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Used car loans for September 2022 in Canada

Apply for a used car loan at a bank, verified by our specialists. On 25.09.2022 1 car loans. are available to you. Increase your chances of getting a loan - fill out an online application with a free credit rating check.

Offers: 1

Updated:
20.09.2022
10:41
Coast Capital Savings
Auto finance
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from 4%
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from 84 months

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Your ideal car loan with a free credit check in Canada is just a few clicks away.

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Interest rates on car loans in various Canadian provinces

Section 347 of the Criminal Code of Canada imposes the cap on the maximum allowable annualized interest - 60%. Any higher interest charged is considered usury and is illegal.

In Canada, average auto loan interest rates range from 4.5% to 10%. However, a borrower can expect to be charged up to 36%.

Factors determining car loan interest rates include the Bank of Canada’s key interest rate, the client's credit score, whether the car is new or used, the history of the vehicle, and whether the interest rate is fixed or variable. In addition, 0% interest can apply to customers with exceptional credit.

Online application for a car loan in Canada

Cost of the vehicle:
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Term:
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120
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How to get a used car loan

Fill out an application
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On our website you can fill out a short application form for a loan.
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Send your application online to the suggested companies
After checking your credit rating, you will be able to send the loan application to the appropriate companies.
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If necessary, the lender will contact you to clarify the details.
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Reviews of car loans

GoDay
1.6
JUDGEV
JUDGEV
26.05.2022 at 15:46
the application is easy and takes less then 5 mins to fill out. but the funding time is quite long. if looking for instant funding then its not here...
Review
Used car loans for September 2022

What is a used car loan?

The Canadian used vehicle market is growing, and there are obvious reasons for that. A new vehicle may be prestigious, but the common knowledge is that it depreciates rapidly when a car is purchased and leaves the dealership within the first few years. Therefore, the same vehicle, usually with modest mileage, used for a few years, will cost much less than a new car, and the buyer will receive the same benefits.

Buying a used car is a wise investment for several reasons:

  • the future depreciation would not be so drastic;

  • the manufacturer's warranty may still cover a used but still relatively new car;

  • it is possible to choose the model and style and model year, and it is already tested.

In addition, not everyone can pay the total value of a used car, but this problem is easily solved by lenders who offer used car loans.

Reference! A used car loan is a credit product intended to purchase a used car, paid at a fixed or variable interest rate within a limited term.

The better the borrower's credit rating, the better conditions are offered by lenders. For example, good financial discipline and a positive credit history pay off in low-interest rates, a favorable percentage of the required down payment, etc.

Borrowers with less than perfect credit or no credit history can also get a loan, but the cost of credit is much higher, and the chosen car costs more.

Major types of used car loans

The types of used car loans make a big difference to the borrower because they differ in terms of the loan and the cost.

  1. The first criterion is the ownership during the repayment of the loan: In secured loans, the car is used as collateral to guarantee the repayment of the loan amount and interest. In case of complications during repayment, the borrower risks losing the car since they are not yet the owner in the full sense of the word. Unsecured loans mean no equity is used to secure loan repayment to the lender. The borrower can use the car as they see fit and must repay the loan according to the signed loan agreement.

  2. Loans with fixed and variable interest rates. It is about the cost of the loan, and even though a variable interest rate is tempting, the borrower must be aware that future market fluctuations cannot be fully predicted. On the other hand, a fixed interest rate is predictable, and the borrower knows what payments to expect in the future.

  3. The loan term can vary for used car loans, but it is usually 5-7 years.

  4. Another category of used car loans is the type of lender: bank, credit union, or other lenders (specialized used car dealerships that facilitate the sale of used vehicles, RVs, trailers, etc., and provide loans for them).

  5. Other options can be used for any purpose, including purchasing a used car: a personal line of credit and a personal loan. In this case, the purpose of the loan is not specified, and the borrower can pay for any goods or services. In this case, the used car is not taken as collateral.\

  6. A loan with a trade-in option allows you to use the value of your previous car to cover part of your new car loan.

    To make the best choice, it is very convenient to back up a preliminary decision about the lender using a car loan calculator developed for general information purposes. In addition, it is worth looking at the credit report to get an idea of your credit approval perspectives.

    How to apply for a used car loan

    Once a customer has found a used vehicle that they would like to purchase with the help of a loan, there are only a few steps:

    1. Check your credit report to make sure it is up to date;

    2. Observe the market offers for used car loans and special financing rates and test different scenarios with the help of a loan calculator;

    3. Plan the loan cost and monthly payment in your budget;

    4. Apply online or make an appointment at the lender's branch;

    5. Submit required documents and agree on the loan product, interest rate, loan term, etc.

    6. Finalize the loan and pay.

        Depending on the lender and the features available in the mobile app, it may be possible to apply for a used auto loan with flexible payment options online or through the app and even get pre-approval.

