I was wondering if anyone could advise me on obtaining car finance without a Canadian credit history, I arrived about 4 weeks ago and need to purchase a car as driving a rental one for a month is expensive! I went to Toyota to make enquiries, leasing seems like a good option but I was told that I'd need a co-signer in order to be approved for car leasing. Ay advice would be appreciated.

Hi,

We have just leased a Nissan Murano with no Canadian credit history, in fact we are here initially on work permits. We put down a $10k deposit and they would only arrange the lease for term of the work permit. We had to of course show them job contracts and proof of income. Be persistent and remember they are desperate to sell you a car.
Good luck

SAW04

In BC, you are going to have a next to impossible task without at least 50% of the term of the lease to put down and a co-signer resident in BC who has a good credit history. BC is not like other provinces where persistence can pay off. The reputable car dealerships will not budge on this, I had the same problem on arrival. Don't consider the dodgy ones, the interest rates are crippling and are compounded daily. I ended up using a whole chunk of the "safety" money I had brought with me and bought a used vehicle outright.

You can sometimes lodge a sum of money with the bank and use that as security for a loan, but they will ask you for a local guarantor. After four weeks here, BC lenders won't usually consider you without a load of $$ to bribe them with.

Hi,
Interesting comments. Why would it be harder to obtain credit in BC when in fact the individual dealers have nothing to do with the lending decision? In our case Nissan Finance Canada approved our lease. What difference would it make to them if we live in NB or BC as long as we fill their lending criteria?

SAW04

Had a similar problem, no credit history, the bank said no. I went back to the used car dealer and he said he could sort me out. He found me a loan which turned out to be with my own bank but a different branch - the new branch manager explained that some of the bigger branches have new, young "by the book" managers who will not bend the rules, the same manager offered me a mortgage limit of $200k the same day saying he knew my type, and that he didn't expect to see me driving taxis!! I'm hi-tech and all I needed to give him was a letter from the company detailing my salary. So don't despair just yet, shop around and maybe try smaller bank branches and sit down with the manager and explain your position.

When I arrived fresh of the boat in Ontario I leased a new Jeep Cherokee. The only way was to agree a large security deposit (~$5k IIRC). The interest rate was none to competitive either as I recall, but i had this good job, and I wanted a new vehicle.

With hind site i should have just swallowed my pride and driven an older (paid for) vehicle for a while and saved the money to buy rather than lease. Leasing is OK if you don't mind having a car payment for the rest of your life, but I'm the kind that would rather look forward to a day when its paid off, and with leasing that wont happen. At the end of the lease you will have paid $400 a month, and still have to hand the vehicle back.

If BC is a problem, whats to stop you "moving" to Alberta in a very temporary way, and then bringing your newly aquired AB vehicle back to BC, but first a B-i-F says, shop around, someone somewhere will be delighted to take your money.

You definately need to shop around. A lot of things are at the managers' or dealers' discretion. For a year, CIBC wont give me Visa card without security and then talked to manager in TD and not only did I get Visa card without security but also increased the limit and got approved for $25000 to buy a car. I don't even have mortgage with them and don't have PR card. So shopping around definately pays off.

I think most of the replies here cover the possibilities of getting credit - but I want to ask: is leasing really a good idea? You have to have the car maintained exactly how the dealer says (on a Hyundai, blowing out brake dust is a must, and costs ~$100 a time), and you are financially hit by over-mileage. And the vehicle must be returned at the end of the lease in prime condition, fair wear and tear excepted. A colleague of mine leases. But the car just stand here in the company parking lot as it is way over mileage, and he knows he is going to pay so much when th lease is over.

Leasing is an interesting option and it has it's pro's and con's
You only pay for the depreciation of the vehicle but you are left with nothing.
Your mileage is restricted and you must do all repairs and services

Tends to be worthwhile if you can get 0% interest and you don't travel much, otherwise only really worth it if you can right it off against a business. Alternatively, if you want a new vehicle and don't want to have new vehicle monthly payments it might be right for you. Personally I like to buy, getting out of a lease can be a pain.

