Immigrating to a new country comes with its fair share of hurdles. You have to settle into a new job, a new home, and perhaps a new wardrobe suitable for the long, cold Canadian winters. On top of all these tasks, you must start your financial life from scratch, including building a healthy credit score. Unfortunately, your credit score from your home country doesn’t transfer, so you have to start over again.
To build a solid financial history in Canada, you need a robust credit score to back it up. As a new immigrant, building your credit score takes time. Fortunately, some shortcuts, like getting a car loan, can help you build your credit score quickly.
You can improve your credit score with the help of auto financing. By making regular payments on car loans, you can demonstrate your trustworthiness to lenders. Continue reading to learn more about how car loans can help you build a healthy credit score as a newcomer to Canada.
How Do Car Loans Help Build Your Credit Score?
A car loan is an effective way to build credit. On-time payments account for 35% of your credit score. By making regular payments to your car loan, you demonstrate your consistency and fiscal responsibility, which helps build lender trust.
While 30% of your credit score is based on how much credit you’re using, the biggest component of your credit score is still your payment history. Paying a car loan back on time can positively impact your credit history, improving your scores.
East Coast Financing is your best choice if you’re looking for a quick and easy car loan to build credit. We offer auto financing at affordable rates to all Canadians, including new immigrants. Choose from hundreds of vehicles and get pre-approved quickly.
Benefits of Building Credit With a Car Loan
There are three main reasons why auto loans are an excellent choice for building your credit score:
1. Auto Financing Is Secured
Secured loans are backed by collateral. In this case, your vehicle acts as the collateral. Since the loan is secured, you can easily qualify for it, despite not having a high credit score. Generally, secured loans have a lower interest rate compared to unsecured loans.
2. You Need Credit to Build Credit.
You need credit to build your credit rating. The easiest way to get credit is to get a car loan. That said, be mindful not to miss your car loan payments, as delayed or missed payments further damage your credit score.
3. It’s Easier to Get Approved for Car Loans.
Companies like East Coast Financing can approve your car loan, even if you’re a subprime borrower. Subprime borrowers have scores that fall below average, usually lesser than 670.
Smart Tips for Immigrants Applying for a Car Loan
Are you ready to apply for a car loan to build your credit? Here are a few tips to help you prepare, apply, and get approved for auto financing in Canada:
- Ensure that your financial commitments are up to date. Catch up with minimum payments on your credit card, bills, and other credit obligations.
- Save for a down payment. The higher your down payment is, the more your chances of loan approval.
- Choose a vehicle that fits your budget. If you earn a modest income, choose a Corolla instead of a Cadillac. Picking a car within your budget ensures you can repay the loan comfortably every month.
- Avoid sending multiple loan applications because it hurts your chances of approval. East Coast Financing can help you get approved quickly and for the best rates.
Get Approved for a Car Loan with East Coast Financing.
A car loan can help you improve your credit score. Contact East Coast Financing to get pre-approved and see what vehicle suits your situation.
Get a no-obligation assessment of your trade-in value below, or fill out this form to talk with one of our agents about your financing options: