RRSP vs. RSP
Often the the terms RSP and RRSP are used interchangeably, which can be correct, but it depends on the context.
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Whether you live in the city, suburbs, or the country, there are plenty of reasons to want a dependable vehicle. However, if you’re looking for something that’s safe, fuel-efficient, and that will last you more than a few years, chances are it’ll have a price tag that matches, which is where a car loan can be extremely useful.
In fact, a solid amount of financing can help you purchase a very nice hatchback, sedan, SUV, or truck. What’s more, there are a ton of lenders and dealerships across Canada that can give you an affordable car loan this year. You just need to know where to look.
Essentially, a car loan helps you finance a vehicle over several years using divided installments. This can make the car more affordable overall because you won’t have to shell out tens of thousands of dollars at once.
Nonetheless, there are many different costs that you’ll encounter after you’ve been approved, not including the expenses that come with the average vehicle. These costs can include but aren’t restricted to your:
A down payment is usually optional, depending on where you apply. However, most experts recommend that you put down at least 10% – 20% of the vehicle’s final asking price. While a down payment isn’t affordable for everyone, it can be particularly beneficial when financing a newer or more expensive model.
Not only can a larger down payment reduce the size and length of your debt, but it can also help you qualify for a lower interest rate. Plus, it will let your auto dealer know you’re a serious buyer, so they may offer you a few extra perks.
Interest is what lenders and dealerships charge in exchange for you borrowing from them. The rate you end up paying can fluctuate depending on where you apply, what kind of vehicle you’re financing, and how strong your finances are. There are also two types of interest rate you may encounter:
The length of your loan term and the size of your payments can also significantly affect the amount you pay by the end of your car loan. After all, your vehicle’s advertised price won’t actually be its final cost, once you factor in fees and interest.
For instance, while a longer term and small payments can be more affordable at first, you would pay more interest and fees overall. Larger payments are harder on your budget, but typically help you pay off the car faster. Either way, you should be careful not to take on a repayment plan that you cannot handle.
There will also be several fees included with your car loan, which can also vary depending on where you apply and the conditions of your repayment plan. For example, traditional lenders, like banks, often charge for administrative services, such as loan origination.
If you apply for in-house financing through a dealership, you may also encounter fees for documentation, licensing, and pre-delivery costs. In some cases, these are one-time fees to be paid when your term ends, in others, they are applied on a per-payment basis. Ask your car loan provider for a price quote before you sign any contracts.
Amount | Interest | Term(Months) | ||
![]() | $500 - $50,000 | Up to 46.96% | 12 - 84 | Learn More |
![]() | $500 - $35,000 | $29.99% – 46.96% | 9 - 60 | Learn more |
![]() | $500 – $10,000 | 12.99% – 39.99% | 9 - 36 | Learn more |
![]() | $5,000 - $40,000 | Varies | 12 - 72 | Learn more |
![]() | $7500 - $59,995 | 3.95% + | 12 -96 | Learn more |
![]() | $5,000 - $45,000 | 4.90 % - 29.95% | 36 - 72 | Learn more |
![]() | Varies | 11.9% + | 12 - 84 | Learn more |
![]() | Up to $50,000 | Varies | 12 - 84 | Learn more |
Luckily, there are many places in Canada where you can apply for a car loan. Each of these lending sources has different benefits, drawbacks, and approval requirements, so be sure to compare them properly prior to applying:
These days, there is an increasing number of car loan transactions conducted online. In fact, almost every lender now has a webpage where you can create an account, apply, and make payments. Alternative lenders like this can also be a good option because they often have easy requirements, so borrowers with bad credit and low incomes won’t have as much trouble qualifying.
If you’d prefer a more traditional approach, many banks and credit unions can also offer you vehicle financing. Some borrowers prefer financial institutions because they are generally more secure and offer better rates than alternative lenders. However, drivers with weaker finances and credit may find it difficult to get approved.
There are also thousands of dealerships that can provide you with in-house financing, so you can pay them directly and avoid having to apply for a loan. Like alternative lenders, car dealerships will usually have less restrictive approval requirements if it means making a sale but can charge slightly higher rates.
As mentioned, every lender and dealership has its own loan requirements. However, there are a few personal and financial details that you’ll have to provide to qualify the best car loan in 2021, such as your:
Although your credit score may be less significant for some lenders and dealerships, you may also have to fill out a credit application, so they can check your credit report. The healthier your credit is, the easier it will be to get approved for a car loan with a decent interest rate and repayment plan.
Remember, getting approved for the best car loan is all about your financial health. The more chance you have of making payments on time, the better the result. As such, it’s important to prepare yourself by taking the following measures:
If your finances or credit aren’t good enough, you can also strengthen your application by finding a stronger borrower to cosign it. While this is usually optional, a cosigner gives your lender a way to protect their investment, since they will be agreeing to take over your payments if you cannot afford them.
Just be careful, because your cosigner’s finances and credit could be negatively affected if they become responsible for your car loan, but also can’t make payments.
Cars come in all shapes, sizes, and costs. That said, if you want the best deal on your car loan, here are a few extra tips to help you find it:
Loans Canada can help make your search easier. Whether you’re looking to finance a new or used car, we can connect you with the right lenders and dealerships in your area.
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Often the the terms RSP and RRSP are used interchangeably, which can be correct, but it depends on the context.
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