When you’re looking for a new or used car, getting an auto loan is often a necessary part of the process. Few people have the resources to buy a car in cash, especially at high prices. So, how do you find the best rates and terms on auto loans in Canada? This guide will walk you through the process, from prepping your finances to finalizing your purchase.
Save Your Down Payment
Depending on your credit score and finances, you might not need a down payment. Even so, it’s best to have one saved. You could also pull from existing savings to cover the cost. Other significant sources of potential down payment funds include tax refunds or bonuses at work.
Check Your Credit Score
When you attempt to get financing for a car, the lender will check your credit score. Know what it is before getting started. If it is not as high as you thought it was, consider taking steps to improve it. Remember, higher scores lead to lower interest rates and better terms.
Set a Budget For Auto Loans in Canada
How much can you reasonably afford every month and in the long haul? Note that the more you stretch your payments, the less you pay each month. However, you end up paying more in interest over time. Include the following costs when setting a budget:
- Insurance premiums
- Insurance deductibles
- Maintenance and repairs
Research Auto Loan Options
The Canadian government website recommends getting your loan through a financial institution instead of through the dealer. Start with a lender you have an existing relationship with, so you can negotiate better rates and terms.
Choose Your Vehicle
Once you have your auto loan, it’s time to start shopping for the perfect car. Bring any relevant paperwork with you, such as your driver’s license. Many people tend to choose whichever vehicle looks nice and feels comfortable. Others go by their budgets.
These factors are all great starting points, but you should also consider the following:
- Fuel efficiency or battery range
- Reliability ratings
- Current condition
- Cost to insure
Request an Independent Inspection
Only a licensed mechanic can look at a vehicle and determine its condition and whether it’s worth the sticker price. Mechanics can also give you a heads-up if the car has major mechanical issues you might want to avoid.
Complete the Financing Process for Auto Loans in Canada
If you have already received preapproval, financing the vehicle you choose should be straightforward. The dealer will work with you to finalize the purchase and auto loan. It’s always best to have your auto loan lined up before heading to the dealership.
Once you have your new car, you will need to find insurance. Some dealers might not let you leave the lot without proof of insurance. You might be able to get this through the auto loan lender or the dealership. If not, you can shop around for the best rates and coverage on your own. After all that hard work of reviewing the many auto loans Canada has to offer, you are finally the proud owner of your new, or new-to-you, vehicle. Are you still in the market for an auto loan? Check out our cash car loans at LoanConnect.