Saving enough cash to buy that favorite car in the showroom can be an insurmountable hurdle especially when you have other financial responsibilities to shoulder. A car loan financier helps you own your favorite automobile while paying for it in manageable installments. If you reside in Canada, there are hundreds of car loan companies that can help you achieve your dream soonest. This guide reviews some of the best car loan companies to seek financing from. However if you are ready to start your search for auto financing in Canada, visit Smarter Loans – Canada’s Loan Directory, for a list of the country’s most reputable vehicle loan providers.
How Auto Loans Work
Understanding how a car loan works helps you complete the purchase process with ease.Well, when you seek out a car loan with a given lender, you will have to sign a loan contract where you commit to be paying for the credit facility in installments and in a specified duration of time. Often times, the car loan company dictates the terms of repaying the loan though you can always try to negotiate for better terms.
What makes auto loans tick is that the vehicle you are purchasing acts as its own collateral so that you don’t have to attach other assets when buying. At Smarter Loans you will find valuable articles that further explain exactly how auto loans and car loans work in Canada.
The Building Blocks of a Car Loan
- Interest payable
Interest is the true cost of the loan. It’s fee that you pay for borrowing from a financier. Different lenders offer different rates depending on repayment period, type of vehicle you’d want to purchase and, in a small part, your credit history. A good buyer should shop around for the best rates possible.
- The down payment
This is the percentage of the cost of the car that you pay up while the financier shoulders the remainder. It’s obvious that you should only opt to buy that car when you have the minimum amount to cover down payment and other miscellaneous expenses.
- Installments repayable
The amount you repay on monthly basis is determined by the duration of the loan and interest levied by the lender. Ascertain the installment amount fits into your budget so that you don’t commit to pay too much and affect other realms of your life. Again, choosing the lowest amounts or the longest payment period on offer may attract higher interest.
- Lender’s requirements
Different lenders have specific sets of documents that a lender should furnish them with when applying for a car. The most common of these documents are current pay stub, a valid driver’s license, and a void cheque. This is in addition to a down payment and credit report. Check with different lenders the requirements to fulfill before getting a car loan in Canada.
It is important to understand all your options when searching for an auto loan. That’s why many Canadians use Smarter Loans as a one-stop shop for all things financing, including financing and leasing of all types of vehicles.