        Requirements

        The eligibility criteria for used car loans in Canada are more or less the same:

        • The age of majority;

        • Canadian citizenship or confirmation of permanent residence;

        • a stable income and steady employment (some lenders require the borrower to be employed by the same employer for at least 12 months);

        • ability to sign contracts and other legal documents.

        Talking about documents for vehicle loans, there would be not too many but get ready to provide:

        • loan application form (unless it is done fully online);

        • report about car evaluation (trade-in, for example) made by an expert;

        • identity proof document (driver's license, passport, ID, etc.) and address proof (utility bill, etc.);

        • income proof (income statement, cash flow on account, salary sleep, etc.

        A full list of required documents and eligibility criteria for used car financing should be checked directly with the lender.

        Ways to get a used car loan

        A used car loan can be obtained from:

        • a bank;

        • a credit union;

        • a specialized used vehicle dealership, possibly with trade-in;

        • another lender.

        Reference! Loan approval is quite simple, and even with bad credit, there are chances to get used car financing with convenient or no down payment.

        How to repay a used car loan debt

        Monthly payments, the principal can be paid via direct debit, by cheque or cash at the lender's branch, or using online banking or mobile app.

        Pros and cons of a used car loan

        Purchase of a used vehicle is beneficial from a financial point of view, although some people would prefer only a new car from the dealership. Therefore, financing used auto via loan products has many advantages but is not for everybody. This is why before filling out an application, it is recommended to consider the advantages and disadvantages of using such a loan product.

        Pros

        • monthly payment is lower than for a new auto;

        • interest rates are friendly;

        • if monthly payments are not convenient, one can arrange other repayment schedules, like semi-month payments, etc.

        • loan payment takes approximately seven years;

        • bad credit clients can still get approved, and they just need to find lenders open to working with any credit score borrowers;

        • it is possible to make a vehicle purchase from a private seller;

        • financing options include not only banks but also credit unions and other lenders;

        • some used autos are still under extended warranties;

        • it is possible to pay via direct debit and enjoy automatic withdrawals;

        • you get a good price vs. quality deal.

        Cons

        • You have to check the car history and title, especially when buying from a private seller;

        • if it is a secured loan, the borrower risks losing the car if they can not make payments according to the schedule;

        • bad credit would mean that more money from your budget would go to the lender because there is a high probability of higher interest rates;

        • some financial institutions would require additional insurance;

        • a credit check is usually required for such loans;

        • stable employment might mean at least 12-36 months with the same employer.

        • monthly income is verified.

        Legal regulation

        Used car loans are subject to federal and state legal regulations. In addition, financial institutions must comply with several laws to ensure that lending is transparent.

        Legal documents require that loan terms and all fees be clearly stated for borrowers.

        The disclosure statement must include clear and understandable information about all fees associated with the used car loan (e.g., origination, appraisal, administrative, modification, closing fees, etc.).

        At the federal level, Canadian legislation has set general requirements for financing used cars and all vehicles in general. The Investment Act, the Consumer Protection Act, and the Criminal Code are worth mentioning, which limit the maximum interest rate and thus the lender's profit margin.

        Complaints by the borrower regarding the loan must first be addressed to the lender. This can be a letter with information about the violation. If this does not help, the complaint must be filed with the regulatory agency of the respective province.

        Almost all provinces require lenders to clearly disclose all fees that outweigh the loan's actual cost.

        In British Columbia, for example, such matters are handled by the Vehicle Sales Authority of British Columbia.

        The names of the regulators in the Alberta region can be found in the open sources.

        The Ontario Motor Vehicle Industry Council is a helpful institution for customers in Ontario.

        The real cost of a used car loan

        The real cost includes all related fees, which comprise the loan's value. Except for the interest, it means administration fees, origination fees, etc. You should check it out before getting pre-approved and signing a loan agreement.

        FAQ

        What is a reasonable interest rate on a used car loan?

        Depending on the credit score, it can be anywhere between 5-16%, but some financial institutions offer to check out interest rates upon arranging a consultation with their loan specialist.

        What credit score do you need for a used car loan?

        Ideally, it is excellent or good, not less than 660, but even bad credit score and no credit score customers still have chances to be approved by alternative financial institutions.

        What credit score is needed to buy a car with no down payment?

        On average, if you have 650 and up, there are chances that the lenders would be open to offering more flexible and friendly terms for the loan, including the no down payment option.