As one of western Canada’s largest auto loan brokers, Guaranteed Auto Approvals has helped over 5,400 Canadians find their best rate since 1999.
We understand that navigating the world of car loan interest rates can be confusing and overwhelming.
That’s why we’ve created this comprehensive guide to help you understand the factors that affect your rate and how to secure the most favorable terms for your unique financial situation.
Dispelling the Myth of “Starting At” Rates
You may have seen “starting at” rate numbers posted on bank websites, but it’s crucial to understand that these rates are typically reserved for individuals with exceptional credit.
Most borrowers will end up paying between 5.99% to 29%, depending on their specific circumstances.
Four Key Factors That Determine Your Interest Rate
- Credit Score: While important, your credit score is not the sole determining factor for your interest rate. Lenders also consider other aspects of your financial profile.
- Debt-to-Income Ratio: This ratio compares your monthly income to your existing debt obligations. Lenders prefer a ratio of 0.5 or lower, as it demonstrates your ability to comfortably afford the car loan payments.
- Vehicle Age: Interest rates tend to be higher for older vehicles, as they pose a greater risk for lenders due to their lower resale value. To qualify for financing, the used vehicle must be a 2014 model or newer, have less than 130,000 kilometers, and pass a comprehensive inspection by a certified mechanic.
- Loan Term: Longer loan terms generally come with higher interest rates. Lenders charge more for extended repayment periods to offset the increased risk of lending money over a longer duration.
Prioritizing Your Loan Objectives
To avoid overpaying on your car loan, it’s essential to prioritize your objectives.
Determine which aspect is most important to you: the lowest vehicle price, the lowest interest rate, or the lowest monthly payment.
Focusing on all three simultaneously is not feasible, so clearly defining your priorities is key.
The Benefits of Pre-Approval
Shopping for a vehicle without pre-approval can lead to disappointment if you find a car you love but later discover you can’t afford the financing.
Getting pre-approved provides clarity on the loan terms available to you, allowing you to shop with confidence and within your budget.
Your Partner in Securing the Best Rate
At Guaranteed Auto Approvals, we specialize in helping individuals with diverse credit histories and financial situations find the right financing solution.
With over 20 years of experience and an extensive network of lenders, we have the expertise to secure the most competitive rates tailored to your unique needs.
Our free pre-approval service is designed to be quick, easy, and obligation-free.
Simply provide some basic information about your financial situation and desired vehicle, and our team will promptly provide you with a personalized quote.
