Car Loan

Car loan

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What is a car loan?

A car loan is simply a loan to help purchase a new or used vehicle.

Our role: Unity Financial Services provides marketing and referrals to third-party financial professionals. Products, advice and account opening are provided by those third parties; Unity does not sell these products directly.

Unity can help arrange a referral about financing a new or used vehicle. Loans are offered by third-party providers. Unity does not lend money directly, approve applications or set interest rates.

Ask the provider for a written explanation of the loan amount, term, payment schedule, fees and total borrowing cost before deciding.

What type of lender is best?

Dealerships

Banks/credit unions

Online lenders

How do I calculate car loan interest?

A car loan’s interest rate depends on the amount it costs the lender to borrow money and how risky a borrower’s profile is. Interest rates increase as a loan gets longer. Higher monthly payments can save you money in the long run if it means a shorter loan.

How does car loan interest work?

A secured car loan gives the lender rights over the vehicle as collateral. Ownership and registration arrangements depend on the financing contract and provincial law. If payments are not made, enforcement or repossession may be possible. Check the contract and any registered security before buying or selling a financed vehicle.

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How do I calculate how much of a car loan I can afford?

Unsure how much you can spend? Try a car loan calculater to quickly calculate your monthly car payments. Remember that a car loan is not the only expense when buying a car. There is insurance, gas, maintenance, parking, taxes and more to consider. A good rule of thumb is to limit car payments to around 10% and overall expenses to under 15% of take-home pay.
For example, if you make $5,000 a month aim to keep your total budget under $750 per month. That is $500 for the car payments with $250 left for additional expenses.

What is a pre-approved car loan?

A pre-approved loan is a loan that you are approved for before you go shopping.

Before heading to a dealer, you speak with a lender. You submit initial information. They give you pre-approval to borrow up to a certain amount. Car loan pre-approval helps you determine a realistic budget for your next vehicle before you start shopping. Learn what you can afford and get an estimate of what your car loan rates will look like ahead of time. It is a great time-saver!

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How do I get approved for a car loan?

Compare written quotes from third-party lenders or professionals. Check the rate, fees, repayment schedule, total borrowing cost, security requirements and early repayment terms. Unity can arrange a referral enquiry; this page does not provide live quotes or loan approval.

To authorize a credit check
Photo ID
Proof of income
Proof of residency
Proof of car insurance

How do I get a car loan for a pre-owned or used vehicle?

Financing used cars and trucks is easy. Dealership or their banking partner typically used car loan options. They resemble a loan for a new vehicle. If you buy a used car in a private sale, your lender a traditional car loan may not be available. In this instance, a personal loan is an option. Typically unsecured by the vehicle itself, the interest rate on a personal loan for a used car will be higher than a traditional car loan for a new one.

What is a good interest rate for a car loan?

Request a current, personalized quote from a third-party lender. Rates and approval depend on the lender’s assessment and the terms of the proposed loan. An advertised rate is not a promise of eligibility.

Credit score range for a car loan	Category
760+	Excellent
725-759	Very good
660-724	Good
659-560	Fair
559-300	Poor

Need loan answers now?

Call 438 701 3770 to request a loan referral. Product advice, approval and terms are handled by the third-party provider.

Top tips for saving money on your car loan:

Ask the lender to show the total cost of each proposed term and payment schedule. Consider the full vehicle budget, including insurance, maintenance and other ownership costs, when discussing affordability with an appropriate professional.

Historical or illustrative examples retained from the original page. These are not current rates, limits or offers. Confirm the applicable terms with the provider.

Loan terms	Loan A	Loan B
Total borrowed	$40,000	$40,000
Interest rate	3%	%6
Length of the loan	60	96
Monthly payment	$575.00	$420.53
Total interest paid	$2,599.89	$8,370.47

What minimum credit score is required for a car loan?

Each lender applies its own eligibility criteria. Ask the provider what information it requires and whether an enquiry or application involves a credit check. Unity does not promise approval or a minimum qualifying score.

How can I get a car loan with bad credit?

Ask a third-party provider whether it considers applications in your circumstances and request a written explanation of the available terms. Unity does not guarantee approval, a particular interest rate or access to a specific lender.

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How do I get out of a car loan?

Assuming that your car is worth more than the remaining balance on your car loan, the easiest way to get out of a car loan is by selling that vehicle. Then immediately use the money you receive to finish paying off your loan. Remember, until you pay off the loan, you do not own the title to the car. Most lenders will allow you to sell it under the condition that the sale covers the remainder of what you owe.

Can you pay off a car loan early?

Yes! Check your contract conditions for details. Some lenders allow borrowers to pay off car loans early without a penalty or fees. This is a great way to save on interest payments.

Need loan answers now?

Send a loan referral enquiry to Unity. This is not a loan application.

When to pay it off early

You do not have other debts
You have an emergency fund
To save money on interest
To get rid of a monthly payment

When to avoid paying it off early

You have other debt at a higher interest rate (mortgage, credit card, student loans, etc.)
There is an excessive prepayment fee*
To build your credit score

Can I refinance a car loan?

It may be possible to refinance your car loan. When you refinance, a new lender buys your remaining debt. Then they offer a new contract under more favourable terms. Favourable could mean extending the length of the loan to lower your payments, decreasing the interest rate or removing a co-signer.
This option can make sense if some time has passed since you bought your car and your credit score has since increased.

How do you transfer a car loan to another person?

Unfortunately, it is not always possible to transfer a loan to someone else. As each lender has different conditions, it is best to check the terms and conditions of your current contract.
Depending on the length of the loan and the vehicle’s age, it is possible to owe more than the car is worth on the resale market. A bank is unlikely to sign a new loan agreement against a depreciated vehicle.

How can I remove a co-signer from a car loan?

It is often possible to remove a co-signer from a car loan, provided your credit score or financial situation has improved since signing the original loan.
Everyone’s situation is different, so it is best to speak with your lender. As you are already negotiating loan terms, this is an opportunity to refinance your loan if you wish to do so.

What is the APR on a car loan?

Ask the lender to disclose the annual percentage rate, all fees, the payment schedule and the total cost of borrowing in writing. Compare offers on the same basis and ask the lender to explain any differences.