How to Get a Car Loan as a New Immigrant to Canada

New immigrants to Canada often never realize how vast the country is until they get here. And that’s when they understand a vehicle is one of the first things they need to buy to adjust to the Canadian way of life.

Cars are a necessity because you need to be able to get to your job as well as purchase groceries. But most immigrants come to Canada without the required funds to buy a car, and getting a loan for a vehicle can be difficult.

Buying a car may be a daunting prospect for most, but with this guide, you’ll learn all you need to know to make your first vehicle purchase as painless and stress-free as possible.

What You Need

If you want to buy a car, you’ll need to cross off a few things, such as a driver’s license, car insurance, as well as vehicle registration. And you must get these items in that order.

New or Used Cars?

There are benefits and drawbacks to getting either, so you’ll need to consider what works best for you. New vehicles have fewer issues, warranty cover, and the latest car features while used cars are more affordable.

Your Credit Score

As a newcomer to Canada, it’s likely you’re not going to be arriving with a credit history. Lenders are usually reluctant to offer loans to individuals without a credit history, but you can build your credit by signing up for small loans or getting a credit card. Aside from this, some institutions have financial products that are tailored for new immigrants to Canada.

Lease or Finance?

You cannot think about buying a vehicle without deciding whether to opt for a new car or a second-hand vehicle.

Brand new cars are generally more expensive, while a used vehicle is cheaper to sell. On the flip side, you can lease a new car, finance it, or purchase it outright if you’ve got the cash. However, you’d be hard-pressed to find a used vehicle for lease.

And while you won’t get many opportunities to finance a second-hand car, it is easier to buy outright because it’s far more affordable.

There are many other benefits and drawbacks to both, so ensure you do your research going forward.

As a new immigrant, it is generally better to go for a used car because you wouldn’t want to splurge all your savings on a vehicle when you’re yet to secure a job or housing.

Can Immigrants in Canada Get a Vehicle Loan?

The short answer is yes. As long as you’re a legal immigrant to Canada, you can qualify for a car loan. You’d likely have to put down some money, but there are many other options you can explore to buy a car, including:

  • Credit Unions
  • Dealership Financing
  • Personal loans

The qualification criteria for each of the above may vary, and some may have a more stringent vetting process. But this does not detract from the fact that immigrants generally have a tough time succeeding in their car loan application.

Continue to read, and you’d find out why.

Why it’s Difficult for New Canadian Immigrants to Get a Car Loan

There are specific factors most lenders watch out for when they evaluate a car loan application. The most crucial factor is the credit score.

A credit score gives an insight into the reliability of an applicant towards their loan payments.

Unfortunately, new immigrants to Canada don’t own a Canadian credit card. They’ve also not immersed themselves in the Canadian credit system. And this is especially so if they have no credit history upon their arrival to Canada.

Once a lender cannot reference a credit score, the immigrant is categorized as a high-risk applicant and denied accordingly. There are other factors at play that make lenders reluctant to give car loans to immigrants.

Firstly, the legal right to stay in Canada can turn on a dime, and an immigrant may be forced to depart the country. If this happens, the lender will be unable to recover the loan.

Another hurdle immigrants may face on their quest to secure a car loan is to provide a co-signer. A co-signer is an individual with an excellent credit score who undertakes to pay the debt in the event of a default.

But because new immigrants often do not have a support system in Canada, they’d pretty much find it difficult to get a co-signer.

So what are the loan options?

Immigrant Financial Products

Fortunately for immigrants, Canadian banks and car dealers often understand the difficulties associated with buying a car as a newcomer.

They know a vehicle goes a long way to help the newcomers adjust to the Canadian way of life.

Traditional lenders like Scotiabank, as well as the Royal Bank of Canada, have financial products that help newcomers to Canada to secure loans without a credit history.

However, these financial products are not without a few problems.

Firstly, the ceiling limit on the amount that can be borrowed by an immigrant is generally lower. Secondly, a typical immigrant looking to secure a car loan would usually front a larger down payment.

And thirdly, the interest rates on these car loans are higher than the standard rate.

Another option is to patronize car dealerships. Many car dealerships have some form of discount or incentive packages for newcomers to Canada, especially where they are purchasing their first vehicle.

You can get a discount within the range of C$500 to C$1000, or financial packages that will allow the dealer to finance the car for you just like a traditional lender.


Migrating to Canada is a tedious process, which is made even more difficult when you consider the hurdles you’d have to surmount to get a car loan.

Every immigrant has a different financial situation, but it generally takes a long time to afford a brand new car.

You can opt for a used car in the beginning, and when you’re more comfortable, save up funds for a brand new vehicle.

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