You buy a brand new sedan price $60,000 and due to this fact take out a loan of that quantity at 4.99% for six years (72 months). This loan has monthly payments of $966 (total $72). You borrowed $60,000, but the quantity you have got to pay back (72 payments of $966 each) is $69,500. The additional $9,500 is the interest on this loan, the associated fee of borrowing $60,000 at 4.99% for six years.
- Loan amount: $60,000
- Interest rate: 4.99% APR
- Loan term: 6 years (72 months)
- Monthly payment: $966
- Total repayment: $69,500
- Total interest payable: $9,500
Let’s do one other case study to actually drive the exercise home.
You purchase a brand new small automotive for $30,000 on a promotional take care of 1.99% APR financing for 4 years (48 months). Financing and automotive loan are the identical, and the identical goes for the bill from before: this loan has 48 monthly payments of $651, for a complete of $31,235, or $1,235 greater than the $30,000. Dollars you borrowed. So the interest on this loan is $1,235, or the associated fee of borrowing $30,000 at 1.99% for 4 years.
- Loan amount: $30,000
- Interest rate: 1.99% APR
- Loan term: 4 years (48 months)
- Monthly payment: $651
- Total repayment: $31,235
- Total interest payable: $1,235
Too much math? Don’t worry, in real life you most likely won’t must do these calculations. Your lender should outline these (and definitely ask them to), and it is also easy to “run some numbers” by entering hypothetical data into a web-based loan calculator.
Your automotive loan may also cover automotive costs, akin to accessories and add-ons. Things like bike racks, trailer hitches, all-weather floor mats, luggage racks, winter tire and wheel packages, and paint and fabric protection may be added to the loan or financing amount, so the associated fee is opened up over time, similar to purchasing the value of the vehicle itself.
Check out these automotive loan rates of interest currently available.
| Lender | Loan term | APR | Loan amount | Minimum credit rating |
|---|---|---|---|---|
| Spring Finance* | 6 months to five years | 9.99% to 46.99% | $500 to $35,000 | N/A |
| Scotiabank | 1 to five years | 6% to 10% | $5,000 to $75,000 | Not announced |
| BMO | 1 to five years | 8.99% to 22.99% | $2,000 to $35,000 | Not announced |
| TD Bank | 1 to 7 years | 8.99% to 23.99% | $5,000 to $50,000 | 650 |
| CIBC | 1 to five years | 9% to 10% | $3,000 to $200.00 | Not announced |
| RBC | 1 to five years | 9% to 13% | No minimum or maximum listed | Not announced |
| Mogo | 6 months to five years | 9.90% to 46.96% | $500 to $35,000 | N/A |
| Fig Financial* | 2 years to five years | 8.99% to 24.99% | $2,000 to $30,000 | 680 |
| MDG Financial | 3 years | 29.78% to 44.80% | Maximum $1,600 | 560 |
| Easyfinancial | 9 months to 10 years | 9.90% to 46.96% | $500 to $20,000 | N/A |
How are automotive loans different from other loans?
It could seem similar, but there are some nuances when considering secured and unsecured loans. “Car loans are considered a ‘secured’ loan because the car you purchase is collateral in the event of a loan default,” Gray explains. The loan is secured by an asset. “Because of the collateral, interest rates are often lower than a personal loan and the terms of the loan may be easier for the vehicle buyer to qualify for. With a personal loan you can buy anything you want (including a car). Because no collateral is required, interest rates are often higher and the borrower may need a higher credit score to qualify.”
Canadians don’t all the time research the most effective automotive loan terms, even when it could save them money.
