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Find the Best Rates in Canada

Unless you work in the financial industry, you may have difficulty finding the best lender for your situation. So why not let us help you so that you don’t end up paying more than you have to? And best of all, our service is free.

A small change in the interest rate can save you a lot of money each month! Try out our free Loan Analyzer and find out how much car you can afford.

What Factors Affect the Interest Rate On a Car Loan?

That’s a great question. Many things come into play, but your credit score is the biggest issue. Canadian banks and lending institutions will also consider your monthly income, the vehicle you are trying to purchase, and the desired length of the loan. Let’s look at each of these in a bit more detail.

Your Credit Score

Do you know your credit score? You may be surprised to learn that most people don’t. In fact, more than half of Canadians have never even checked! The good news is that people are often surprised to find that their score is higher than expected.

If you pay your bills on time and aren’t already overburdened with debt, your score is likely in the good to excellent range. Check out the table below to see the difference a good score can make.

 (Interest Rate Table)

Monthly Income

Your income is also a significant consideration. Banks want to be paid on time and won’t lend you more than they think you can afford. So here’s an insider secret: lenders generally never approve an auto loan in which the payment is more than 18% of your monthly income. If you apply for a loan that exceeds that figure, it will be automatically rejected.

The Vehicle Value

Lenders are looking to minimize risk, so they will only lend a certain percentage of the car’s value. The lender will use the VIN and current condition of the vehicle to determine how much they will lend. Several free services online will allow you to check any vehicle’s value based on whether you are purchasing or trading in.

Length of the Loan

The term or length of the loan is also an important factor in determining your payment and interest rate. Longer terms usually have a higher interest rate but a lower monthly payment. Conversely, you will get the best interest rate with a shorter-term loan if you can afford the higher monthly amount. For most people, a 60-month loan provides a great balance.

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