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Understanding Car Loan Interest Rates In Canada

April 18, 2019

Understanding Car Loan Interest Rates In Canada

Having bad or no credit doesn’t mean you can’t get an affordable auto loan in Canada. The interest rates for a car loan are determined based on a number of different factors. While your credit history plays a crucial role when it comes to drafting terms of the loan, make sure to choose a lender that provides car loans on low interest rates. Find My Auto is a reputable auto financing company which helps Canadians get approved for easy car loans no matter their credit standing.

The interest rate for an auto loan

You might be wondering what’s an appropriate interest rate for a car loan. Interest rates vary from as low as 0% to as high as 30%. Some vehicle manufacturers offer a zero-percent loan program on selected cars. It’s a good idea to watch out for such opportunities. If you’re looking to finance a used car, they typically start at 5-7%.

Interest rate is not the only factor that you should consider when financing a car. A car with a 6% interest rate may be a better choice overall than a car with 0% interest considering all the factors. It’s important to evaluate all the variables and don’t get trapped in a bad deal which apparently looks attractive.

Relationship between bad credit and interest rates

Some consumers refinance their car loans at a prime rate after making timely loan payments for a certain period of time. People who aren’t good at managing finances might face difficult financial situations down the road after financing a car. Therefore, it’s important to plan everything ahead and be able to make car loan payments in a timely manner. This will also help you improve your credit score.

High-risk customers often get car loans at higher interest rates. In case you get a loan on a higher initial rate, it’s recommended to effectively manage your loan payments in order to rebuild your credit faster. It would be even better if you could find an auto loan company which specializes in helping bad credit customers get the lowest possible interest rates from the start.

Related: Car Loans In Canada: What Can Affect Your Interest Rate?

What does it mean to refinance?

Refinancing a vehicle refers to a situation where you replace your current car loan for one with different terms and rates. It doesn’t mean you have to replace the vehicle as well; you keep the car and sign a new agreement that offers more affordable rates. If your initial interest rate is high or you want to lower your monthly payments or want to adjust the loan term, the ideal solution is to refinance the car.

Refinancing also allows you to remove the co-signer from your loan contract. If you get approved for refinancing, your monthly payments, term length, and interest rates can sometimes improve in your favor.

About Find My Auto

Find My Auto helps people get the best auto financing available. Whether you have bad credit or filed for bankruptcy, we’re ready to get you approved for a car loan that fits your financial situation. Apply right now!

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