How to Finance a Car Loan as an International Student in Canada

Thousands of students from across the world study in Canadian universities each year. We have one of the best higher education systems in the world so it’s no wonder it is popular with international students. But as a car-centric country, how do car loans for international students work?

If you live in a city, getting around is easy. Public transport is first class and your options are plenty. Move out of the city though and you’ll need a car.

Car Loans for International Students

There is no specific program for car loans for international students. We tend to assess each case individually on its merits as we know our lenders will do the same.

That means, if you can afford the repayments and have some form of income, you can usually get a car loan in Canada.

Work Permit and Social Insurance Number

As a newcomer to Canada, you’ll need to apply for a work permit so you can earn and a social insurance number (SIN) so you can access government services. Your university may help you apply for these and should certainly help you apply for a SIN.

Once you have both of those documents, you can look for work and begin creating a credit history.

One thing you’ll need to consider before you apply for a car loan is that the term of the loan doesn’t exceed your work permit date. Lenders will not lend beyond that date even if you play to remain long after.

Working Around Your Lack of Credit History

Even though the credit bureaus are international, your credit history is not. It is only valid for the country you built it in. So, if you’re from the UK for example, your UK credit history is perfectly valid there but won’t be here.

That means starting over.

You can do that with a secured credit card. They are like normal credit cards but require a cash deposit to protect the credit card company against loss. Miss a payment and it comes out of your deposit. Pay on time and it helps build a credit history here in Canada.

If you’re studying medicine or a Ph.D, you should have no problem getting a car loan as an international student as Canada has a large government-funded program for these two areas of study, lenders view them more positively than other subjects.

The Down Payment

The other way round a lack of credit history is to put down a large down payment on the car. If you could put down 60% or more down as cash, lenders will often be willing to lend the rest.

That’s mainly because they know they will get their money back should a repossession ever become necessary!

We won’t pretend it’s easy getting a car loan in Canada as an international student but it is possible. The more you can do to build a credit history, the better. The more you can put down as a deposit on the car, the better.

If you’re studying medicine or for a Ph.D, even better!

When it comes time to apply for the car loan, we’ll be waiting.