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Buying a brand new car is exciting. But deciding what you buy and how much you’re going to spend takes time. Budget out the cost and compare lenders to get the best deal. CarsFast Car Loans
CarsFast Car Loans
New car loans are typically secured term loans backed by your new vehicle. Generally you can borrow between 80% and 100% of your vehicle’s value and cover the rest of the cost upfront.
Once you get your funds either through a dealer or a third-party lender, you pay it back plus interest and fees in monthly installments. Usually, it takes between two and seven years to pay off a car loan. If you fall behind on your payments, your lender can repossess your vehicle.
Emily lives in Ontario and recently got a new job in another city, so she decides to buy a car to drive to work. She visits a dealership and picks out a 2020 Toyota Yaris priced at $19,800.00. Emily makes a 20% down payment of $3,960.00 and heads to her local bank to get an auto loan to cover the remaining $15,840.00 + $2,574.00 HST on the purchase price.
Because she has a solid credit history, Emily is approved for a $18,414.00 auto loan with competitive terms. Along with the cost of her loan, she also pays approximately $180.00 to register her vehicle with the province of Ontario – this includes the cost of license plates, a sticker and a vehicle permit.
| Cost of new car | $19,800.00 |
| Loan type | Auto loan (term loan) |
| Loan amount | $18,414.00 |
| Interest rate (APR) | 4.90% |
| Loan term | 6 year |
| Additional fees | 4.00% origination fee ($736.56) |
| Payment | $295.70 monthly or $136.35 biweekly |
| Total loan cost | $21,290.40 with monthly payments or $21,270.60 with biweekly payments |
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
New car loans don’t have to be for brand new cars — the majority of lenders accept a vehicle up to two years old from a dealer or private sale as well.
Anything below 5% is considered a good interest rate on a new car loan. However, you won’t be able to qualify for a good rate on a car loan unless you have good or excellent credit. In Canada, credit scores usually range from 300-900, and if your score is 650 or higher, you have a good chance of being approved for a loan. If your score is below 650, you may have trouble getting approved for a loan, and if you are approved, you will probably be charged a higher interest rate.
Here are some factors to consider when comparing loans for a new car:
Pros
Cons
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