What does OAC mean when shopping for a car?

In the old days, you’d have to physically visit dealerships to buy a car, and there always was a salesperson who could answer all your questions. Nowadays, when even car shopping is done online, there is often no one immediately available to help you find your way through all these professional terms. Even with the option to ask a question online, it may be a little too annoying to wait for a rep to get back to you in the chat window.

So why not educate yourself in advance? One of the common elements of the auto loan industry lingo is OAC, which we’ll talk about today.

What is OAC really?

These three letters can usually be found on the car description page somewhere at the bottom, together with the very appealing monthly rates or interest rate, often in small print. The acronym OAC stands for On Approved Credit. This means that the approval of the rates and interest accompanied by the letters ‘OAC’ are subject to your credit standing. Simply put, if your credit score is high enough, the indicated loan conditions will be available to you.

In the automotive loan industry, OAC means that meeting specific requirements set by the dealership can guarantee you approval for particular loan conditions that were pre-agreed. These requirements are normally related to your credit score and/or level of income.

What You Need to Get OAC Financing

Based on the OAC meaning, it is natural to think that OAC financing is only available to those with an outstanding credit history. Generally, it is so. Even having what is considered a prime credit standing in some situations may not suffice to get approved for specific rates depending on the actual car loan conditions offered.
However, that doesn’t mean that you should stop yourself from knocking on this door. While the whole approval process is a game of numbers, you can use its rules to get what you need.

Ultimately, getting OAC financing is about proving your ability to maintain the good standing of your loan in a timely and responsible manner.

On the one hand, lenders want to see how well you’ve been able to manage your credits in the past. On the other hand, they want to see how much you earn now or will be earning in the nearest future. That together tells lenders about how much they can trust you as a borrower.

While proving your level of income is fairly straight forward, keeping your credit score in good standing requires certain knowledge. Here’s what you should always be doing to maintain and improve your credit rating:

• Know your credit score. Often major banks can provide their customers with their credit score for free. Or you could get this information from credit bureaus like Equifax or TransUnion. Free online credit score calculators can give you an idea of what your current credit score might be.
• Start your credit history. If you’ve never used any credit before, you should know that having no record of demonstrated financial behavior is nearly as bad as having a poor credit history. You can start off by getting a credit card that is easier to get than a regular credit card: an in-store credit card, a gas card, or a secured credit card. This will get you on track with building your credit history.
• Make payments on time. Whatever credit or loan products you have at the moment, start to make sure that you never miss a single payment if you haven’t already started doing so.
• Minimize your debt. Maxing out your credit limits tells lenders about a great need for borrowed funds. The reliable minimum at which you should keep the combined debt of all your credit sources is 30% of the total credit limit. It is never safe to go above that mark.
• Additionally, in case of poor credit history, having a larger down payment or a co-signer may be the key to the door of OAC financing.

You Can Get a Great Deal without OAC Financing

Now that you know what OAC is about, you may think that OAC is your only way to the best deal out there. Well, not necessarily. If you step a little back to get the bigger picture, you’ll see that you can get a great bargain without having to OAC finance:

• Refine your search. Think of what you really want from your new car and prioritize accordingly. This can help you cut on the extras that are nice yet not so vital.
• Plan in advance. If OAC is out of your reach, you’ll have to put some work and time into finding a good deal. Besides, if you don’t leave your car purchase till the last moment when you’d have to rush things, chances are you will make more conscious and reasonable decisions.
• Get pre-approved. Being pre-approved means you know how much you can afford, which puts you in a better position to negotiate, rather than coming from the street, unprepared.
• Dealer financing. Some dealerships offer their in-store financing options that don’t involve a credit check. As dealers don’t report such loans to credit agencies, this will not improve your credit history. Still, it is an option to consider.

Get pre-approved with CarEvo now!

Here at CarEvo, we help Canadians get connected with their dream cars. Apply online to find out your options based on your budget, preference, location, and your credit standing. One of our Qualified Agents will get back to you to complete vehicle selection and securing your financing. You only sign the paperwork after the car is delivered to your home, and you are happy with it. This is how we work – “from your phone to your home”.