Car Loans for Alberta Teachers and Educational Assistants

Lenders look for proof that your pay is real and will continue. A school job gives you a clear story to tell, and the summer is the part to explain.

One bank’s published credit policy says a T4 slip or a pay stub is generally required as minimum proof of income, and that it looks at your employment history to judge whether your income will continue. It adds that if you are a contracted employee, more information may be requested.

The Government of Alberta describes a teacher’s salary as annual, with vacation during the summer and at set times through the school year. The Alberta Teachers’ Association adds that teachers are paid for the days the school calendar says they work. Because school divisions are funded over twelve months, it explains, paying one twelfth of the annual salary each month from September to August is easier to budget, which means part of each month’s earnings is saved to be paid in July and August.

Educational assistants are different. The Government of Alberta says most work on a contract basis and are not paid during the summer months, though some school districts pay over the twelve-month period.

So a lender can meet two patterns, and they look different on paper.

• Paid over twelve months. Part of your pay arrives over the summer, so you have pay stubs in July or August too. One school division’s payroll guide says its teachers are paid over twelve months, and that a teacher on a continuous contract is paid on the last banking day of July and August.
• Paid for the school year only. There is no pay stub in July or August. Your T4 shows what you earned over the whole year, and a letter from your employer can say how you are paid.

Not sure which one you are? Your pay stub, your contract or your payroll office will say. Tell us when you apply.

Work out the payment against your pay spread over twelve months, not against one paycheque. A car loan payment is due on every payment date, whether or not your employer pays you that month.

Lenders compare your pay with the payment, and none of the lender pages we read sets a rule for ten-month pay. So do the sum yourself. Here is one example buyer, paid $4,800 a month in each of ten school-year months and nothing in July and August.

That payment is the same all year, including the two months with no pay. It is about 13% of one school-year paycheque ($4,800). Against the same pay spread over twelve months ($4,000 a month) it is about 16%. Check the second number before you choose a car. If your division pays over twelve months, the two numbers are the same.

A lower price or a bigger down payment moves both numbers. To try your own, use the payment calculator. Ask the lender which payment dates fit your pay.

It can, because each type has a different end point. Alberta’s Education Act sets out several kinds of teaching contract. Four of them, in plain terms:

• Continuing: the contract carries on from year to year.
• Probationary: it runs to the next June 30. It can be extended for a further period if evaluations call for it and the teacher agrees.
• Temporary: it covers a teacher who is away for 20 or more consecutive teaching days, and it ends on the next June 30 or on the date written in the contract, whichever is earlier.
• Substitute: the teacher teaches day to day, or fills a vacancy expected to last less than 20 consecutive teaching days.

Lenders want to see that your income will continue. A letter from your employer can name your contract type, your pay and how you are paid. Some lenders also ask the employer about job probation and seasonal pay changes, and some contact the employer by phone or email instead of asking for a letter.

Ask your payroll or HR office for the letter. One school division’s payroll guide says teachers can request a verification of employment letter. Pay over the summer depends on your contract. The Alberta Teachers’ Association says teachers who work less than a full school year have a reduced amount of pay for July and August. The same payroll guide says a teacher whose contract ends on the last day of the school year and who is not returning is paid in mid-July.

Lenders also set their own rules on time on the job. One Canadian auto lender publishes a minimum of three months on the job, with exceptions when you take a new job in the same or a similar field after at least a year at your last one. If you are new to a school division, read how lenders handle a new job or probation.

If your hours change from month to month, one pay stub shows one pay period. A longer stretch shows the pattern.

The Government of Alberta describes casual or on-call work as working only when the job is required for a short period of time, and gives substitute teachers as an example. It notes that casual work can mean uncertain hours and income.

Lenders ask for different stretches. One bank lists your last two years of tax returns with your Notice of Assessment for variable income, such as overtime or commission. A T4 adds up the year, and the Canada Revenue Agency says employment income is usually shown in box 14.

If your work follows the school calendar and nothing is paid in July and August, our page on seasonal worker car financing covers how lenders read a pay pattern that stops for part of the year. If you work for a health authority, a city or the province rather than a school division, see car loans for public sector employees.

• Government photo ID.
• Your last two pay stubs from the school year. Lender lists vary: some ask for the last two stubs, or an employer letter, together with a T4, a Notice of Assessment or a year-end pay stub.
• Your latest T4 or Notice of Assessment.
• A letter from your employer that names your position, your contract type, your start date and how you are paid, over ten or twelve months.
• Your contract or offer letter for the coming school year, if you have one.
• Bank statements if a lender asks, and a void cheque.

The quickest start is the online application. We review every application and call you back. Or call us at (825) 736-4438.