Your Guide To Car Loans Ontario - Compare Providers
| Lender | Loan amount | Rate | Term | Details |
|---|---|---|---|---|
 Spring Financial Personal Loan | $500 – $35,000 | 9.99% – 34.95% | 6 – 84 months | Learn more |
 LendDirect Personal Line of Credit | Up to $10,000 | 34.99% | Not listed | Learn more |
 Mogo Finance Line of Credit | Up to $5,000 | 34.37% | Not listed | Learn more |
 easyfinancial Personal Loan (Unsecured) | $500 – $150,000 | 9.99% – 34.95% | 9 - 240 months | Learn more |
 Fairstone Financial Unsecured Personal Loan | Up to $50,000† | 19.99% – 34.99%* | 6 – 120 months | Learn more |
 MDG Cash Installment Loan | Up to $20,000 | 19.8% – 34.99% | 36 – 85 months | Learn more |
 Fora Line Of Credit | $1,000 – $15,000 | 19.9% – 34.9% | Not listed | Learn more |
 Money Mart Installment Loan | $500 – $25,000 | 29.9% or 34.28% | 6 – 84 months | Learn more |
 SkyCap Financial Personal Loan | $500 – $100,000 | 12.99% – 34.99% | 9 – 60 months | Learn more |
 Cashco Financial Personal Loan – Flex Loan | Up to $9,000 | 35% | 6 – 60 months | Learn more |
 Magical Credit Magical Installment Loans | up to $20,000 | 19.99% – 35% | 12 - 60 months | Learn more |
 LoanMeNow Personal Loan | $500 – $1000 | Up to 32% | 3 months | Learn more |
 Green Loans Personal Loan | Up to $1,000 | Up to 35% | Not listed | Learn more |
 AimFinance Personal Loan | $100 – $1,000 | 29% – 35% | 9 – 24 months | Learn more |
 goPeer Personal Loan | $1,000 – $35,000 | 8.99% – 34.99% | 36 or 60 months | Learn more |
 GoLoans Installment Loan | $500 – $5,000 | Up to 32% | 3 – 4 months | Learn more |
 LendCare Installment Loan | $500 – $15,000 | 9.9% – 29.9% | 12 – 60 months | Learn more |
 Ledn Bitcoin-Backed Loan | $1,000 – $1,000,000 | 10.4% | 12 months | Learn more |
 Borrowell Personal Loan | Up to $35,000 | Starting at 12.99% | Up to 60 months | Learn more |
 Windmill Microlending Professional development loans | $15,000 | 6.7% | Up to 60 months | Learn more |
 Parachute Personal Loan | Up to $25,000 | 24.99% – 29.99% | 30 or 60 months | Learn more |
 Helium Loans Personal Loan | $500 – $50,000 | Varies | 6 – 60 months | Learn more |
 Fast Access Financial Personal Loan | $1,000 – $5,000 | Starting at 9.90% | 12 – 36 months | Learn more |
 514 Loans Personal Loan | $300 – $3000 | 22% – 32% | 3 – 4 months | Learn more |
 Credit Club Short Term Loan | $100 – $1,500 | $14 per $100 | Up to 62 days | Learn more |
 DMO Crédit Personal Loan | $300 – $1,000 | 28% – 35% | 90 days – 16 weeks | Learn more |
 Loan & Go Micro Loan | $250 – $1,250 | 29% – 32% | 3 – 6 months | Learn more |
 Prudent Financial Services Equity Personal Loan | up to $100,000 | 5.75% – 9.9% | Not listed | Learn more |
 Cash Depot Short-Term Loan | $300 – $3000 | 18% + fees | 6 months | Learn more |
 Financeit Personal Loans | $500 – $100,000 | Starting at 12.99% | Up to 60 months | Learn more |
 SimplyBorrowed Personal Installment Loan | $1,500 – $10,000 | Not listed | 12 – 60 months | Learn more |
 LM Credit Unsecured Personal Loan | $500 – $15,000 | 10.99% – 34.99% | 9 – 60 months | Learn more |
 Dashloans Personal Loan | Up to $1,250 | Up to 32% | 90 – 150 days | Learn more |
 Lamina Personal Loan | $300 – $1500 | Starting at 18% | 3 – 7 months | Learn more |
