Car Loans Sherbrooke
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Written by Bryan Daly
Best Car Loans Sherbrooke (Online) August 2021
Note: Loans Canada does not arrange or underwrite mortgages or any other financial service. We are a simple referral website that provides free educational resources to help Canadians make better decisions.
Although Sherbrooke is a large town, it’s also located in a rural part of Quebec, meaning cars, trucks, and other vehicles are necessary for many residents to get around. That’s right, whether it’s to commute to work, to get your groceries home, or to go on a road trip, a reliable car is a commodity for a lot of Canadians out there.
Nevertheless, anyone who owns a car will tell you how expensive it can be to purchase, fuel, and maintain throughout the years. While many of these costs are manageable, sometimes financing is required to make the overall price of the vehicle more affordable over time. Luckily, that’s exactly what a car loan is for.
Common Reasons to Apply For a Car Loan
Why would you apply for a car loan in Sherbrooke? The answer can vary, of course, but the main reason is so that you can gradually purchase a newer or more expensive vehicle through payments, rather than all at once. After all, even a lightly used car can retail for well over $10,000 and that’s not including the interest and fees that you may be charged along the way.
If not for the overall cost, you may want to apply for a car loan because:
- Your old vehicle is broken down or unreliable
- You’re looking to upgrade to a nicer model or downgrade to a cheaper one
- Repairing and/or maintaining your current model is too expensive
- You’re buying a second vehicle for your child, partner, or another family member
- Your family is expanding, so you need a bigger, safer vehicle
- You have to drive a lot for work
When searching for financing, you’ll typically have two choices. The first would be to apply for a loan through your bank or other lending institution, then repay it through installments over several months to several years. Alternatively, many dealerships offer their own in-house financing programs. Be sure to speak with a financial advisor before you make your decision, as both options have their benefits and drawbacks.
Trading In Your Current Vehicle
Another situation that could cause you to apply for a car loan in Sherbrooke is a trade-in. Essentially, this is when a dealership accepts your used vehicle in exchange for a reduced price on the model you’re interested in buying. As long as they can resell your car at a profit someday, many dealerships will make these kinds of agreements.
Before you attempt a vehicle trade-in, there are a few things you should consider:
- Many less reputable dealers will low-ball you on the price and try to get your vehicle for less than it’s worth, then sell you an unreliable vehicle.
- So, it’s smart to check what similar makes and models are selling for online, then get your vehicle inspected by an outside mechanic to learn it’s true value.
- If the car seems fit for a trade-in, be sure to clean it properly and get any necessary repairs done so it commands as much value as possible.
- Organize any paperwork you have on the vehicle (registration, accident reports, etc.) and make sure the dealer provides the same documents for your new car.
- Even if your dealer is reputable, most vehicles depreciate rapidly in value, so it’s unrealistic to expect top-dollar for your car, regardless of where you trade it in.
- Depending on the make, model, condition, and mileage of your current vehicle, you may only receive a few hundred to a few thousand dollars off your next one.
Despite all these factors, a trade-in can be a great way to reduce the price of a new or slightly used vehicle that would otherwise be unaffordable. It’s just important to set your expectations appropriately and do all the research you can prior to signing any contracts. That way, you can get every dollar possible out of the deal.
Vehicle Title Loans
As mentioned, a traditional car loan is a lump sum of money that you can apply for through your bank or another lender. However, many lenders can also offer you a vehicle title loan. This type of financing allows you to temporarily sign over the title of your current car and use it as collateral in exchange for a loan.
Since this loan is liquid cash, you can use it for almost any expenses that come your way. That said, before you apply for this kind of financing, keep in mind that the loan will be secured against the vehicle, meaning the lender is allowed to repossess it if you miss too many of your upcoming payments.
In addition, you must fully own the car’s title and there must be enough residual value in the vehicle itself for the lender to sell it if you go into default.
Bad Credit Car Loans
If you have a bad credit score (300-600), it’s likely the result of too many missed payments in the past, loss of employment, identity theft, or other problems related to your unpaid debts. As a result, your options will be more restricted when it comes to the credit products that you’ll qualify for.
Don’t worry, because there are still numerous ways to get approved for a car loan in Sherbrooke, including but not limited to:
Applying With The Right Lender
Unfortunately, many prime lenders, such as banks, will not approve you because of their tighter borrowing standards. Thankfully, there are plenty of subprime lenders in Quebec who can offer you a smaller, higher-interest loan, as well as many dealerships with bad credit in-house financing programs. Just make sure that your chosen lender is a legitimate source of financing with a good reputation among their customers.
It’s also a good idea to choose a lender that reports to at least one of Canada’s credit bureaus (Equifax or TransUnion) so that any payments you make will show up on your credit history and gradually increase your credit score.
Offering A Sizeable Down Payment
Another way of earning better loan approval odds and conditions when you have bad credit is to come up with a large down payment of 10%-20% of the vehicle’s final asking price. Not only will this help reduce the length of your repayment plan, but your lender might also consider you less risky, so you could be eligible for a lower interest rate.
Finding a Cosigner or Offering Collateral
If your creditworthiness still isn’t strong enough, you can also get a stronger borrower to co-sign your application and agree to take over your car payments if you can’t afford them. Alternatively, you can offer up one of your assets, such as another vehicle, so your lender has some collateral to sell if you one day go into loan default.
Improve Your Finances
In the end, the main thing your lender or dealership needs to confirm is that you’ll make your car payments on time. So, even if you have bad credit now, it may be easier to get approved for a favourable car loan if you have a solid income and a decent amount of savings to cover your payments during any financial emergencies that arise.
Vehicles You Can Finance With a Car Loan
Remember, any vehicle can be expensive, especially when you consider the base price, the interest, and any costs that recur throughout the years. So, before you apply for a car loan in Sherbrooke, be sure to tally up these costs and factor them into your budget to know if you can afford them when coupled with your other expenses.
If your finances and credit are healthy enough, then there are plenty of car brands that your loan can help finance, such as:
You can also use this type of loan to finance most recreational vehicles, such as:
- Jet Skis
- All-Terrain Vehicles
Finding The Right Car Loan
If you’re looking for a car loan in Sherbrooke, don’t hesitate to reach out to the experts at Loans Canada. We can put you in contact with the best vehicle financing plans, dealerships, and lenders in your area.