The Smart Way To Finance A Car | Quick Auto Loan
New vehicles these days have better safety features and more tech features than models from several years ago. However, many Canadians make big mistakes buying cars.
First, it is essential to understand your credit score before going to the dealership. So your first step should be securing the best auto loan rate is to check your credit report and score to understand where you are.
When it comes to buying a car with bad credit, the lower your credit score, the more critical it becomes to shop around and make sure you’re getting the best auto loan rate a bank can offer. You may even pay more than someone with a superior credit score, but you may not have to pay the first-rate somebody offers.
Keep The Term Short As You Can Afford
Regardless of your credit score or buying a car with bad credit, a dealer will always try to sell you zero down, low monthly payments and long car loan terms of four, five, even six years.
The longer you repay a car loan or car finance, the more interest you’ll pay in the long run. But that’s not all.
Banks will charge a higher interest rate for longer loans, increasing your cost of credit. It’s tempting to stretch out an auto loan over five or even six years to get to a more comfortable monthly payment, but this means you’ll pay a lot more in interest and almost certainly be down on your new car interest rates for nearly the life of the loan.
If a dealer offers you a loan with zero down payment, they’re paying.
If you cannot afford to place 20% down on the car you’re considering; the chances are that you probably can’t afford the monthly payments plus interest throughout the auto loan.
Frequently Asked Questions:
What’s the most innovative way to finance a car?
When you’re purchasing a vehicle, odds are you borrow money for it. The smartest way to Finance a Car is through a dealership or car loan lender. Usually, you will receive a lower interest rate this way.
How to get a loan on a car?
Buying a new car is exciting but getting the right car loan is crucial. The first step is to take a look at your budget, review your credit score, consider your lending options, and last step is to apply for a loan with your lender of choice. Before choosing a lender, it would be best to review the interest rate, payment amount, repayment term, and extra fees. Papers you require for a car loan include:
- Your ID/driver’s license
- Proof of income or tax return
- Proof of car insurance
- Employment info
The next step is accepting your loan offer and making your loan payments.
How to finance a car through a bank?
When you choose to finance through a bank, you directly use a bank or credit union to get a car loan. You will have to get pre-approved for a loan before you ever set foot in a dealership.
What is an excellent Annual Percentage Rate (APR) for a car?
This is dependent on your credit score; it can range from 2.99% to 6.99%
Which bank offers the best car loan in Canada?
This varies as most banks have monthly specials to inquire about and secure the best car loan.
Which banks approve car loans quickly?
No banks approve a car loan quickly; however, it usually takes 1-2 business days for a car finance application to be agreed with the proper paperwork.
Do I need a guarantor/ security when applying for the car loan?
You will need a guarantor or a large security deposit only if you have poor credit or have no credit.
What kind of credit score do you need to buy a car?
You will need a credit score of 500 or above to qualify for a car loan. A credit score of 780 or better can get you the best rates.
Will my credit score affect the interest rate?
The lower our credit score, the greater risk we pose to the lender.
Some lenders, such as private lenders and trust companies, will charge you a higher interest rate to compensate for that risk. Some lenders won’t lend you money if the credit score is too low.
Should I take a car loan from the car dealership or bank?
Dealer-arranged auto financing works the same way as bank financing; the only difference is that the dealer does the work on your behalf. After choosing your vehicle, the dealer will have you fill out a credit application, which they’ll submit to multiple lenders.
Do banks offer finance for used cars?
Due to the depreciation that used cars will have. While the value of a new vehicle also tends to depreciate, banks tend to grant car loans for them with less apprehension.
How much money is needed for a down payment on a car?
Part of your decision will depend on where your credit score stands. When it comes to a down payment on new car finance, you should try to cover at least 20% of the purchase price. If you consider a used car, a 10% down payment might do.
If you are seeking a car loan and you have good or bad credit, consider applying to Quick Auto Loans for your next auto finance loan. Schedule your appointment today! You can receive your car loan within 24 hours.