Being Rejected for a Car Loan

[Rebel]

I understand completely why I was rejected, it just leaves me feeling depressed.

2 years ago I moved to Canada from Australia. In Australia, I had a really good credit history. I had one large personal loan, and one large car loan, both of which I paid off very quickly. So pretty much, if I'd applied for a loan back home, there's about a 99% chance of it being accepted.

I've now only been in Canada for 2 years. I have a credit card with a $500 limit which I always pay off, and a $1000 furniture loan that I've nearly paid off.
I really wanted a car (@&$#! public transport!) and so I went in to apply for a $5000 car loan.
I know, I know. I was never going to get that with a meager 2 year credit history.
As it was, I just got off the phone with the bank who rang to let me know I could get the loan....as long as I had a guarantor sign with me.

Hell to the NO!

Now, I pay off all my loans, but there's no way I'm even asking anyone to sign with me. Not my friends, not my boyfriend, not anyone. All it takes is one accident or the loss of my job, and their credit score is poo.

So I politely declined.

Now I'm depressed and still car-less.

But I've now decided to just put aside $200 or so from each paycheck. It'll means less fun each month, but at least when I can afford to buy a car, it'll be without interest loaded payments.

But still, @#$%! public transport! (for reference, see any of Gravekeeper's Skytrain stories)

[kiwi]

Getting credit in Canada is HARD. I am a Perm Res with perfect credit from NZ and it still took me FOUR years to get a credit card. I got rejected 18 times before they agreed to a secured card with a $500 limit.

[Ladeeda]

As an American, I am amazed. I was getting "pre-approved" credit cards since the day I turned 18.

With ridiculously high interest and a monthly fee, but I only had that one for a year before canceling and getting one through my bank, with no fee and much lower interest.

[Ghel]

Sometimes it depends on the bank, too, at least here in the US. For example, my bank would be willing to give you the loan you describe (assuming no late payments on your current credit and the car being worth at least the amount of the loan). But we also originate loans through a larger bank (mortgages, but the concept still applies), and they want to see at least 3 positive items on a person's credit report. So based just on that, they would deny your application.

I don't know if this helps. But I hope it explains how complicated applying for a loan can be.

[Andara Bledin]

I'm in the US and got a car through a loan just last year. The lenders were very specific about how much they would lend me. They had a lower limit just as much as an upper limit. To the point where only a single lender would offer me a loan on a single car, and that was after a month of the credit union's agent going through every group she worked with.

^-.-^

[kiwi]

The banking laws in Canada are much, much tighter than the USA. Part of the reason Canada was out of the ression so much faster was because the banks here just do not give out credit as easily as the American banks used to. Now they are cracking down even harder because of the economic fallout.

Can you save up a deposit?

[Rebel]

The banking laws in Canada are much, much tighter than the USA. Part of the reason Canada was out of the recession so much faster was because the banks here just do not give out credit as easily as the American banks used to. Now they are cracking down even harder because of the economic fallout.

Can you save up a deposit?

Canadian banks are kinda like Australian banks. Any sort of loan for someone with meager credit history requires a guarantor or some collateral. It never really affected me because my first car I'd started saving for when I was 11 years old, so that was always my collateral.

Like I said, I understand completely why I was rejected, but I'm still bummed out.

My plan now is to save as much of my money as I can each paycheck. Then I can buy a crappy car in a few months time. Luckily I've just downgraded my living costs and just gotten a job that pays a little better, so it shouldn't take too long.

[BlaqueKatt]

I have a credit card with a $500 limit which I always pay off.

this could actually hurt your credit score, I had a personal banker(your results talking to a personal banker may vary) explain to me that you NEVER pay your credit card balance in full every month, always carry a small balance(under $50 or so), otherwise the bank makes no money from interest and as of late in the US at least, they consider you "non-profitable" and either lower your limit, change your due date, or cancel your account. Some companies are charging "penalty fees" for people that are doing this. I'd talk to a personal banker at a credit union if you guys have those, see if they can give you any tips on how to improve your credit. We were denied for a mortgage, but told if we put $300-$400 a month into savings for a year, they'd give us a home loan.