Car Deal Canada

Edmonton Car Loans

Photo of the city skyline in Edmonton the capital of car loans

Getting the best auto loan rates and terms requires research, understanding your options, and taking the right steps during the application process. This guide will walk you through everything you need to know to secure favourable financing on your next car purchase in Edmonton.

The key is to check your credit, calculate your budget, compare different lenders and loan offers, and negotiate the best deal possible. While auto loan rates are dependent on your personal financial situation, there are strategies you can use to optimize the rate and terms on your next auto loan in Edmonton.

Get Pre-Qualified in Under 60 Seconds

All Credit Approved and 0 Money Down Options Available

 

Current Edmonton Auto Loan Rates

Average new car loan rates from major banks and lenders in Edmonton currently range between 4-7% for borrowers with good to excellent credit.

 

Here are some current new car loan rates being offered in Edmonton as of January 2023:

  • TD Auto Finance: Rates from 4.99% for new vehicles
  • RBC Royal Bank: Rates from 4.74% for new vehicles
  • Scotiabank: Rates from 4.99% for new vehicles
  • CIBC: Rates from 4.99% for new vehicles

 

For used vehicles, average interest rates are higher, typically ranging from 6-10% for buyers with good credit.

Used car rates can vary more depending on factors like vehicle age, mileage, and lender.

 

Here are some current used car loan rate ranges from major Edmonton lenders:

  • TD Auto Finance: Rates from 6.99% for used vehicles
  • RBC Royal Bank: Rates from 6.84% for used vehicles under $20K
  • ATB Financial: Rates from 7.09% for used vehicles

 

In general, those with better credit scores and lower loan amounts will qualify for the lowest advertised rates.

 

New vs Used Vehicle Loan Rates

New vehicles tend to qualify for lower interest rates compared to used vehicles. Average interest rates for new cars range from 0% to 6.99%, while used car rates are higher, typically between 5% and 22.99%.

This difference is largely due to the fact that new cars depreciate in value more slowly than used cars, especially in the first few years after purchase. Since the new car will retain a higher portion of its value over the loan term, lenders consider new cars to be lower-risk collateral for the loan. Used cars depreciate faster, so lenders charge higher rates to account for the faster loss in value.

Loan terms also tend to be more favorable for new car buyers. For example, 0% financing deals are commonly advertised for new cars, but rarely offered for used cars. New car loan terms can extend as long as 8 years, while used car loans typically max out at 6 years.

The better rates and longer loan terms available for new car purchases allow buyers to get lower monthly payments. However, longer loans also mean paying more total interest over the life of the loan. Used car buyers benefit from shorter loan terms that allow them to build equity and own their vehicles sooner.

 

Loan Term Pros and Cons

When financing a vehicle purchase in Edmonton, one of the key decisions you’ll need to make is selecting the length of your auto loan term. The loan term is the amount of time you have to repay the loan amount.

Shorter loan terms usually range from 24 to 48 months, while longer loans can stretch out to 72 months or even 84 months. There are some key pros and cons to weigh when choosing between shorter and longer auto loan terms.

 

Pros of Shorter Loan Terms

Some benefits of opting for a shorter 24-48 month auto loan include:

  • Lower interest charges over the life of the loan – you’ll pay less in total interest with a shorter-term
  • Faster equity buildup in the vehicle – you’ll reach positive equity sooner
  • Lower monthly payments after the loan is paid off
  • Shorter commitment – you’re not locked in for a lengthy 6-7 years

 

Pros of Longer Loan Terms

Some potential advantages of longer 60-84 month loans include:

  • Lower monthly payments – spreading the payments over more time reduces the monthly cost
  • Ability to purchase more expensive vehicles that may be unaffordable on a shorter-term
  • Potentially approval for borrowers with limited credit history
  • More flexibility in monthly budgeting with smaller required payments

 

When weighing loan term options, it’s important to crunch the numbers and evaluate both affordability today and total interest paid over the life of the loan. Your individual financial situation should guide whether shorter or longer terms make more sense.

 

Factors Affecting Your Auto Loan Rate

There are several key factors that influence the loan rate and terms you will be offered when financing a vehicle purchase in Edmonton:

Credit Score – Your credit score is one of the biggest determinants of your interest rate. Borrowers with excellent credit (720+ score) will qualify for the lowest rates from lenders. Those with poor credit will pay higher interest rates.

Down Payment Amount – The size of your down payment is another major factor. Larger down payments reduce the amount you have to borrow, lowering risk for the lender. A 20-50% down payment can result in significantly better rates.

Loan Term – Opting for a shorter loan term (3 years) often results in a lower interest rate than longer terms (5-7 years). Shorter terms equal less interest paid over the life of the loan.

Vehicle Type – Loans for new cars typically have lower rates than used cars. Financing an older used car with high mileage could mean paying a higher interest rate.

Income/Debt Levels – Your income-to-debt ratio is factored in. Lenders want to confirm your income is enough to comfortably handle the proposed auto loan payments.

 

How to Get the Best Deal on an Auto Loan in Edmonton

Getting the best possible deal on your auto loan requires doing your research upfront and employing some savvy negotiation strategies. Here are some tips to save money on your financing:

 

  • Shop around and compare rates from different lenders like banks, credit unions, and dealerships. Getting quotes from multiple places ensures you don’t miss out on the best rate. 
  • Consider getting pre-approved before starting your car search. This shows dealers you’re a serious buyer and can give you stronger negotiating power on the purchase price.
  • Always negotiate the vehicle purchase price first before discussing financing terms. This prevents the dealer from showing inflated rates.
  • Optimize your down payment and loan term to get the best rate. Larger down payments and shorter terms often get lower rates.
  • Look for lenders like credit unions running special rates or incentives that could score you a lower APR.
  • Make sure to avoid agreeing to unnecessary add-ons like extended warranties that inflate the loan amount.

