Navigating the waters of auto financing can be tricky, especially if you’re new to Canada, struggling with credit issues, or just stepping into adult life. However, the journey becomes a lot less daunting when you can separate fact from fiction. In a financial climate where bad credit car loans are increasingly becoming the norm, it’s essential to bust some myths that could discourage or mislead potential car buyers. Let’s take a closer look at the truth behind these myths.
Myth 1: Short-Term Loans Are Premium
Contrary to popular belief, long-term loans can sometimes be more financially prudent. While it’s true that you may pay more in interest over time, the manageable monthly payments can fit better into your budget. It’s crucial to weigh the [...]
In Canadian society, owning a vehicle is often considered a necessity. Whether it’s for commuting to work, running errands, or road-tripping across our expansive landscapes, cars play a significant role in our daily lives. However, the financial responsibilities associated with owning a car can be daunting, especially for newcomers, those with credit issues, or recent graduates.
While public transit may be an option, many prefer the convenience that comes with owning a car. Unfortunately, the real cost of a vehicle goes beyond the initial sticker price, and many end up with negative equity in their car loans. If you find yourself in this situation or fear you might be heading there, this article is for you.
What Does Being “Upside Down” On Your Car Loan Mean?
Debunking Common Misconceptions About Auto Loans in Canada Table of Contents
Common Misconceptions About Auto Loans
Focusing Only on Monthly Payments
If Approved, You Can Afford It
Dealership Rates Are Non-Negotiable
The Dangers of Being “Upside Down”
Refinancing Isn’t Worthwhile
If you’re considering purchasing a new or used vehicle in Canada, there’s a high likelihood that you’ll require financial assistance to make that acquisition. Recent statistics show that approximately 56% of new vehicles and nearly half of used vehicles purchased in recent quarters were financed through loans. On average, these loans exceeded $30,000 for new vehicles and were close to $20,000 for used vehicles. In this article, we’ll debunk some common misconceptions surrounding auto loans that could save you money and stress, especially if you’re a newcomer to Canada, grappling with credit issues, or a recent graduate.
Why pay more than your car is worth when you can settle your car loan early? Approximately seven out of 10 people borrow money to buy their cars, and a car loan is one of the largest financial obligations you can have. If you’re one of them, you may have a loan that will take you 60 or 72 months to pay off. That’s five to six years! That’s too much interest to want to pay. So, we want to help you get out from under that loan faster and save money on interest by providing you with multiple ways to pay off your car loan early. Apply for a car loan today.
Pay Half Your Monthly Payment Every Two Weeks
This strategy may seem like a wash, but if your lender allows you to do it, you should. With a payment every two weeks, you’ll end up making 26 half-payments each year. That [...]
Navigating the labyrinthine world of loans can be a daunting task, especially when you’re unable to secure a cosigner. Whether you’re a newcomer to Canada, a recent graduate, or someone with a history of financial difficulties, understanding how to get approved for a loan without a cosigner is crucial. This comprehensive guide aims to equip you with the knowledge and strategies to improve your chances of loan approval, all while maintaining your financial independence. Apply for a loan today.
Cosigning is often suggested by lenders as a way to strengthen your loan application. In this arrangement, the cosigner agrees to take on the responsibility of repaying the loan if you default. While this can be advantageous, it’s not always feasible or desirable [...]
Monitor Your Credit with Borrowell and Credit Karma
Identifying the Root Cause of Your Credit Problem
Understanding the root cause of your credit issues is the first step towards financial freedom. Whether it’s due to unforeseen circumstances like medical emergencies or unemployment, or more controllable factors like overspending, identifying the root cause is crucial. Consult your credit report to start.
Creating a Budget
Financial discipline begins with budgeting. A well-structured budget can be your roadmap to improving your credit score. Allocate funds for essential expenses and savings to ensure you’re not living beyond your means.
Paying Off Your Debt
Once you have a budget, the next step is to focus on debt reduction. Prioritize debts with higher interest rates to save [...]
So, you’ve found yourself in a situation where you need a vehicle but don’t have the funds to purchase one outright. Don’t worry; you’re not alone. Most Canadians, especially newcomers and those with credit challenges, find themselves in a similar predicament. This is where car loans come into play. But before you dive into the world of auto financing, it’s crucial to understand the basics. This article aims to guide you through the essentials of car loans, ensuring you’re well-equipped to get the best deal possible. Apply for a car loan today.
Understanding Car Loans
A car loan is a type of personal loan where the lender provides the funds needed to purchase a vehicle. Unlike unsecured loans, car loans are [...]
When it comes to purchasing a vehicle, especially for newcomers to Canada or those with credit challenges, understanding the intricacies of car financing is crucial. While many focus on negotiating the best price for their dream car, they often overlook the importance of securing favourable loan terms. This comprehensive guide aims to educate you on how to balance the total cost of a loan with what you can afford, ensuring you make a financially sound decision.
Understanding the Total Cost of a Car Loan
When evaluating car loan options, the Annual Percentage Rate (APR) is the key figure to focus on. A lower APR can result in significant long-term savings. For instance, a three-year $15,000 loan with [...]
Decoding the Mystery of Down Payments for Car Loans
When it comes to purchasing a vehicle, the topic of down payments often leaves buyers scratching their heads. Is the age-old wisdom of putting down 20% on a new car still relevant? What are the pros and cons of making a smaller down payment? This comprehensive guide aims to answer these questions and more, offering invaluable insights for a range of buyers—from newcomers to Canada to those with bad credit or recent graduates.
Challenging the 20% Rule
Contrary to popular belief, the 20% down payment rule has become more of a myth in today’s automotive market. According to a study by Edmunds, the average down payment for new and used cars in 2017 was around 12%. This shift raises questions about the relevance of traditional advice, especially as car prices continue to rise while incomes remain stagnant.
Understanding the Intricacies of Auto Loan Interest Rates
When you’re in the market for a new vehicle, understanding auto loan interest rates is crucial for making an informed decision. Rates can vary significantly between lenders for a variety of reasons. Some lenders offer competitive rates under specific conditions, while others may charge higher rates but provide loans to borrowers who might not qualify elsewhere. In this comprehensive guide, we’ll delve into the nuances of auto loan rates and how to secure the most competitive offers.
FICO Score Directly Affects Rates
Your FICO score plays a pivotal role in determining the interest rate you’ll be offered. Generally, lenders offer lower rates to individuals with good or excellent credit scores. Conversely, those with poor or marginal credit scores are often charged higher interest rates. The difference in rates can range from a few percentage points to as much as 10 to 15 points. Learn more about how [...]
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.