Car ownership is a necessity for many Canadians, but buying a car doesn’t need to be stressful. If you need a car but don’t have the money to pay for it in cash, there are options available to you: financing or leasing. Here, we’ll cover some of the things to consider when deciding which payment option is right for you and some common terms you’re likely to come across when applying for a lease or loan, so you’ll be able to understand the process more easily. There’s also a car loan payment estimator, so you can get an idea of what your payments might look like.
If you want to buy a car, but don’t have the cash to pay for it in full, you can apply for a car loan to help you pay the difference. Think of it like a mini-mortgage. In order to be approved for a loan, you must first apply for car financing from your bank, loan specialist or dealership. Financing gives you immediate ownership and the chance to build equity.
You can negotiate the length of your loan, monthly payment amount and the interest rate when you apply. Factors that can change your interest rate include your credit rating, amount borrowed and the province you live in.
Financing can be more expensive than lease payments and in order to qualify, you will need a sizeable down payment. See how much you could be paying with our car loan payment calculator.
If you need a car but don’t have the cash to buy it or to make the down payment for a loan, leasing a car is an affordable option. Car leases are long-term rentals that can last anywhere from a few months to a few years. Lease payments can be less expensive than car loan payments, and you save money on long-term maintenance costs as you are covered under warranty, and you won’t pay as much sales tax.
Leasing allows you to get behind the wheel of a brand-new vehicle every few years, but it’s not for everyone—especially those who travel long distances. There are some restrictions to a lease, such as fewer design options and a yearly kilometre limit. Handing over the car at the end of your term can be expensive if there is wear and tear or if you have surpassed your kilometre limit, but getting out of your lease term early can be costly.
Leasing also means that your monthly payments aren’t put towards ownership. At the end of your lease term, you may choose to lease a new model or buy for its remaining value.
^Estimated payments are for informational purposes only and do not represent a financing offer or guarantee of credit. Estimated payments are calculated based on: (i) the Vehicle Price (which may or may not include freight, fees, license, insurance, registration and taxes); and (ii) the other information selected or provided by the user. Actual rates, terms and payment frequencies may differ or may not be available. Contact dealer for available financing options and complete details.