with details about the dealership near you. After that, you’ll be ready to finish the loan process at the dealership and select your car.

documents for a car loan

One Step at a Time

Even though the process of getting a car loan may seem tedious, it’s actually a relatively short process, especially if you get pre-approved for a car loan prior to visiting the dealership.

If you’re ever feeling overwhelmed, just remember: follow the steps above and you’ll be on your way to buying your new car in no time.


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