 Cash 4 You Installment Loan | $500 – $20,000 | Up to 34.37% APR | 6 – 84 months | Learn more |
 Eastern Loans Personal Loan | $500 – $750 | ~23% | 3+ months | Learn more |
 Captain Cash Personal Loan | $500 – $1000 | 23% | 90 – 150 days | Learn more |
 Loan Away Personal Loan | Up to $5,000 | 19.9% – 35% | 6 – 36 months | Learn more |
 Credit2Go Short Term Loan | $250 – $1,500 | 23.99% – 29.99% | 3 – 4 months | Learn more |
 Progressa Debt Consolidation Loan | $1,000 – $15,000 | 19% – 34.95% | 12 – 60 months | Learn more |
 LM Financial Personal Loan | Up to $15,000 | Not listed | Not listed | Learn more |
 Iceberg Finance Personal Loans | $1,000 – $35,000 | 12.99% – 29.99% | 12 – 84 months | Learn more |
 Afterpay Buy Now Pay Later | Varies | 0% | 6 or 8 weeks | Learn more |
 FlexMoney Installment Loan | $500 – $15,000 | Starting at 18.9% | 6 – 60 months | Learn more |
 Deposit My Cash Now Micro Loan | $300 – $3000 (first-time clients can receive up to $1,000) | 18% + fees | 6 months | Learn more |
 My Next Pay Micro Loan | $300 – $3000 (first-time clients can receive up to $1,000) | 18% + fees | 6 months | Learn more |
 Northstar Brokers Micro Loan | $300 – $3000 (first-time clients can receive up to $1,000) | 18% + fees | 6 months | Learn more |
 City Lending Centers (CLC) Micro Loan | $150 – $1,600 | 10 – 35% | 3 – 6 months | Learn more |
 Alterfina Cash Advance | $500 – $2,500 | 18.99% | Not listed | Learn more |
 APX Lending Crypto-Backed Loan | $10,000; no maximums | Not listed | 3 - 60 months | Learn more |
| Lender | Loan amount | Rate | Term | Details |
|---|---|---|---|---|
 iCash Payday Loan | Up to $1,500 | $14 per $100 | Up to 62 days | Learn more |
 CashMoney Payday Loan | Up to $10,000 | Up to 34.99% | Up to 60 months | Learn more |
| Magical Credit Payday Loans | up to $20,000 | 19.99% – 35% | 12 - 60 months | Learn more |
 Lenditt Payday Loan | $250 - $1,500 | $14 per $100 | Up to 62 days | Learn more |
 Wagepay Payday Loan | $100 – $1500 | $8 per $100 + 24% | Up to 62 days | Learn more |
 Mr. Payday Payday Loan | $100 – $1,500 | $14 per $100 | 14 – 31 days | Learn more |
 My Canada Payday Payday Loan | Up to $1,500 | $14 per $100 | Next payday, or the one after | Learn more |
 North’n Loans Payday Loans | $100 – $1,500 | $14 per $100 | Not listed | Learn more |
 Pay2Day Payday Loan | Up to $1,500 | $14 per $100 | Next payday, 42 days in Alberta | Learn more |
 GoDay Payday Loan | $100 – $1,500 | $14 per $100 | Next pay date, 14 – 30 days | Learn more |
 Loan Express Payday Loan | up to $1,500 | $14 per $100 | 14 days | Learn more |
 Focus Financial Inc. Payday Loan | $100 – $1,500 | $14 per $100 | Next payday | Learn more |
 Instant Payday Canada Payday Loan | Up to $1,500 | $14 per $100 | Up to 30 days | Learn more |
| Lender | Loan amount | Rate | Term | Details |
|---|---|---|---|---|
| Spring Financial Spark Loan | $100 – $2,500 | 28.9% (about 29.9% APR with the $1 access fee) May decrease as you unlock higher loan amounts | 12 months | Learn more |
 Bree Cash Advance | Up to $750 | 0% | Up to 90 days | Learn more |
 Nyble Line Of Credit | $30 – $250 | 0% | Not listed | Learn more |
| Lender | Loan amount | Rate | Term | Details |
|---|---|---|---|---|
 Canada Drives Car Loan | Up to $100,000 | 3.99% - 19.9% | 24 -96 months | Learn more |
