In a nutshell, auto financing in Canada includes a lender extending credit or loan to a buyer to purchase the car in installments. These lenders could be banks, credit unions, auto dealerships, or specialized institutions for vehicle financing. This saves you from having to spend a fortune at one go, and repay off your debt over a period of time.
Major part of the auto financing experience involves evaluating your options on interest rates, monthly payments, and loan terms. Once the loan term is over, the complete ownership of the vehicle is handed over to you. Loan terms are typically anywhere between three to eight years. You must understand that the lower you want your monthly payments to be, the longer it would take you to repay the entire debt.
Just like any other personal loans, auto financing loans have their own benefits and drawbacks. Always remember that your auto financing needs are unique, and not similar to any other individuals. That’s why at 902 Auto Sales, we provide personalized services to provide you with the best rates, guaranteed.
Let’s look at some of the advantages of buying a vehicle with financing. Firstly, it helps you build a good credit history as you keep repaying your debts in time. As opposed to leasing, you have full ownership of the vehicle and do as you please with it, as long as you’re making your loan payments in full. As opposed to a 100% down payment, the insurance rates are lower with an auto financing arrangement.
The major drawback with auto financing is negative equity due to the depreciation of value. The market value of any particular car is always decreasing, so if your car is worth less than your outstanding loan, you are losing equity. Moreover, monthly payments are on top of other costs of owning a car, including parking, gas, and insurance. You have to carefully consider these financial factors before going for auto financing.
In the end, it all comes down to the time value of money. Repaying small monthly amounts over a longer period of time means you’re not having to put a dent in your wallet as long as you keep earning and repaying. However, it also means that if you repay over seven or eight years, you are losing money as the value of an automobile is always depreciating. Your decision today will impact your life years from now, so at 902Auto Sales, we make sure that you take the most informed decision and run through all your options before choosing the one that has the most positive impact on your future.
Basic Requirements to get approved for a car loan
Most lenders require applicants to meet their minimum requirements for an auto loan. You can check how much you can get approved for by taking our pre-approval quiz and talking to one of our experts. Some of the basic prerequisites for getting approved for a car loan in Canada includes a government issued photo ID, valid driver’s license, proof of income, and proof of insurance.
Once you have decided on your dream vehicle, and have all your documents ready, you’re all set for financing! 902 Auto Sales offers online financial advice for anyone looking for an auto loan, even the ones with a bad or no credit history. We gather all the information you need to make a decision, and our friendly consultants will work with you to find a deal that makes sense not only for today, but for the future as well. Fill out our pre-approval form and talk to an expert today to find out your auto financing options.