Understanding Car Loans

Car Loans don’t have to be complicated. Here’s everything you need to know about getting a car loan in Canada.

Buying a vehicle is one of the most expensive purchases you can make. Many times, a consumer must seek financing through a car loan in order to purchase a new vehicle. There are three main components that make up the payments for a car loan in Canada.

The Principal

The total cost of the vehicle you intend on purchasing, including any fees or add-ons that you may have added to the purchase.

The Term

The length of time that you intend to pay your car loan. You can generally choose between 12 to 96 months. Typically, longer terms result in lower monthly payments, but have higher interest rates.

The Rate

The percentage rate that the lender is charging you to borrow money. Interest rates vary depending on the vehicle, the term, and the borrower’s financial situation.

What Do You Need To Get a Car Loan in Canada?

Driver’s License

It is necessary to have a driver’s license and be of legal age of 18 or 19, depending on your province.

Income Source

Typically you need to be employed and be at your current job for three or more months, however other sources of income can also be accepted.

Monthly Income

Generally, the minimum income to qualify for a car loan is $1,800/month before deductions (CPP, EI, etc.). However a co-signer can assist you in obtaining a car loan if you don’t make the minimum monthly amount.

Bank Account

Lenders prefer to take payments out of your bank account each month. A void cheque or a pre-authorization form may be required.

Home Address

Lenders will need to know your current address, along with your monthly rent or mortgage payments

Contact Details

Lenders prefer to take payments out of your bank account each month. A void cheque or a pre-authorization form may be required.

Securing a car loan can seem complicated and time consuming, but Auto Clinch simplifies this process. We will help you get pre-approved and walk you through all the necessary step in order to secure a car loan for your perfect vehicle.

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