 Clutch Car Loan | Varies | Varies | 24 – 96 months | Learn more |
 SafeLend Auto Loan Refinance | Min $10,000 | 6.93% – 19.99% | 18 – 96 months | Learn more |
| easyfinancial Car Loan | $500 – $150,000 | 9.99% – 34.95% | 9 - 240 months | Learn more |
 Car Loans Canada Car Loan | Not listed | Up to 29.99% | 12 – 96 months | Learn more |
 Eden Park Car Loan | Not listed | Not listed | Not listed | Learn more |
| Fairstone Financial Car Loan | Up to $50,000† | 19.99% – 34.99%* | 6 – 120 months | Learn more |
 Wippy Repair Loan | $500 – $10,000 | Starting at 0% | 3 – 48 months | Learn more |
 Auto Credit Deals Car Loan | $5,000 – $75,000 | Not listed | 12 – 96 months | Learn more |
| LendCare Car Loan | Up to $50,000 | Not listed | Up to 60 months | Learn more |
| Helium Loans Auto Loan | $500 – $50,000 | Varies | 6 – 60 months | Learn more |
 Carloans411 Auto Loan | Not listed | Not listed | 12 – 84 months | Learn more |
 2nd Chance Automotive Car Loan | Not listed | Starting at 4.2% | Not listed | Learn more |
 Dixie Auto Loans Car Loan | Not listed | Not listed | Not listed | Learn more |
| Prudent Financial Services Equity Car Loan | Up to $50,000 | Not listed | 6 – 48 months | Learn more |
 Prefera Finance Recreational Vehicle Loan | Not listed | Not listed | Not listed | Learn more |
 Royal Bank of Canada (RBC) Auto Loan | Starting $7,500 | Not listed | 12 – 96 months | Learn more |
| Min $7,500 | Not listed | 12 – 96 months | Learn more | |
 Desjardins Auto Loan | $7,500 + | Not listed | 6 – 96 months | Learn more |
 Auto Capital Canada Car Loan | Not listed | Not listed | Not listed | Learn more |
 Canada Auto Finance Auto Loans | $5,000 – $45,000 | 4.90 % – 29.95% | Not listed | Learn more |
 Coast Capital Savings Car Loans | Not listed | Not listed | Not listed | Learn more |
 National Powersports Financing Vehicle Financing | Not listed | Not listed | Not listed | Learn more |
 Rifco Auto Loan | Not listed | Starting at 12.9% | Not listed | Learn more |
 National Bank Auto Loan | Not listed | Not listed | up to 96 months | Learn more |
 Scotiabank Auto Loan | Up to $1,000,000 | Not listed | Up to 15 years | Learn more |
 Credit River Capital Inc Auto Loan | Not listed | Not listed | Not listed | Learn more |
 DealerPlan Financial Auto Loans | Not listed | Not listed | Not listed | Learn more |
 iA Auto Finance Auto Loan | Not listed | Starting at 10.99% | Not listed | Learn more |
 Leisure Trailer Sales RV Trailer Loan | Not listed | Not listed | Not listed | Learn more |
 Loans2Go Auto Loan | Not listed | Not listed | Not listed | Learn more |
 LMG Finance Auto Loan | Not listed | Not listed | Not listed | Learn more |
 Toyloan Auto Loan | Not listed | Not listed | Not listed | Learn more |
 Auto Loan Solutions Car Loan | Not listed | Up to 29.5% | Not listed | Learn more |
 Go Auto Car Loans | Not listed | Not listed | 36 – 96 months | Learn more |
| Iceberg Finance Auto Financing | $1,000 – $35,000 | 12.99% – 29.99% | 12 – 84 months | Learn more |
 TD Bank Car Loan | Up to $50,000 | Not listed | Up to 96 months | Learn more |
 Fix4 Capital Car Repair Financing | $250 – $10,000 | Starting at 14.99% | 12 – 36 months | Learn more |
 Santander Car Loan | Not listed | Not listed | Up to 96 months | Learn more |
| Lender | Loan amount | Rate | Term | Details |
|---|---|---|---|---|
 Alpine Credits Home Equity Loan | $10,000 – $500,000 | Starting at 10% | Not listed | Learn more |
| Spring Financial Mortgages | Borrow up to 80% of your home's value | Rates shopped across 40+ banks and lenders Usually no broker fee; any fee is disclosed before you sign | Not listed | Learn more |
 nesto Mortgage Loans | Min $110,000 | 4.14% – 6.29% | 24– 120 months | Learn more |
 Frank Mortgage Mortgage Loans | $100,000 – $2,000,000 | Varies | 12 – 60 months | Learn more |
 Lotly Home Equity Loan | $5,000 + | 6% – 16% | 12 – 60 months | Learn more |
 Meridian Credit Union Mortgage | Not listed | 4.19% – 8.00% | 6 – 120 months | Learn more |
 Neo Mortgage Neo Mortgage™ | Not listed | Not listed | Not listed | Learn more |
 Blue Pearl Mortgage Mortgage | Not listed | Not listed | Not listed | Learn more |
 Capital Direct Home Equity Loan | $10,000 – $3,000,000 | Varies | 12 – 24 months | Learn more |
| Prudent Financial Services Home Equity Loan | Up to $500,000 | Starts at 8.49% | Not listed | Learn more |
 Dominion Lending Center Mortgage | Not listed | Not listed | Not listed | Learn more |
 Manzil Mortgage | Not listed | Not listed | Not listed | Learn more |
 Mortgage Architects Mortgage | Not listed | 4.54% – 7.49% | 6 – 120 months | Learn more |
 Northwood Mortgage Mortgage | Not listed | 4.19% – 6.04% | 12 – 120 months | Learn more |
 Mortgage Alliance Mortgage | Not listed | 4.19% – 6.04% | 12 – 120 months | Learn more |
 First National Financial LP Residential Mortgage | Not listed | 4.49% – 6.63% | 1 – 10 years | Learn more |
 CanWise Mortgages | Not listed | 4.24% – 6.30% | Not listed | Learn more |
 CHIP Reverse Mortgage Reverse Mortgage | Not listed | Not listed | 12 – 60 months | Learn more |
 Equitable Bank Reverse Mortgage | Not listed | Varies | Not listed | Learn more |
 Matrix Mortgage Global Mortgage | Not listed | Not listed | Not listed | Learn more |
 Think Financial Mortgage | Not listed | Not listed | Not listed | Learn more |
 Tangerine Mortgage | $50,000+ | Not listed | 12 – 120 months | Learn more |
 True North Mortgage Mortgage | $150,000 – $1,500,000 | 2.99% – 5.49% | 6 – 60 months | Learn more |
 Verico Mortgage | Not listed | Not listed | Not listed | Learn more |
 Peoples Bank Mortgages | Not listed | 4.50% – 5.97% | 12 – 60 months | Learn more |
 Mortgage Intelligence Mortgage | Not listed | Not listed | Not listed | Learn more |
| Provider | Services | Details |
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| Lender | Loan amount | Rate | Term | Details |
|---|---|---|---|---|
 SharpShooter Funding Business Loan | $1,000 – $300,000 | Not listed | 12 – 120 months | Learn more |
 Merchant Growth Term Financing | $5,000 – $800,000 | Not listed | 6 – 24 months | Learn more |
 OnTap Capital Business Financing | $10,000 – $2,000,000 | 10%+ | Up to 36 months | Learn more |
 Primed Loans Business Financing | $10,000 – $20,000,000 | Not listed | Not listed | Learn more |
 Bizcap Working Capital | Up to 2 million | Not listed | Flexible | Learn more |
 Driven Business Loan | $10,000 – $300,000 | Not listed | 3 – 24 months | Learn more |
 Journey Capital Business Term Loan | $5,000 – $300,000 | 9% – 35% | Varies by product | Learn more |
 Lending Loop Small Business Loan | $ 1,000 – $500,000 | 4.96% – 24.93% | 1 – 60 months | Learn more |
 IOU Financial Term Loan | $15,000 – $1,500,000 | Not listed | 6 – 36 months | Learn more |
 iCommission Commission Advance | Up to $40,000 | $0.75 per $1,000 per day | Not listed | Learn more |
| Magical Credit Merchant Cash Advance | up to $20,000 | 19.99% – 35% | 12 - 60 months | Learn more |
| Helium Loans Business Term Loan | $500 – $50,000 | Varies | 6 – 60 months | Learn more |
 iCapital Commercial Loan | Up to $250,000 | Not listed | 3 – 24 months | Learn more |
 Canadian Equipment Finance Equipment Loan | $50,000 – $12,000,000 | Not listed | 24 – 96 months | Learn more |
 Easylease Corp Equipment Loan | Up to $5,000,000 | Not listed | 24 – 72 months | Learn more |
 Econolease Financial Services Inc. Equipment Leasing | $1,000 – $1,000,000 | 6% – 20% | Not listed | Learn more |
 FundThrough Invoice Financing | $500 – $50,000 | 2.75% – 8.25% | 12 week cycles | Learn more |
 Lease Link Working Capital Loan | Up to $250,000 | Not listed | Up to 48 months | Learn more |
 Money in Motion Equipment Loan | $10,000 – $1,000,000 | 4% – 14% | 12 – 84 months | Learn more |
 Money Line Capital Equipment Financing | $5,000+ | 4.9% – 24.99% | 18 – 48 months | Learn more |
| Royal Bank of Canada (RBC) Business Loan | Starting at $5,000 | Not listed | Up to 84 months | Learn more |
 Canadian Imperial Bank of Commerce (CIBC) Business Loan | Up to $1,000,000 | Not listed | Up to 15 years | Learn more |
| Desjardins Business Loan | Up to $100,000 | Not listed | Not listed | Learn more |
 DUCA Credit Union Business Loan | Not listed | Not listed | Not listed | Learn more |
 PACE Credit Union Business Loan | Not listed | Not listed | Not listed | Learn more |
 BarterPay Barter Loan | BP 2,500 – BP 100,000 | Not listed | 6 – 60 months | Learn more |
| National Bank Business Loan | Up to $1,000,000 | Not listed | Not listed | Learn more |
 B2B Bank Investment Loan | $10,000 – $300,000 | Not listed | Not listed | Learn more |
 Bank of Montreal (BMO) Business Loan | Up to $500,000 | Not listed | Up to 15 years | Learn more |
 BDC Business Loan | Up to $100,000 | Not listed | Not listed | Learn more |
| Scotiabank Business Loan | Up to $1,000,000 | Not listed | Up to 15 years | Learn more |
 CanaCap Merchant Cash Advance | Up to $250,000 | Not listed | Not listed | Learn more |
 Laurentian Bank of Canada Business Loan | Up to $250,000 | Not listed | Up to 10 years | Learn more |
 Essex Lease Financial Corporation Equipment Loan | Not listed | Not listed | Not listed | Learn more |
 Export Development Canada Commercial Financing | Not listed | Not listed | Not listed | Learn more |
 Leaseline Equipment Leasing | Not listed | Not listed | 24 – 60 months | Learn more |
 Peel Financial Equipment Loans | Not listed | Not listed | Not listed | Learn more |
 Core Capital Group Inc Equipment Financing | Not listed | Not listed | Not listed | Learn more |
 Loop Business Line of Credit | Not listed | Not listed | Not listed | Learn more |
 Accelerated Payments Invoice Financing | Not listed | Not listed | Not listed | Learn more |
| TD Bank Business Loan | Not listed | Not listed | 12 – 60 months | Learn more |
