Information Regarding Car Loan in Canada

Information Regarding Car Loan in Canada

Car Loan vs. Personal Loan, What’s the difference?

A car loan in Canada is different than a regular personal loan in Canada but the method applied to both is almost the same. The most important difference between a car loan and a personal loan is that a car loan is secured against your purchased car and is short-termed like 2 to 5 years normally and 2 to 7 years in some extended cases maximum. Another good thing is that car loan interest is only from 0 to 10% per year in Canada. On the other hand, a personal loan can or cannot be secured against an asset.

Car Lease vs. Car Financing, Which Option is better?

In Canada, if you travel a lot then you should not take the car on a lease because it limits your yearly kilometers but if you don’t travel much then this option is fine with you. Many people have a misconception that lease is only offered for the new car but that is not true at all. You can get a lease for a second-hand car but if this is costing you just as financing a new car, then you should pass that option and lease a new car as ample warranties reduce the maintenance cost for you. Also, if you change your car after every 4-6 years, then leasing a car seems a better option.

Who Offers Car Loan in Canada?

Car loans in Canada are offered by many entities including some unconventional lending institutes, used car dealerships, new car dealerships, private lenders, used car lots, and even some banks.

  1. The new car dealerships do their own lending mostly. For instance, Volkswagen has its financing support through VW Finance that deals with the financing of new or used car purchases. Having good credits will ensure your finance at lower rates and improve your chances of being approved by the bank.
  2. The used car directly works with Canadian banks to finance their customers which works out between them like banks pay the dealers directly when a car is purchased without involving the used car lots and ask the customer to reimburse the loan straight back to them. This kind of loan is sometimes considered as bad credit because most dealers don’t do background credit checks as they only care about their job stability or look for income.
  3. Many people try to find financing from private lenders to purchase a new car. This option is somehow flawed because a loan is safe against an asset which is your car. Now, what happens in this context is that the car is transferred to the moneylender until the loan is paid. This method is also known as the car title loan.
  4. Certainly, if you get hold of an unsecured personal loan, you can do pretty much whatever you want with that money including buying a new car but unfortunately; unsecured loans are a small amount and tend to range only from $500 to $5000 that limits your buying options.

3 thoughts on “Information Regarding Car Loan in Canada

  • Getting a car loan in Canada is a simple process, you can apply physically or online; where the online car loan application offers the easiest solution while applying through the comforts of home or office by using your mobile phone or computer. Your car loan request may consist of 3 steps:

    Step 1: Complete the online car loan request form and provide all necessary personal and financial information as required by the online lender or company that offers online service by self or through a network of lenders.
    Step 2: Submit other required documentation.
    Step 3: Wait to get approved by the lender you have requested for your car loan in Canada.

  • A good interest rate on a car loan in Canada depends on your financial situation, your car loan interest rates can be lower or significantly higher because of your credit profile whereas the average car loan rate for Canadians is 4.38% according to Statistics Canada. It will help you in knowing how good the interest rate on a car loan you’re getting in Canada for you.

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