Car Loans - Instant Loans Canada

Car Loans

How Car Loans Work In Canada

When Canadians decide to purchase a new car, paying cash isn’t always an option. Additionally, even if it is a possibility, they most likely do not want to deplete all of their savings just to buy a new car. This results in people deciding to use dealership financing. Dealership financing means that customers receive financing from the dealership of where they purchased their car. The customer and the dealer sign a contract where over a period of specified time they pay back the borrowed amount on the car and the additional finance charge. Depending on the dealership,  the dealer may choose to sell the contract to a finance company, credit union or bank. Sometimes the dealer retains the contract but this does not happen very often. The service that holds the contract is called the assignee and they are the ones who collect payments.

In Canada dealership financing offers convenience to people in the market to purchase new cars. It is convenient because the vehicles and financing are offered at one location so customers do not have to worry about finding financing for their vehicle because it is already offered. Another great thing about dealership financing is that they usually offer many different financing options. This is because dealers use a variety of financing companies and banks which offer unique and different choices payment programs. Furthermore, dealerships often offer discounts and incentive programs to customers. However, generally these programs require a very high credit rating which leads to only qualifying the top customers based on their financial history.

In Canada when people decide to purchase a new car they often are surprised that the price of cars in Canada is much higher that the United States. The Manufacturer’s suggested retail price (MSRP) is often much higher in Canada even for the exact same vehicle. Sadly, majority of American dealers will not sell a new car to Canadians. According to the U.S. Customs and Border Protection you don’t have to be a US resident to purchase a car. Company policy generally doesn’t allow American dealerships to sell to Canadians and when they do warranty generally doesn’t carry over from the US to Canada. Additionally with the current state of the Canadian dollar compared to the American dollar it is not as beneficial for Canadians to even attempt to purchase a car from across the border.

One of the main drawbacks of financing a vehicle through a dealership is that the finance person you work with is actually working on commissions. This means that the financing rate is not set in stone; instead it is based on the deal that is made with the salesman. The final package options such as alarm systems, extended warranties, leather seats to name a few are usually what brings a dealership the most profit. It is financer who upsells these features after the agreed upon price of the car. These add ons add commission to the vehicle and in turn result in the customers having to pay much more for the car and having larger payments.

Overall dealership financing is a good option for people looking to buy a new vehicle who have a good credit score. The downside is that many Canadians do not have a good credit score and therefore do not qualify for dealership financing. Majority of loans require credit checks, however collateral loans are perfect for people with average and lower credit scores. For the most part Collateral loans do not check credit and as a result most people qualify regardless  of financial history. Instant Loans Canada, offers loans based on the equity of your vehicle and not your finances, so you have the chance to get the money you need when other companies won’t qualify you.