 2M7 Financial Solutions Merchant Cash Advance | $1000 – $250,000 | Not listed | Not listed | Learn more |
 Advance Funds Network Business Term Loans | $10,000 - $1,000,000 | 12% + | 3 - 24 months | Learn more |
| Lender | Loan amount | Rate | Term | Details |
|---|---|---|---|---|
 BHM Financial Title Loan | Up to $50,000 | Not listed | Not listed | Learn more |
Rates last checked: October 2026
In Ontario’s rural communities, public transit is typically limited or even nonexistent. In places like these, owning a car is essential for getting to work, grocery shopping, taking the kids to school, and accessing medical services. While public transportation in Toronto and other big cities across the province is accessible, you may still need a car, especially if you have small children or are living with a physical disability.
That said, buying a car is not easy, especially given the rising cost of the average car. Thankfully, car loans can help spread the cost.
What To Expect When Getting A Car Loan?
Before applying for a car loan, it’s helpful to understand the factors that make up vehicle financing:
| Interest Rates | Varies based on your credit and finances. Generally, rates range between 5% – 8%, though they may be as high as 35% APR. |
| Loan Terms | 12 – 96 months |
| Loan Amounts | Depends on the lender, your credit, income, down payment and the vehicle age and condition (if buying used). |
Learn more: Best Car Loans In Canada
Are You Eligible For A Car Loan?
To qualify for vehicle financing in Ontario, you’ll need to meet the following criteria:
- Debt-To-Income (DTI) Ratio: Your lenders will check how much of your monthly income is dedicated to your existing debt. Usually, a DTI ratio of 32% or lower is recommended to increase the chances of loan qualification.
- Down Payment: A down payment of 10% to 20% is generally recommended. However, some lenders may allow you to finance the full cost of the car.
- Credit History: A hard credit check is usually required. Most lenders want to see a credit score of 660 or more. That said, some lenders may accept much lower scores.
When applying, you may need to provide certain documents such as:
- A valid Ontario driver’s licence
- Proof of residency
- Proof of income (pay stubs, employment letter, or tax returns)
Can You Get A Car Loan As A Newcomer?
As noted, your credit score plays a role in your ability to get a car loan. Unfortunately for newcomers to Canada, it’s not possible to bring their credit from their home country to Canada. Instead, they need to build credit in Canada from scratch.
Fortunately, this doesn’t have to be a barrier to auto financing. Newcomers to Canada can still be eligible for car loans, even without an established credit history. Many major banks and online lenders have programs tailored for newcomers, focusing on other criteria, like income, debt, and job security.
| Can You Get A Car Loan With Bad Credit? Yes, you can get a car loan in Ontario even with bad credit; however, you may have fewer options and will pay higher interest rates. You may have difficulty getting approved by traditional banks, but many alternative lenders and specialized car dealerships offer financing solutions specifically designed for borrowers with bad credit. |
Where Can You Get A Car Loan In Ontario?
