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car loans canada

$7,500 - $59,995
Loan Amount
2.95% – 29.95%
Apr Range
  • Minimum 18 years of age
  • Earn at least $1,800/month
  • 12 – 96 months terms
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loans canada

Up to $50,000
Loan Amount
2.00% - 46.96%
Apr Range
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  • Earn at least $1,800/month
  • 3 – 60 months terms
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carloan411

$5,000 - $40,000
Loan Amount
Starting at 2.9%
Apr Range
  • Minimum 18 years of age
  • Credit score above 500
  • 12 – 72 months terms
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coast capital

No Limit
Starting at 4.9%
Apr Range
  • Minimum 18 years of age
  • Credit score above 500
  • 12 – 72 months terms

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Car Loans

Best Car Loans in Canada

Are you planning to purchase a vehicle? Unless you can afford to pay for it in cash, you’ll have to borrow the money. And there are a lot of factors to consider when choosing a car loan: should you finance or lease? Car loans are a great way to get a higher quality vehicle since you don’t need as much cash upfront. You’ll benefit form driving around a better vehicle and paying for it slowly and the lender benefits by collecting interest as you repay the loan.

Welcome to Comparewise

Are you ready to purchase a new or previously owned car? Finding the best car loans in Canada requires a review of the top loan companies. A dependable vehicle is essential for work, travel, and family. A reliable car or van requires a significant investment to ensure you have a good quality product that will last and provide years of service.

A fuel-efficient luxury vehicle will cost you significantly more than a standard car. If you’re looking for a hatchback, SUV, truck, or sports car, you’ll need a good credit rating and sufficient income to support this purchase. It’s essential to find a dealership that will offer an affordable car loan or financing plan for your purchase. There are plenty of dealerships and lenders in Canada that can offer you a wide range of car loans.

What are car loans?

A car loan is an amount you borrow that is secured against the vehicle you plan to purchase. The new car is collateral for the loan to be seized if you can’t make regular payments.

Each car loan is paid in regular installments with interest. Before you sign for a car loan, it’s essential to review all the terms of the agreement to ensure that it’s affordable for your budget.

What are the types of car loans?

There are many different types of car loans to consider before you make a purchase: unsecured and secured car loans.

Every lender has various options and processes that cater to a variety of budgets and customer needs. Each type of loan offers benefits, depending on the individual situation and financial needs. The best car loans are easy to find, with some research and aligning the terms of the agreement with your requirements and affordability.

Unsecured Car Loans

Typically, collateral is needed for a car loan. In some cases, if the lender is confident in the borrower’s ability to repay the loan in full, they will offer an unsecured loan. This type of loan is less common for car purchases and requires a higher interest rate than secured loans.

Secured Car Loans

A secured car loan is the most standard option for financing your vehicle. The loan is offered with the car as collateral, which is also the item you purchase. Effectively, a lien is placed on your new car, a legal agreement that allows the lender to seize the vehicle if you cannot fulfill the terms of the loan. Most loans offered for car purchases are secured.

How loans are financed

There are different types of interest loans and how they are calculated. A simple interest loan, for example, is calculated on the principal amount of loan outstanding every time a payment is made. Precomputed interest loans calculate the interest for the loan’s entire term, then divide the amount into equal installment amounts for each monthly payment.

Car Loan Financing Options: In-house and Third Parties

There are a few options for securing one of the best car loans in Canada for your purchase. One of the most direct ways to secure a loan is through in-house financing, which is done directly through the dealership. This is a one-stop shopping experience that some customers prefer because they can make their vehicle purchase and loan arrangements all in one place. There may be some room for negotiation if you have a history with the dealership from a previous car purchase.

Dealership or “In-house” Car Loans

The option of securing a car loan through your dealership is favorable for people with bad credit, as dealerships tend to offer payment plans to customers with this situation. The interest rates tend to be higher, which isn’t ideal if you can apply for a better rate through a bank or credit union.

