How To Finance a Used Car in Canada? Need To Take Care Few Things

How To Finance a Used Car in Canada? Need To Take Care Few Things

January 2023

Driving a car in Canada is now a requirement for both personal and professional lives.

If you want to have a car, you have a few options:

Buy a car
Lease a car
Finance a car

Many Canadians do not have enough money to buy a car outright, leaving them with two options: lease or finance the vehicle.

Leasing means driving a car freely as long as you abide by the conditions, but the ownership rights are not up to you. However, financing means you are purchasing ownership of the car by signing up for a payment plan.

Car financing can be an ideal solution if you want ownership. Let’s explore it more in detail.

What is Car Financing?

Car financing in Surrey, BC, involves a lender extending credit equal to the total cost of the vehicle. In this method, the car is used as a security to protect lenders from defaults on payments. In case the customer defaults on making payments, the lender has the right to repossess the car.

The lender can be a credit union, car dealer, online lender, or any other lending institute.

The financing process involves calculating

-Loan term
-Rate of interest
-Monthly payments

Note: Once you finish your payment, you will possess ownership rights.

Difference Between Used Car Financing and Brand New Car Financing

No doubt, buying a brand new car has its benefits, like lower repair and maintenance costs. Also, one has to pay less for the car’s warranty. These things will provide you with peace of mind.

The downside of financing a new car is that you have to pay comparatively high-interest rates over some time. It should be noted that if you want to get yourself approved, you need a good credit score.

While considering the benefits of a used car, the most noticeable benefit is that the purchase price is much lower. A lower purchase price means you will have to pay a lower rate of interest.

For How Long Can a Used Car Be Financed?

In general terms, the length of car finance in Surrey is not specific but 72 to 84 months are becoming common. You can negotiate and finalize the term and conditions that the lender and buyers agreed on.

The increased duration of a used car loan is because of the following factors:

It creates less stress on the wallet. The longer the term of a loan means you can stretch out payments more. Thus, making monthly payments lower.
There are some repair and maintenance costs associated with a used car. If you are making payments on a 5-year-old car it will have some depreciation cost that needs to be balanced with a lower rate of interest.

Documents Required For Used Car Financing in Canada

When it comes to car financing every lender has its unique requirements. If a candidate doesn’t meet the basic requirements, chances are the application will get rejected. Here are some important documents that you need to finance a car.

Proof of Canadian residency
An identification card issued by the government.
Proof of insurance.
Proof of income, including down payment funds
Car Financing Options

Car Financing Options

Car financing is a car loan agreement between a candidate and a particular institute where an individual agrees to pay back a monthly payment with the end goal of having ownership of a car. Here are some most important car financing options discussed below.

Dealership Financing

Car dealers have their own financing departments for their clients.

This is a convenient option for those who want to process their payments quickly. It also opens up financing options for those who have a poor credit history.

Bank Loan

Going to your bank for car finances is also a worthwhile option because you are dealing with someone who knows you and your credit portfolio.

Banks can take care of your considerations while evaluating your eligibility.

However, banks have various strict norms while considering your eligibility. Banks would offer certain specific packages, based on their norms and you might get a lesser amount than you required.

Credit Union

As credit unions are non-profit organizations so they offer low-interest rates on car financing.

However, the major drawback of credit unions is their accessibility. Many credit unions require membership for utilizing their services. To become a member you have to pay a certain amount of fees, open a new account, and meet their other requirements.

Online Car Financing Marketplace

In the online financing marketplace, one can easily compare loan companies; their plans, charges, and other terms. You can choose the best-suited option.

However, there is also a major drawback that it lacks the personal touch and negotiation becomes difficult.

From all the above options,

Financing from a car dealership works best.

As dealers are in the business of selling as many cars as possible so they work best according to the buyer’s need.
Approve an individual with any credit history.
Gives personal touch.
Offers low financing rates.

How Can a Candidate Find the Best Car Financing Deals?

To get the best deal for car financing in Surrey BC, you will have to carefully look at the specifications that your lender is offering you. Before analyzing you first have to calculate how much down payment you can give comfortably each month so that it doesn’t stress your budget.

After calculating your budget, the two main things you must focus on are

1. Loan’s term

2. Interest rates

Considering loan terms will tell you how faster you will own your car

The loan term is defined as the duration of the loan, i.e., how much time would the borrower take to pay the loan?

Short loan term

Long loan term

– Low-interest rate

– High monthly payment

– Quick ownership

-High-interest rates

-Low monthly payments

-Delayed ownership

Interest rate

The lower it is the better it is.

For lower interest rates, improve your credit score or make a higher down payment.

Benefits of Car Financing

It is a great way to get steering wheels quickly on your hands.

There are a few potential benefits of it which are discussed below.

Buy Your Own Dream Car

Car financing in Surrey BC is a great way to afford a car that you really want. This is because of the fact that if you have good credit, dealership lenders can easily figure out the best financing deal for you regardless of the price of the vehicle.

Improve Your Credit Score

If you have a bad credit score and are looking to improve it. Car financing can help it. If you are able to make your payments consistently on time, your credit score will improve.

Equity Building

Every payment you make for your car puts you one step closer to building equity. When you have completed all your payments you will have 100% equity in it.

Lower Insurance Rates

With a car financing option you can get lower insurance rates.

Are Bad Credit Candidates Eligible to Finance a Car?

Even if a candidate has a bad credit score still there are many options available to finance a car.. Banks and other traditional lenders can decline your application considering you are not eligible to repay the loan amount.

That’s why more Canadians are exploring car dealers’ options where one can get easily approved despite the credit history.

Contact Skyline Auto Group with almost any credit score. We have more than 150 used cars in our inventory at discounted prices.

Buy your own used car and finance it from us.

Get ready to hit the road.
You are just a few clicks away!!!

Contact Information

 Phone: 604-503-2886

 Phone: 604-591-8322

7237 King George Blvd
Surrey, British Columbia

 Business Hours:

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