Multiple sources are available for car financing in Ontario, including the following:
Manufacturer Financing
Auto manufacturers often offer loans directly through their own financial arms, like Toyota Financial Services. These programs often come with attractive incentives, such as 0% interest rates or cashback offers.
Manufacturer financing is most suitable for buyers who are purchasing a new vehicle directly from a specific brand, want to take advantage of promotional deals, and have good credit.
Dealership Financing
While most dealerships offer financing through their network of partnered lenders, some may offer in-house financing, which involves the dealership financing the loan directly. Dealership financing is a convenient option, since the shopping and financing processes are done in one place.
Dealership financing can be particularly useful for those with bad credit and those looking to buy a used car.
Banks
If you want bank financing, you generally have two options:
Private Party Auto Loan
When purchasing a used car directly from another individual (not a dealership), you can apply for a private party car loan directly with the bank. However, there may be certain requirements, such as a minimum loan amount and the age and condition of the car.
Bank Car Loan
If you’re looking for bank financing for a car from a dealership, you generally must apply with a partnered dealership instead of the bank. Most big banks partner with dealerships across Ontario to streamline the auto financing process for car buyers. Simply visit a dealership and request bank financing after you’ve chosen your vehicle. Dealership staff can take care of the application process by dealing with the bank.
You can even apply online, using a digital tool to facilitate the process. For example, the TD Wheels App allows you to browse available vehicles for sale, estimate monthly payments, and apply for financing directly online. This is especially convenient for those who prefer to shop and apply entirely online without physically visiting a dealership.
Private Lenders
Private lenders tend to offer more flexible approval requirements and are more willing to work with bad credit borrowers. However, interest rates tend to be higher among private lenders, especially for those with poor credit histories.
If you’re struggling to get financing due to bad credit, a private lender can be a good choice.
How To Apply For A Car Loan?
To apply for a car loan in Ontario, follow these steps:
- Step 1: Compare Lenders. Compare loan quotes or use an online platform like Loans Canada to find lenders who are willing to work with someone with your financial and credit profile. Doing so will help find the best deal on car financing to save you money and fit with your financial comfort level.
- Step 2: Start Shopping. Based on your loan options, begin searching for a vehicle that fits your budget.
- Step 3: Finalize Financing. Once you find the right car, you can finalize the loan with your lender or dealership. Carefully review the loan agreement, paying attention to the interest rate, term length, and any additional fees before signing.
Be Sure To Consider The Following When Getting A Car Loan
There are plenty of factors to consider before applying for vehicle financing in Ontario, including the following:
Can You Afford To Buy A Car?
In Canada, the average price of a new car is currently $65,219, and for used vehicles, the average price is $34,445. So, can you afford to make this purchase? This is an important question to ask before you commit to a financing agreement.
Not only should you consider the purchase price and financing rates of a vehicle loan, but you should also factor in other costs of ownership, like gas, insurance, maintenance, and repairs.
To help you understand what you can afford, you can use the 20/4/10 rule, which is based on the following:
- 20% Down Payment: Making an upfront payment of 20% of the purchase price of the car can reduce your loan amount and monthly payments, while minimizing the potential for getting into “negative equity” territory.
- 4-Year Term: Keep your loan term to 4 years or less to avoid higher interest costs and strain on your finances.
- 10% Percentage Of Your Income: Ideally, your car-related expenses shouldn’t exceed 10% of your net income to maintain financial stability.
Learn more: How Much Car Can I Realistically Afford?
Check The Car History (For Used Cars)
Checking a used car’s history helps you discover past accidents, repairs, or ownership changes that could affect its safety or reliability. A vehicle history report can also protect you from hidden issues like salvage titles or unpaid liens. By reviewing the car’s history, you can make a more informed buying decision and avoid paying more for a car that won’t last.
Look For 0% Car Financing Deals
Sometimes car dealerships offer 0% financing deals as incentives to attract car buyers. This is a great way to keep financing costs as low as possible.
