Car Loans in Canada
Buying the car you want is easy when you take advantage of the equity in your home.
Buying a car is a significant investment, one that can have high costs. This is where a car loans Canada can be useful. Alpine Credits can provide you with a home equity loan that can be used to finance the purchase of your car.
What Are Car Loans And Why Are They Important?
Car loans in Canada are a type of loan designed to help people finance the purchase of a vehicle. Buying a brand-new car outright can be expensive, so this is where car loans come in. The borrower will receive a lump sum from a lender or bank, which is used to buy the vehicle. The loan is repaid to the lender over time with interest.
Car loans are important because they make buying a car much more straightforward. Instead of saving enough cash to pay for the car outright, using an automobile loan can help you finance the purchase over the course of a few years.
Types of car loans in Canada
There are three main types of car loans that you can consider. These are:
- Secured car loans—In this case, the car itself is used as collateral and the lender keeps the title to the car. This means that the lender can repossess the car if you’re unable to make your loan payments. These loans have lower interest rates because the car serves as collateral.
- Personal loans—With this loan, the car doesn’t serve as collateral. Therefore, if you default on your loan your car will not be seized or repossessed. However, these loans come with higher interest rates as they aren’t secured against any asset.
- Lease-to-own car loans—This option allows you to lease a car with the opportunity to buy the car at the end of the loan term. Borrowers can make regular payments over a set period, which is usually around four years. In this situation, a portion of the vehicle is paid for during the term of the lease and the vehicle can be purchased at the end of the lease for the remainder of the balance.
Hit the road with the help of a home equity loan
Car loan repayment terms in Canada
In Canada, the average length of a car loan is between 36 to 72 months. The duration will depend on how high you want your monthly payments to be. The longer your loan term is the smaller your monthly payments will be. This is simply because your loan cost is spread out over a longer period with more monthly payments than a shorter loan term.
Most lenders allow borrowers to pay off their loan ahead of time without any penalties. However, this depends entirely on the lender you choose. Some lenders may charge you a fee if you decide to pay early, especially if you’re on a fixed interest rate agreement.
For payment options, you can either make payments via a third-party financial institution (bank or credit union) or directly to the vehicle manufacturer’s financing group. You can set up a pre-authorized payment, make payments online, or even through a phone call to your lender.
Car loan calculator in Canada
Borrowers can use an online calculator to understand the costs of a car loan. For example, the Government of Canada has an online calculator that borrowers can use. It factors in pre-tax selling price, tax rate, and down payment amount. It also provides a calculator for a loan and a lease option.
Car loan application process in Canada
The application process for a car loan in Canada is typically straightforward. Borrowers have the option of choosing from countless reputable lenders and financial institutions that offer competitive rates and flexible terms. However, some lenders offer more flexibility in the application process than others.
Here’s what you can expect with a traditional lender.
- Pre-approval—The lender reviews your eligibility based on your financial standing and credit score. This information is used to determine the loan amount and interest rate you’ll receive.
- Required documentation—Lenders will ask for documents that verify your financial status and identity. They ask for documents like proof of employment and recent pay stubs.
- Lengthy approval process—A bank can take between 3 to 7 days to approve your application. However, other lenders and dealerships can approve your application faster, especially if you have a good credit score.
Homeowners get approved in less than 24 hours
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Apply online in minutes
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Get approved in less than 24 hours
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Funds are deposited directly into your account within a week.
Alternatives to car loans in Canada
When it comes to financing your dream car in Canada, traditional car loans are not the only option available. There’s a wide variety of alternatives that borrowers can look at, each with its own set of unique advantages and opportunities.
Here are a few examples of alternative options to automobile loans:
- Home equity loans—A traditional home equity loan involves the borrower receiving a lump sum of money based on the equity available in their home. This lump sum can be used to finance the purchase of your dream car.
- Personal loans—Another option can be a personal loan from a conventional lender or bank. However, a personal loan has higher interest rates and can be more difficult to obtain than a home equity loan if you are not a homeowner and have a poor credit history.
Requirements for a car loan with Alpine Credits
Alpine Credits offers home equity loans canada that have the flexibility to be used towards car purchases. Home equity is the current value of your home minus the amount owed on your mortgage. To qualify for a home equity loan with Alpine Credits, you need to:
- Pay for at least 25% of the value of the property.
- Be a Canadian citizen or permanent resident.
- Be at least 18 years of age.
An equity loan can be a maximum of 80% of the home’s appraised value minus any outstanding mortgage balance you may have. Home equity loans can cover vehicle expenses, but they can also be used towards loan consolidation, business investments, and home renovations.
