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Buying a Car with No Credit as a Newcomer to Canada


Starting a new life as a newcomer to Canada can be exciting, but also challenging. In many ways, you're starting over from scratch, and it feels like you're getting nowhere fast. This is especially true when it comes to finances and credit.

No matter what your buying habits and credit usage were like in your previous country, that information hasn't followed you to your new home. Until you're able to build one, you'll have no credit history as a newcomer.

This can make it difficult when it comes time to finance large items like a car. Lenders typically make approval decisions based on your past credit experience. So, if there's nothing there for them to gauge, they have no way of knowing how responsible you'll be with making payments. Luckily, though, there are financing options available for newcomers with no credit.

How Car Loans can Help Newcomers Turn No Credit into Good Credit

Buying a Car with No Credit

As someone who is just starting out in this country, your first impulse may be to just pay cash for an inexpensive car. Why not? After all, you need a vehicle in order to get to work or school, and you need one as soon as possible.

There are two reasons why you may want to buy your first vehicle in Canada with a car loan. First of all, if you purchase an older used car with cash, you could end up with something unreliable. And having to pay for repair bills and miss work due to a vehicle that breaks down a lot can get expensive.

Also, the only way to build good credit is to use credit. This can be done with credit cards (either secured or unsecured) and taking out and making payments on an installment loan. A car loan is a good first loan to take out because:

  • Owning a vehicle is necessary for most people.
  • Unless they are obtained through a buy-here-pay-here dealership, payments on car loans are normally reported to the credit bureaus.
  • As a buyer with no credit history, you may be assigned a higher-than-average interest rate on your car loan. However, if you're able to build good enough credit, there's a chance that you can refinance the loan for a better rate even before the vehicle is paid off.

    Or, if refinancing isn't an option, if you make every payment on time, it should be much easier to finance your next car. You are also likely to qualify for a lower interest rate.

    How to Get Approved for a Car Loan as a Newcomer with No Credit

    Getting approved for a car loan with no credit may be easier than you think. In fact, Royal Bank of Canada (RBC) offers a special first-time buyer program to newcomers who meet certain requirements. Or, if you find that you don't qualify, you may be able to get financed with a cosigner. This would be a close friend or family member with good credit who is willing to share responsibility for the loan with you.

    But even if you don't have a cosigner, auto loan approval may be available through a special finance lender. This type of lender is able to look at factors beyond your credit history in order to approve you. Of course, these types of lenders usually cannot be contacted independently. They normally work through dealerships that specialize in selling cars to buyers with credit issues.

    At Canada Auto Loan, we have dealership partners in every province. And the dealers in our network have the right kinds of lending connections. We can match you with one of these dealers right in your area, and it won't cost you anything.

    We've been offering this free service to buyers with bad credit and newcomers with no credit for nearly two decades. To be next, all you have to do is fill out our secure and obligation-free online auto loan request. Go ahead and get started today.