It’s important to keep in mind that these deals may only be offered every so often and may not always be available. They may also be restricted to specific models, and may only be accessible to those with excellent credit.
Watch Your Down Payment To Avoid Negative Equity
Negative equity happens when the value of your car is less than what you still owe on the car loan. Also referred to as being “upside down” on a loan, negative equity can make things difficult for you if you plan to sell the car in the future, or if the vehicle is involved in a collision and an insurance claim is filed.
One way to avoid the potential for negative equity is to make a large down payment upfront, which gives you instant equity in the car.
Should You Buy New Or Used?
Buying new or used each comes with its own perks and drawbacks:
- Buying New: When you purchase a new car, you might pay more and will have to deal with rapid depreciation early on. But, you’ll get the latest technology, full warranty, and fewer trips to the mechanics over the first few years.
- Buying Used: A used car is typically more affordable and depreciates more slowly. However, it may require more maintenance and come with less warranty coverage.
Your Rights When Buying A Car In Ontario
You have rights when you buy a new or used vehicle from a registered dealer in Ontario:
- No Cooling-Off Period: Before signing a vehicle contract in Ontario, make sure you’re certain about your decision, as there’s no cooling-off period. That means most contracts are legally binding right off the bat.
- 90-Day Contract Cancellation: You can cancel the contract within 90 days only if key information is missing or inaccurate.
- All-Inclusive Pricing: Dealer ads must show an all-inclusive price and disclose if the car was previously used as a rental, police, emergency, or taxi vehicle. Manufacturer ads don’t have to follow these rules.
- Seizure Of Financed Cars: Once you’ve paid off two-thirds of the loan amount, your vehicle cannot be repossessed or resold without a court order.
Learn more: Ontario.ca
Costs To Consider When Buying A Car
The total cost of a car involves much more than just the ticket price. Be sure to factor in the following costs before making a purchase:
- Registration Fees: The primary vehicle registration cost in Ontario is $32 fee for a vehicle permit. New license plates cost an additional $59.
- Car Sales Tax: You’ll need to pay 13% HST on the purchase price of the vehicle. Do note that in Ontario, you can transfer vehicle ownership to a family member without paying retail sales tax. You’ll need to visit a ServiceOntario centre to complete this transfer.
- Car Insurance: It’s mandatory to have insurance on your vehicle in Ontario. The cost of car insurance varies based on factors such as your age, gender, address, driving record, and claims history. That said, the average cost of vehicle insurance in Ontario is currently $1,528, with prices on the rise.
- Dealership Fees: Car dealerships may charge the following fees that you should be aware of:
- Freight charges
- PDI-PDE (pre-delivery inspection/expense)
- Administration/documentation fees
- Government levies
- Tire levy fees
- Advertising fees
- Brokerage fees
- Loan Costs: Don’t forget to calculate how much your car loan costs. Consider the interest rate, term, and potential fees such as late or early prepayment fees.
Alternatives To A Car Loan
Aside from a traditional car loan to pay for a vehicle, there are other ways to cover this big purchase:
- Pay In Cash: Paying upfront means you can avoid interest charges, monthly payments, and credit checks. You may even use your position to negotiate a lower price. Plus, paying in cash will help you avoid the risk of negative equity.
- Lease: Leasing allows you to drive a new car every few years with lower monthly payments compared to a traditional car loan. Just be mindful of mileage limits and wear-and-tear charges.
- Public Transportation: Taking the bus or train is a cost-effective alternative to owning a car, especially if you live in an urban area. You can avoid loan costs, maintenance, insurance, parking fees, and gas entirely.
Final Thoughts
Auto loans in Ontario offer a convenient way to cover the cost of a vehicle purchase, but it’s important to understand rates, terms, eligibility, and affordability. Be sure to shop around for car prices and lender options before committing to a car loan. Whether you’re financing through a bank, dealership, or private lender, making a more informed decision can lead to financial preparedness.
