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Car loans Edmonton: How does it work? 

There are several options for a car loan in Edmonton. Choosing the right lender and loan that fits your financial situation is important. For most people living in Edmonton, purchasing a dream car is a landmark achievement. To simplify the process involved, we’ve written this simple guide to the different financing options for car loans in Edmonton.

Different financing options to buy a car 

As mentioned earlier, there are several car financing options available to people in Edmonton. Through traditional auto financing, leasing, lease-to-own, or home equity loans, you can buy the car that you prefer. 

A happy couple posing next to their car

Home equity loans 

You can unlock your home equity and access it as a lump sum amount to buy a car. If you’re a homeowner, home equity loans provide a great source of financing because interest rates tend to be lower than unsecured loans, it’s flexible and the qualifying criteria are less stringent.  

This kind of loan depends more on how much equity you have built in your home rather than your credit score or income. You can calculate how much equity you have by subtracting your outstanding mortgage balance from the house’s appraised value.   

If you’re unable to meet the car loan requirements of traditional banks, you may consider home equity loans from alternative lenders like Alpine Credits.

Traditional car financing 

One of the most common ways to buy a car is by financing it with a loan from the vehicle manufacturer’s financing program. Regular car loans can last anywhere from two to seven years. If your credit score is low, you might qualify for a loan with a higher interest rate.  

Like most loans from the bank, you’ll need to show your creditworthiness by providing a strong credit score and steady income. The car dealership will offer an interest rate based on the market environment, vehicle age, and other factors.

Leasing a car 

You could choose to lease a car instead if you need it only temporarily. In this case, you will make monthly payments to the dealership for the benefit of using the vehicle for the lease term. 

Those monthly payments can include interest, tax, and depreciation costs, but overall, these payments can be less than the payments for car financing. This option can provide more flexibility than financing a car purchase as you can return the vehicle at the end of the lease term or pay down the outstanding balance and purchase the vehicle outright.   

However, leasing a car comes with limits such as a yearly mileage limit and penalty fees for any damage to the car.

Lease-to-own financing 

Another alternative is lease-to-own purchase agreements. Lease-to-own agreements allow people to eventually own the car they are driving. Some people choose the lease-to-own option because of the benefits they can get from leasing and financing. It could be a good way to get a vehicle until you’re more financially secure.   

Until you officially purchase the car, you’ll have certain driving limits and other obligations according to the agreement you sign with your dealership.

Where can I get car loans in Edmonton?

Residents in Edmonton have multiple car financing options and auto loan providers who can help them purchase their dream car. In Edmonton, prospective car owners can secure funding from:   

  • Traditional car dealerships  
  • Banks  
  • Credit unions  
  • Digital and other private lenders  

When dealing with a car dealership, a dedicated car salesperson will help you secure the car loan you’re looking for. The car manufacturer will most likely have its financing division to provide individuals with car loans. If these options don’t work for you, you can seek out a lender of your choice in the form of a bank, an alternative lender, or a credit union.

How to get approved for a car loan in Edmonton 

Applying for an auto loan in Edmonton is a very straightforward process that doesn’t require much effort. You’ll quickly secure the car loan you’re looking for by following a few simple steps. 

You can secure a car loan with dealerships, banks, credit unions, and online lenders. Feel free to research and choose a provider that understands your needs and financial situation. 

Most auto loan applications need you to provide documents like proof of income, credit report, or a valid driver’s license. To complete the application, you must also provide your contact information and current address.

You can apply for your auto loan online or in person, depending on your chosen provider. This is also an excellent time to put down a down payment, which isn’t necessary but can improve your chances of getting approved.

You could be waiting anywhere from a few days to a few months. Each lender processes the applications at their own pace.

How to compare car loans in Edmonton

Like other Canadian cities, Edmonton has multiple car loan providers offering varying loan amounts, loan terms, and interest rates. The best way to find the right provider is to speak to various providers, including banks, alternative lenders, and credit unions, and note their loan terms and interest rates.  

Taking these numbers to a financial advisor can help break down the offers you have received. You can single out the best provider for your goals and needs at the end of this process.

Are interest rates for car loans in Edmonton different from other provinces? 

The interest rate for auto loans across Canada largely stays the same, and car loan providers use this to establish base interest rates. Although interest rates and loan terms can vary from lender to lender, the interest cost of a vehicle won’t change based on where you live. In special cases, there may be a slight difference in rates, but they won’t have much of an impact on the total cost of your vehicle.

Can you get approved for a car loan with an alternative lender? 

Indeed, alternative lenders can help individuals secure a car loan in Edmonton. The good thing about choosing an alternative lender is that their approval criteria are more flexible than banks and traditional car dealerships concerning credit score and income status.  

For example, Alpine Credits provides home equity loans and primarily considers the equity built in your home. Borrowers can then use home equity loans to purchase their car. You can also use the loan for other purposes.

Conclusion 

With the right resources and financial support, residents of Edmonton can fulfill their dreams of buying the car they have always wanted. Buying your dream car should be enjoyable, filling you with excitement rather than stress. As such, with multiple loan providers and financial advisors ready to assist, you can secure auto loan financing in a smooth and stress-free manner.

Frequently asked questions

You can secure a car loan in Edmonton through a bank, alternative lender or traditional car dealership. Your option will depend on your financial situation and providers’ terms.

Car loan rates in Alberta can vary from 6% to 10% on average. However, this number can change depending on the vehicle’s condition and the loan provider’s policies.