Indirect Car Loan Financing

The car dealer may arrange to finance between the buyer and a third-party lender, who indirectly provides the loan funding. Some finance companies provide this arrangement for specific car dealerships or automakers and may offer rebates or specific incentives for prospective buyers. A dealer may add their fee, which may increase the interest rate offered by the lender.

Direct Car Loan Financing

You can secure a car loan through a bank, finance company, or credit union online before you approach a car dealership. This option allows customers to shop around for the best car loans in Canada before finalizing a decision. Pre-approval for a loan is also an excellent incentive for car dealers to offer you a good deal, as you can shop around for a better price based on the approved loan.

Loans and Car Purchases from a Private Party

Do you want to purchase a car from a private seller? This option may be a consideration when an individual or party offers an incredible deal or trade-off with another vehicle, which may decrease the overall price. Before you purchase from a private seller, you’ll want to find out if an amount is owing on the car, whether or not the individual owes money on a car loan and other matters that could complicate your ownership of the car.

Is the car certified as safe for the road? Were any parts of the car replaced, and are there recurring issues that may cost you more in the long run? A private lender may offer a better deal for a car, which seems ideal on the surface, though it’s essential to know everything upfront before you sign any documents or make a transaction.

Buying Out a Lease

If you lease a vehicle, you may have the option of buying the car outright at the end of the term. A lease buyout plan gives you the option to make payments during the term so that you can own the vehicle once all the financial obligations are fulfilled.

Used or Pre-owned Car Loans

The cost of a used car is less than a new vehicle, making the loan amount easier to afford. A used car is an ideal solution for individuals who need a car and do not want the higher cost and longer terms of a new purchase. This option has become an attractive option for prospective car owners in recent years, as the interest rates are lower. Since the overall cost is affordable, there is a low risk of repossession because payments are generally easy to make and fit a broader range of budgets.

Reviewing All Your Car Purchase Options

Take all the time you need to make an informed choice so that you can secure one of the best car loans in Canada. You’ll need to review your finances, affordability, and future budget to determine which plan works best for you. Fortunately, more car dealerships and financial institutions are flexible, with more credit products to afford your next purchase.

How do car loans work?

A car loan offers a borrower the ability to purchase a car with an agreement to pay the amount in installments over a specified period.

This allows the customer an affordable way to buy a car without spending tens of thousands of dollars, which is not possible for many people. There are a few essential factors to consider when you review the best car loans in Canada.

The first step in applying for a car loan is completing a lender’s car loan form. This should be done only once you’ve researched all your viable options. Once you complete the application on your chosen lender’s website, you’ll need to answer questions about your financial situation and follow up with documents to support this information. These documents include proof of residence, financial details such as income, bank statements, and other loan agreements, credit score, and employment (current and previous), among other items.

You’ll need to provide details on your financial commitments, in addition to your income, such as monthly rent or mortgage expenses, tax returns, and other debt obligations. This information provides the lender with an accurate picture of what you can afford and how likely you can pay back a loan without difficulty. Details about the make and model of the car are also required, including the price, as this will determine the amount of loan you’ll need.

It may seem advantageous to apply at a few lenders to secure a loan, though this could negatively impact your credit score, as they will run reports to check your level. Instead, you can opt to complete a form for pre-qualification, which gives you an indication if you’re likely to be approved without impacting your credit score.

When You’re Approved for a Car Loan

Once you’re approved for a car loan, you’ll receive the amount in a lump sum from your bank, your credit union, as a direct deposit to your account. If you’re borrowing from the dealership, the purchase can be made on the spot, and you can begin making payments, as per the term agreements. When you borrow directly from the dealership, you’ll have immediate access to the vehicle, which benefits some customers.

The shorter the term agreement, the higher the payment. You’ll need to ensure that installments are made promptly, so there is no risk of defaulting on your loan, which could result in additional fees, repossession of the car, or other penalties, including a damaging strike against your credit score. Keeping your credit in good standing is of utmost importance for current and future loan opportunities.

Always consider which option is best for your financial situation. If you want lower payments, you may opt for a longer term, though you’ll pay more interest in the long term. If you anticipate more money each month, a shorter term will help you pay off the loan faster and save you on interest.

