Auto Financing


  • Interest Rates: When you take out an auto loan, a lender will charge an annual percentage rate (APR) for lending you the money. Your credit score and the type of vehicle you’re financing affect the percentage.
  • Term: Auto loans typically have 36- to 72-month terms, during which borrowers are required to make monthly payments with interest.
  • Principal: The principal includes the price of a vehicle, plus lender fees, dealer fees, and optional vehicle upgrades.

  • Trade-Ins: A trade-in involves offering a vehicle to a dealership, so its resale value can be credited toward the cost of a vehicle you want to buy. This is one of the most effective ways to lower the price of a new car.
  • Down Payments: Many companies require a down payment of up to 20% before they’ll approve your loan, depending on how much you’re financing.
  • Leasing: Leasing isn’t the same as traditional financing, but it’s a smart option for car shoppers with a small down payment savings. As a lessee, you’ll pay for the vehicle’s depreciation over the course of your lease term, but not the entire cost of the vehicle.

  • Lending Institutions: If you’re applying for an auto loan, you can take the direct lending route (financing through banks and credit unions) or finance through the dealership.
  • Credit Scores: Your credit score is a numerical summarization of your credit reports, which are filed by Equifax Canada and TransUnion Canada. The higher your credit score, the smaller the APR on your auto loan.
  • Pre-Approval: Banks and credit unions will pre-approve you for a specific amount, (usually based on income, credit score, and other factors), which streamlines the buying process and gives you more room to negotiate.