Requirements to qualify for car loans with other lenders
- Credit score—Other lenders will need you to have a strong credit score (above 600). Your creditworthiness is a good indicator of your ability to make payments on time and repay the loan.
- Income and employment history—They will also want you to have a long-standing stable job with a steady income stream. Your income will determine the loan amount you will receive. If you are self-employed, you may be asked to provide documents like tax returns as proof of income.
- Down payment—Lenders may require a down payment when you apply for an automobile loan. The down payment amount is usually between 10%-20% of the car’s purchase price. A bigger down payment will reduce your monthly payments and interest over the duration of your loan.
- Co-signer requirements—Some car buyers will have a cosigner to support them in being approved for the car loan. A cosigner will assume responsibility for the loan if the main borrower is unable to keep up with payments. However, there are certain requirements that a co-signer must fulfill.
Tips on getting approved for a car loan in Canada
Getting approved for a car loan doesn’t have to be a daunting task. With a positive mindset and a little preparation, you can increase the chances of getting approved. Here are some insights on how to get approved with traditional lenders and or dealerships.
- Improve your credit score—A strong credit score will increase your chances of approval. It will also help you secure lower interest rates and favorable payment terms.
- Save for a down payment—A down payment can reduce the overall cost of the loan. It also increases your chances of approval as it protects the lender if you default. It also helps them recover a bit of the cost of the car if they decide to sell it after your loan expires.
- Find a cosigner—If your financial situation isn’t great, getting a cosigner can help you get approved. A cosigner is someone that shares the burden of the loan with you. They are responsible for the loan if you are unable to make payments.
See how Alpine Credits compares
When people are in the market for a new car, they usually consider their budget and the monthly payment they can afford. See how a home equity loan from Alpine Credits compares to other borrowing options.
Car loans
You oen need a hey down payment to make car payments reasonably fit within your budget.
Traditional banks
Banks have stringent loan approval criteria. They are also less flexible about reasons for borrowing money.
Personal loans
These loans are typically unsecured, which means higher interest rates. Plus, you’ll pay interest on the total loan amount, even if you don’t need it all.
Conclusion
Car loans are an important financial tool that helps Canadians purchase a car. Borrowers have a wide variety of options to choose from, such as secured and unsecured loans as well as leases and lease to own agreements. You have the flexibility to choose an option that works best for your financial situation.
It’s helpful to do your own research and shop around for the best rates. You can get the most out of your buying experience by understanding how car loans work in Canada. If a traditional car loan is out of your reach, Alpine Credits can help.
Talk to someone on the team of Financial Solutions Specialists, and they can get you started with your home equity loan application that will help you buy the car of your dreams.
Own your home? You’re approved.
All you need to qualify for a loan is to own your home (or other real estate). Traditional banks look at factors such as your age, income, and credit history to approve you for a loan. At Alpine Credits, we focus on the amount of equity you have in your home or other real estate properties. We make the process as quick and easy as possible.
Frequently asked questions
**The above chart entitled “Monthly Loan Payments on $35,000” is for discussion purposes only. The graph is intended to illustrate various monthly payments associated with different product offerings to the reader. Please see below for the unique terms and conditions related to each offering. Final rates and payments for all loans in question are subject to change and vary based on each individual’s situation.
Bank Loans: $35,000 interest-only loan with fixed rate prime (2.95%) + 3% / monthly payment. Two-year term in which 100% of principal is owed at the end of the term. Other fees (appraisal/legal) may apply.
Alpine Credits 1st Mortgage: $40,500 (net $35,000) interest-only loan with 5.75% interest rate in year one and prime + 4.00% in year two. Two-year term in which 100% of principal is owed at the end of the term. Monthly payment and APR associated closing costs (legal fees, appraisal, brokerage fees).
Alpine Credits 2nd Mortgage: $40,500 (net $35,000) interest-only loan with 8.75% interest rate in year one and prime + 6.05% in year two. Two-year term in which 100% of principal is owed at the end of the term. Monthly payment and APR associated closing costs (legal fees, appraisal, brokerage fees).
Credit Cards: $35,000 loan paid off in 5 year & monthly PMT. 19.99% interest rate & fee of primary and secondary user ($99 + 30$ = $129 Yearly).
Online Loan 1: $35,000 loan paid off in 46 Months/Bi-weekly PMT with a 26.90% interest rate. Loan details have been taken directly from the online lending company’s website. Other fees may apply.
Online Loan 2: $35,000 loan paid off in 4 Years/Bi-weekly PMT. Loan details have been taken directly from the online lending company’s website. Other fees may apply.