Determining the Interest Rate

Interest rates vary from one lender to another. This fee is the cost of doing business and financing with a dealership or loan company. The interest rate you pay depends on the amount you borrow, the terms of the agreement, credit rating, and the type of vehicle you purchase. You’ll find two main types of interest rates when you review car loans: a variable interest rate and a fixed interest rate.

Car loans with fixed interest rates are locked in from the most you’ve been approved for the loan and remain in place without change during your entire term. While a fixed rate may be higher than a variable interest rate, the reason people tend to favor this option is that it’s predictable. You automatically know how much you’ll pay each month because there’s never a change for the duration of your term.

If you’re offered a variable interest rate, the amount can change over time, though it will largely depend on the prime rate in Canada, among other factors. While the monthly payment amounts fluctuate over time, this option is less expensive than fixed rates.

Making a Down Payment

A down payment is an amount you pay towards the cost of your car purchase, which decreases the amount left to borrow and pay back in installments. In many cases, a down payment ranges from 10% to 20% of the overall vehicle’s costs, which is recommended. In some cases, no down payment is required to finance the purchase of a car, though it’s helpful in the long-term if you make sizeable payment upfront, especially for an expensive vehicle.

A significant amount paid initially will reduce the amount you need to borrow from a lender. It also makes a good impression on a car dealer that you’re serious about committing to the plan. There may be some significant advantages to your car loan with a down payment, including lower interest rates and preferable terms.

Additional Fees for Car Financing

It’s essential to be aware of extra fees that are included with your car purchase. These charges include administrative costs for documentation, processing financial plans through a third party, and licensing. You may notice one-time fees for specific services, which are explained in detail in your contract or agreement. Before you sign, make sure you review all the car loan terms to have a complete understanding.

The Terms of the Agreement

How long is your repayment schedule? How much are the payments, and how affordable is it for you and your family? The length of your car loan term, how payments are made, and the interest rates all have an impact on your financial budget and should be reviewed carefully. You may find a smaller payment each month is ideal, though, with a longer-term, you’ll pay more in fees and interest than with shorter-term and larger payments. It’s vital to consider all your options and the future affordability of your car loan before you sign any contract.

Reviews of Five Car Loan Companies

Where can you find the best car loans for your vehicle purchase? You may have a car in mind and a specific price range, or you may be uncertain of where to begin. Once you have a purchase in mind and the loan amount you’ll need to make a purchase, you’ll need to review all your options to find the best solution. Most car owners do not buy their car outright, making a lender the next step in the process.

It’s important to understand that even among the top car loan companies, and the best car loans, the interest rates vary considerably, anywhere from under 4% up to 47% or more, depending on your credit rating, income, and other factors assessed. The first step in securing a loan is finding a reputable lender with a solid track record of satisfaction.

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1. Car Loans 411 (or CarLoans411.ca)

This car loan company began in 2008 and is considered one of the most helpful companies for Canadians purchasing a vehicle. The application process is completed online, which takes only a few minutes. If you’re approved, you’ll be connected with a lender who meets your individual needs. CarLoans411.ca provides access to a network of lenders curated for a variety of borrowers and their financial situations.

The terms for loans offered through the network typically range from one year (12 months) up to 84 months. Most loans do not require a down payment to qualify, and interest rates are individually calculated based on each applicant. CarLoans411.ca is partnered with numerous dealerships across the country, so you can find the ideal solution for your next car loan that suits your budget.

There are no drawbacks to using this company, as there are many possibilities and options to choose from, due to all the Canada-wide dealership connections. It’s a website worth exploring, even if you’re unsure where to begin. CarLoans411.ca will give you a good idea of what to expect when you apply for a car loan.

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2. Car Loans Canada

Like CarLoan411.ca, Car Loans Canada offers an extensive connection of lenders through partnerships, making it easy to find the car loan solution you’re looking for. Car Loans Canada offers some of the best car loans on the market, and they help customers with poor credit, making their dream of owning a vehicle a reality. The company offers many options and narrows down the best lenders based on your credit history, income, and other factors.

