What’s in this guide?
When you have your eye on a car, it’s easy to consider everything but the financing. However, knowing your options for buying, leasing or even refinancing your dream car can get you out on the road more quickly – and leave you with more money in your pocket.
Read our guide below to find out how to get the best deal to finance your new car. We cover the different types of car loans available, the costs and some of the most frequently asked questions.
What kind of car do you want? Can you afford to buy a new or used car? Do you even want to buy a car – or do you just want to lease one for a few years?
There isn’t just one type of car loan out there for one kind of driver. The financing you need depends on your personal finances as well as what you’re hoping to get out of your loan. Although you’ll find unsecured car loans, most auto financing relies on securing your loan with the vehicle you intend to buy or refinance.
Most lenders offer a combination of the following types of lending:
When it comes to how much you’ll pay for your car loan, it ultimately comes down to three main factors:
The longer your loan term, the more you’ll pay in interest, which ultimately means your car just got a lot more expensive.
Before you compare lenders, calculate how much you can afford to pay for a down payment, monthly repayments, any fees and your loan’s overall cost. Look up the taxes and fees associated with purchasing a car in your province or territory, and add them to the cost of each car you consider.
Banks, credit unions and online lenders often ask borrowers to choose a car before applying. Matching services and dealerships, on the other hand, usually ask you to come with an open mind. Regardless of where you apply, narrow down the makes and models of different cars in order to get an idea of the type of car you can afford.
Click on each question to expand more information about what to look for.
You’ll find that some of this information isn’t readily available online for loan-matching services and dealerships. In those cases, it’s worth taking a look at reviews, forums or calling a customer service line to get a ballpark answer.
You’re ready to apply for a car loan if you:
The car loan application process can vary wildly depending on the type of financing you choose. Getting financing from a dealership doesn’t involve most of the steps outlined below, for example – instead, you start at the dealership.
Most lenders ask to see at least three documents when you apply for a car loan:
So, you’ve finalized the deal that got you behind the driver’s seat. Now it’s time to start paying off your car loan. With many lenders, you can set up automatic payments so you don’t forget to pay. Keep track of your personal account and loan balance to make sure everything goes smoothly.
Before signing your loan contract, find out if you can make early repayments without incurring additional fees by contacting your lender directly.
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