Car Finance Canada
Image default

Can I Afford Car Finance?

There is nothing quite like owning your own vehicle, but unless you have a lot of free cash floating around, chances are you are going to need to look at financing. There are plenty of lenders out there willing to help, but the question you have to ask yourself is whether you can afford to pay the monthly premium. The reality is that there is no easy answer to that question, as lenders will look at various different elements before deciding to offer you a loan. We are going to look at some of those things in this piece, as well as specific situations for different types of drivers.

When you go to a lender looking to finance a car, they will take a number of different things into account. They will look at your current employment situation, which includes how much you make and how long you have been in the job. They will also almost certainly look at your credit history. If you have a low credit score or have had delinquent loans in your past, your chances of getting the financing you need are greatly reduced. Even if you are approved, the length of the loan and the interest tacked on will vary from case to case.

There are lenders out there who will give you a loan even when you don’t meet all the necessary requirements, but you can expect to pay way more in interest. With all of that in mind, let’s look at specific situations for different types of drivers and their ability to afford car financing.

Car Finance for Students

For many college kids, funds tend to be tight, especially when the parents cannot pay for everything. While owning a car would certainly help deliver a real sense of freedom, students tend to face a bit of an uphill battle when looking for car financing. This is not to suggest that car finance for students is out of the question, though, but they will need some help.

The easiest way for a student to secure a car loan is to have someone willing to co-sign the loan papers. It is very often a parent or older sibling who will co-sign, which means that they also bear responsibility if the loan goes unpaid or payments are missed. For that reason, it’s not everyone who is willing to co-sign. Living at home and working, even part-time, can help in getting a student financed for a car. The average student may need to settle for a used vehicle, but that is better than no ride at all. If you are a student and cannot get someone to co-sign, going with a used model really is the most realistic way to get financed.

Car Finance for Unemployed

You might think that car finance for unemployed people is out of the question, but that is not necessarily the case. Not all lenders are wolves looking to pray on the needy. In fact, many understand that finding a new job can very often be difficult without a car to get around in. The biggest issue here is your credit history, as that can make or break your chances of getting a car loan while you are out of a job.

Having a spouse or partner who is currently working and who can have their name on the loan helps. Having a solid credit history and a good credit score also helps. Again, you may be asked to pay a higher level of interest because of the risk that the lender is taking, but you can always try to re-finance with the lender once you are gainfully employed. Keeping up with your payments will make that task easier. As long as you can maintain a good credit score and make payments on time with all of your bills, financing while unemployed is not out of the question.

Car Finance for Uber Drivers

Many people who end up unemployed are turning to Uber and other rideshare services as a way to make some money. Becoming a driver for any of those companies means having to get your current vehicle approved for use. This is not always a slam dunk, especially if you are driving an older model that is a little worse for wear. The bad news here is that many lenders will not consider car finance for Uber drivers, although that is usually when working as a rideshare driver is your only source of income. Your chances of scoring car financing are that much better if driving for Uber is more of a part-time gig.

There are other options open you, though, if you plan on working for Uber on a full-time basis. The Uber car financing program is coming to an end, but that’s not the only place to turn. As already mentioned, lenders are a little gun shy in offering car financing for Uber drivers, but if you are on the rideshare thing on a part-time basis, you should be okay, assuming that your credit is good. Many people drive for Uber part-time to cover the monthly cost of their vehicle financing.

Car Finance for Self-Employed


Of the specific cases that we are looking at in this piece, it may be car finance for the self-employed that is easiest to come by. The biggest issue that you are going to run into in this situation is showing proof of income to a potential lender. Working for yourself means not necessarily having a steady, reliable income every month, but that will not rule you out of being financed for a new car. In the instances where proof of income is not readily available, lenders will very often ask for your last two income tax filings to get a closer look at your finances.

As is the case with every other lending scenario, they will also look at your credit history. If you already have a reliable car to use for work, try to use it until you have some self-employed experience under your belt. Lenders will look favorably upon someone who has been successfully running their own business for a couple year. They may not feel the same way about someone who has just started their own business. It also helps to have a sizeable down payment, as this can make it easier for lenders to approve your loan, while also making your monthly payments more manageable when you experience lean periods in the business.

Car Finance for Pensioners

When people think about retirement, they very often think about putting their feet up and doing very little throughout the course of an average day. Once retirement actually rolls around, though, many pensioners find that they want to be active and get out and see the sights. A good car can help make that dream a reality, which is why the demand for car finance for pensioners is very much on the rise. This is another scenario where you might imagine that getting a car loan for a pensioner is not that easy, but it doesn’t have to be that way. The usual requirements, such as good credit history and money down will certainly come into play. Pensioners are very often on a fixed income, which is why shopping for a car loan with a fixed APR is the way to go, as that will mean that there are no fluctuations in the price. If you are nearing retirement and are expecting a retirement package of some kind, it might well be a good idea to set some of that money aside to be used as a down payment for a new car. Rather than going for a vehicle that is a little on the flashier side, consider choosing a reliable model with good mileage, as this will help cut the cost of ownership, making financing for pensioners that much easier to manage.

In Conclusion

As you can clearly see, there really is no such thing as a lost cause when it comes to looking for car financing from a respected lender. If you know that you are going to be looking for a new car in the near future, now is the time to put a plan in place. Get acquainted with your credit history and work on improving your score, as that always looks good to a lender. Try to set money aside to be used as a down payment, as that will also go in your favor.

It’s also worth mentioning that you should be realistic about the type of vehicle that you want to buy. Do you really need an oversized, overpriced SUV if you don’t have a large family? Do you need the flashiest sports car on the lot? Don’t forget that besides your monthly loan payment, you will also have gas and insurance to consider, which both tend to be on the pricier side of things with sporty models. Get the vehicle that best fits your lifestyle and your budget, and don’t be afraid to shop around before picking a specific lender.