If you’ve filed for bankruptcy in the past or a consumer proposal, Car Loans Canada will find a solution that works best for your circumstances. One prominent feature about the company is that it’s free to search, and there’s no negative impact on your credit score. Interest rates tend to vary, with a maximum of 29.95%, and no down payment is required, with terms between three to six years (36 to 72 months).

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3. Canada Drives

This company has a strong success record of helping more than one million Canadians secure a car loan within a year. They have an extensive partner network of over three hundred dealerships and lenders so that you can find the right match for your financial needs. You’ll find the application process is fast and hassle-free, taking only a few minutes to complete. Interest rates typically range up to 30%, and terms range from a short-term one-year plan up to eight years, or 96 months.

You’ll find the loan amount flexible, whether you are looking to purchase a new or used car, with a range of $5,000 to $75,000. Canada Drives offers people with bad credit or other financial hurdles a chance at vehicle ownership. The firm was considered one of the tops managed car loan companies of 2019.

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4. Canada Auto Finance

If you need a car loan without lots of paperwork and background checks, you may want to consider Canada Auto Finance as an option for one of the best car loans. When you complete an application, you won’t need to provide any fees upfront, and no social insurance number or co-signer is required. Each application is considered on an individual basis, and the maximum loan amount approved is $45,000, which may limit your purchase options.

Canada Auto Finance requires all applicants have a minimum monthly income of $1,500, which you’ll need to substantiate with documentation. Interest rates are typically higher due to the risk factors of lending to applicants who may not have enough credit or poor ratings. Interest rates tend to range between 4.9% and 30%.

loan-connect-car-loans-comparewise

5. Loan Connect

If you’re looking for a quick pre-approval process, Loan Connect offers an online application that lets you know in five minutes. Loans range anywhere from one year to five years (12 to 60 months), with interest rates between 10% to 47%, which is significantly higher than other companies. The interest rate is fixed, which means it will not fluctuate during the term of your loan agreement.

When you apply for a loan through the company’s online portal, there is no specific category for car loans, which means you’re simply applying for a “lifestyle loan” to cover the expense of your vehicle purchase. This option may be ideal for customers who want a loan to cover more than one expense. For example, if you’re looking to purchase a used car and a motorcycle, one approved loan can handle both items, and you only need to repay one amount each month.

Suppose you’re looking to borrow for education, wedding expenses, or extra costs in addition to a vehicle. In that case, Loan Connect is a great solution that handles a few items bundled into one loan agreement. You may want to take extra time to consider other financial needs if you apply for a loan through this company.

Choosing the Right Company for the Best Car Loans

Before you sign any loan agreement with a dealership or finance company, check all the options available to you first. In some cases, you may think your options are limited with poor credit or limited income. However, you’ll be surprised how many companies are willing to give you a chance, provided you meet their criteria and you’re willing to pay a higher interest rate.

Generally, loan companies consider all sorts of reasons why individuals may need a vehicle, and they will work with you to make it happen. Always focus on the advantages and drawbacks, so you can make a thorough analysis of which option is best suited for your situation.

How to choose what car loan is right for you

To choose what car loan is right for you, start by applying with Comparewise. We compare the market and find you a great deal on financing.

There are many factors to consider when you consider which type of car loan works best for you. It’s important to remember that car loans are personal loans to purchase a vehicle. If you have a high income, excellent credit history, you’ll find better interest rates and higher loan amounts at your disposal. A car dealership may not be your best option if you can secure the lowest interest rate with a financial company, including your bank or credit union.

If your credit rating is not well established or poor, you may have fewer opportunities for a preferable interest rate, though you’ll still find options for your next car purchase. Leasing may be an option, and used cars are increasingly more popular, as they don’t cost as much and typically offer better interest rates and low monthly installment payments. You’ll also want to factor in the type of interest, fixed or variable rates, as this will also impact the amount you pay each month.

Finding one of the best car loans takes a bit of time to assess, though the investment of time into your options is worthwhile because you’ll have a better idea of what’s available for you.