BC is notorious for being the most credit-inflexible province, particularly for the female immigrant. For example, Honda (like Nissan, it is Honda Canada who approve the financing or not) have provincial profiles and credit score according to those. These profiles differ so that some BC applicants may require more stringent qualifications than, for example, Ontario ones. (I have friends who work for Honda in BC and Ontario and they confirm this). Toyota, who financed my lease, operate slightly differently and "equalized" my application so that I overrode the BC requirement of a co-signer (being divorced and female).

For those who ask if leasing is a "good" idea....well no. I did not have the money for the downpayment I needed to make the monthly finance payment fall within my budget. When my used vehicle croaked after several years, and just after my divorce, I was absolutely screwed. In BC, a married woman has no credit status of her own, it is linked to her husband's unless she is a woman of significant and independent means. After divorce, you carry the ex's rating with you until you establish yourself (about a year) and request that your credit files are not linked any longer.

I don't pay much for the servicing (about 20% of the retail cost) and I will buy the van when I am done after four years. The mileage restriction is a bit of a pain, but I just squeaked under the yearly 24,000km limit this year.

Hi,

Additional mileage charges only apply in a lease if you elect to hand the vehicle back at the end of the term. If one elects to purchase a second vehicle from the same manufacturer and using the first vehicles equity as a deposit, additional mileage has no where near the same financial impact of say paying 10 cents per mile by handing the vehicle back.

SAW 04

As has been mentioned before, why lease?

6-8K will buy you a 98 Toyota with <120,000 clicks (easily). Drive it for a couple of years, sell (IMO Japanese cars hold their resell value better) and rethink your options if you want to.

Why lease when you can own?

Hi,

Your idea can also be reversed and looked at another way. $8K purchase price equates to a substantial monthly lease over the same time period of ownership for a brand new vehicle, with bumper to bumper warranty on a vehicle costing probably $25k. Lets face it what would the car be worth with another two years and 30,000km under its belt.
Given the savage winters in Canada I'd rather have something new,reliable,guaranteed,quiet and more fuel efficient and change it every two years for a brand new one.

Why own when you can lease?

I have two leased cars. I've had ten or twelve leased vehicles over the past decade as well as some owned vehicles. I lease because the tax write off is nicely consistent and easily claimed. Leaving aside the tax situation some thoughts :

- ownership makes more sense if you can use the vehicle long term, if you don't anticipate your needs changing and if you think the vehicle will last longer than the term of the lease. We had two Chrysler minivans and neither had very much left in them after three years. I was glad they were leased.

- the allowed mileage on a default lease is very low. We put about 25,000 miles per year on each of the vehicles just in ordinary domestic use. Most leases only allow 20,000 kilometers.

- leasing becomes a brand commitment. At the time of returning the vehicle the dealer can charge or waive a fee for excess mileage. If you take another brand X they'll typically waive it, but if you want to change brands you'll have to pay.

- the use of the vehicle is tightly limited by the lease. I returned a 4x4 and the dealer charged $2,000 for excessive use ; driving on an unpaved surface. If you actually intend to engage four wheel drive, not likely in the GTA admittedly, it would make sense to own the vehicle.

- a vehicle lease is an "obligation" not a debt so it doesn't count for the calculation of debt ratio. If you intend to take out a mortgage or other loan at the limit of your borrowing capacity leasing may be the way to go.

- lease payments are lower for a given vehicle than loan payments. Leasing allows preservation of cash flow or bum in flasher car. Note that the salesman knows this and would prefer that the customer take the latter option.

Pros and cons.

You talk as if the whole 8K is dead money. Say it depreciates 2K after 2 years. Works out at less than $100/month. What is an average lease?

Now, correct me if I'm wrong (I'm not fully up on leasing) but when you lease a car aren't you paying some sort of cost when you change for the depreciation of the original one? Isn't the car you're returning thorughly inspected and priced according to the condition. Aren't you tied to reselling that car to your dealer and their price? Or are you saying that after 2 years you can simply walk in and change your car with no hidden costs? Who pays for the depreciation in the original car? From conversations with friends they've told me that they've been charged ridiculous amounts for e.g. small paint chips.

Why do you think that a 6 year old properly cared for and maintained car would be unreliable, loud and fuel inefficient?