Leasing a car as an option

Are you uncertain whether purchasing a car is the right choice for you? You may want to consider leasing a vehicle, which gives you the option of making monthly payments for a pre-determined period, usually between two and four years. You’re essentially renting the car for several years, with the option of returning it and leasing another vehicle or buying it at the end of the term.

Leasing a car is only an option for new vehicles, though it’s an excellent option to consider if you want a solution that doesn’t require the total commitment to purchase right away. There are some great benefits to leasing a car, including more affordable payments, low maintenance, a nicer drive, and the enjoyment of a new vehicle.

There may be a few drawbacks if you plan to drive extensively, as most lease plans have terms that include mileage or kilometers limits, which may be subject to a penalty fee if you drive more and exceed them. Since you don’t own the vehicle outright, you’ll have to abide by the lease agreement rules to avoid extra fees. Newer cars tend to be less prone to breaking down and more minor repairs, making them ideal for low maintenance.

Buying or financing a car versus leasing

While leasing may be an attractive option, purchasing a car outright or financing a vehicle can offer improvements to your credit score, customization options for your car, and driving as much as you want. There’s no limit on mileage, which places the onus on the driver to ensure the car is well maintained and serviced to avoid damage and costly repairs.

If you have the funding to buy a car outright, you’ll avoid monthly financing, interest payments and may qualify for a discount. While this option is typically not available to most people, if it becomes affordable, it’s worth considering. If you’re expecting to receive a large sum of money, such as an inheritance, making a complete purchase may be an excellent option to consider, as it will free up your monthly income for other expenses.

Suppose you don’t want to pay for the vehicle in full. In that case, you can make a significant down payment, such as half of the cost, and finance the rest of the vehicle through a third party or financial company that offers you a reasonable interest rate. You’ll find many companies are willing to offer some of the best car loans to individuals who demonstrate financial stability, and a sizeable down payment will work in your favor.

Conclusion

At first, glance, finding the best car loans can be daunting and complex, especially if it’s your first time applying for a loan or purchasing a vehicle. Initially, you’ll find a quick internet search of famous companies, reviews, and details helpful, though it can be a lot to assess in a short time. Reviewing companies that offer the best car loans is your ideal resource for locating a reputable option without concerns about quality and consistency.

The best car loans are based on a good fit for you, whether you’re in a good financial position or have a history of poor credit and financial struggles. Most companies offer a wide range of solutions, so you can rest assured that you’ll find the right financial product and vehicle for your personal and work needs. Making a purchase is more than a decision about the type of car you want; it entails reviewing your current financial needs and the ability to commit for one to five years, typically, when you pay off the car loan.

 

FAQs about
Car Loans

Have a different question? Contact us today.

What is a good car loan rate in Canada?

The average car loan rate in Canada is 4.38%. This doesn’t mean that you will have this exact rate though. Your rate will be determined by your certified lender partner at the time of your agreement.

What affects car loan rates in Canada?

Car loan rates are determined by several factors, such as your credit score, yearly income, current debts, the loan amount and loan term you wish to borrow for. Generally speaking, the higher your credit score is, the lower your car loan interest rate can be. Lenders also look at your debt to income ratio to make sure that your payments are reasonable based on your monthly income.

What can you do to save on car loans in Canada?

You are already taking the first steps to saving on car loans. When you apply with Comparewise, we automatically match you with the best deal for your situation.

What should I look for in a good car loan deal?

Comparewise will help you find the best car loan deal for your situation. Apply for free online and you’ll be matched with a certified lender who can offer the best car loan deal for you.

What credit score is needed for a car loan in Canada?

While our lenders pride themselves in offering financing solutions to a wide range of credit situations, most clients have a credit score in the mid-600s in Canada. A credit score between 630 and 650 is usually what the average buyer will have. However, we encourage you to apply to find a financing solution no matter what your credit score is.

Can I still get a car loan even if I have poor credit?

You can still get a car loan if you have poor credit. If you have poor credit, you should apply with Comparewise for a car loan and we will match you with a certified lender that will provide you a car finance deal for your circumstances.

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