 

Taking these steps will help you secure the most competitive auto financing rate in Edmonton and save substantially on interest charges over the loan term.

 

Avoiding Extra Fees

When financing a car, it’s important to be aware of any extra fees that can be tacked on to your auto loan. Some common fees to watch out for include:

  • Documentation fees – This covers the dealer’s administrative costs for processing your loan, but can range from $75 to over $500.
  • Dealer preparation fees – Charges for getting the car ready for sale that can add a few hundred dollars.
  • GAP insurance – Covers the difference between the loan balance and insurance payout if the car is totalled, but may be unnecessary with sufficient down payment.

 

To avoid paying excessive fees, be sure to negotiate the final price inclusive of fees and know which ones are required versus optional add-ons. You can also use an auto loan calculator to estimate the total loan cost with fees. By being an informed buyer, you can make sure you don’t agree to any unnecessary extras that inflate the price of your loan.

 

Mistakes to Avoid When Applying for an Auto Loan

Making any of these common mistakes during the auto loan application process could end up costing you big in the form of higher interest rates or loan denial:

 

Only Applying to One Lender

It’s crucial that you shop around and apply to multiple lenders, including banks, credit unions, and dealerships. Rates and terms can vary significantly, so applying to just one lender could mean missing out on considerable savings.

 

Not Checking Your Credit First

Your credit score and report are key factors that determine your loan eligibility and interest rate. Be sure to check your credit before applying so you know where you stand. If needed, take steps to improve your credit profile before submitting applications.

 

Putting Down Too Little Down Payment

A sizable down payment reduces the loan principal and shows lenders you’re financially invested. Putting little to nothing down results in higher rates or possible rejection.

 

Agreeing to a Term That’s Too Long

While lower monthly payments may be tempting, an excessively long loan term (72-84 months) means you’ll pay much more interest over time. Try to keep the term to 60 months or under.

 

Focusing Only on the Monthly Payment

Don’t just look at the monthly amount without considering the total interest charges over the loan’s lifespan. A lower monthly payment could actually mean you pay thousands more overall.

 

Optimizing Your Credit

Having good or excellent credit is one of the most impactful factors in securing the lowest auto loan rates in Edmonton. There are a number of strategies you can use to optimize your credit score and report prior to applying for an auto loan:

First, make sure to check your credit reports for any errors that may be negatively affecting your score. Dispute any inaccurate or erroneous information with the credit bureaus to get it corrected.

Pay all your bills on time, including credit cards, utilities, cell phone bills, etc. Payment history makes up a major part of your credit score calculation, so diligently paying on time will provide a boost.

Also try to lower your credit utilization ratio by paying down balances, especially on revolving credit lines like credit cards. Experts recommend keeping utilization below 30%.

Finally, avoid applying for too many new loans or credit cards in a short period of time. Each application causes a hard inquiry on your credit, which can temporarily ding your score if you have too many.

Following these tips can quickly help raise your credit score so you’re in a better position when applying for an auto loan in Edmonton.

 

Calculating Budget

Figuring out your budget and how much you can afford to spend is one of the most important steps when financing a car purchase. You’ll need to determine your down payment amount as well as an affordable monthly payment.

Experts generally recommend your monthly car payment should be 10-15% of your take-home pay after taxes. For example, if your monthly take-home income is $4,000, your car payment should be around $400-600 per month.

Your down payment amount will also impact the monthly payment. Putting down 20% or more can lower your monthly costs, but lower down payments are possible if you have good credit. Use an auto loan calculator to play with different down payment and loan amount scenarios to find affordable options.

Taking these budget factors into account before shopping for a car ensures you only look at vehicles that fit within your means. Staying within your repayment budget while getting the features you want makes financing a car purchase manageable.

 

Lender Research

One of the most important steps to getting the best auto loan is taking the time to research and compare loan options from different lenders. The major banks in Edmonton that offer auto financing include RBC, TD, Scotiabank, BMO, CIBC, and ATB Financial. There are also several credit unions like Servus Credit Union, First Calgary Financial, and Aldergrove Credit Union that are worth looking into.

When comparing lenders, look at their posted auto loan interest rates and determine if they offer discounts for certain credit scores. Also find out loan terms, down payment requirements, and any applicable fees for setting up and managing the loan. Some banks and credit unions promote special discounted rates or incentives like cash-back offers to attract new borrowers.

In addition to banks and credit unions, you may want to check rates from online lenders like Car Deal Canada and Canada Drives. While you likely won’t qualify for the lowest advertised rates since those require a perfect credit profile, online lenders can still offer competitive financing options. Your own insurance provider may also be a source for financing through insurance premium financing plans.

Dealerships often partner with lenders to offer financing as well. Compare their loan offers to ones you have pre-approved through a bank. The dealership may be able to beat the rate, allowing you to finalize the loan right there instead of going through a pre-approval lender. Just be sure to still compare all options and read the fine print.

Spend some time upfront reaching out to banks, credit unions, and other lenders for rate quotes and pre-approval. By taking the time to research all your options, you can find the lender offering the optimal auto loan rates and terms for your credit profile and financial situation.

 

Getting Pre-Approved

Getting pre-approved for an auto loan before you start shopping for a vehicle can give you a big advantage and help you secure the best rates and terms in Edmonton. Here’s an overview of the key benefits of getting pre-approved and how the pre-approval process works:

 

The main benefits of pre-approval include:

  • Knowing your budget and maximum loan amount before shopping
  • Having negotiating leverage with dealers since you’re a serious buyer
  • Locking in an interest rate ahead of time
  • Streamlining the financing process at the dealership

 

To get pre-approved, you’ll need to submit a loan application with your desired lender. This usually includes providing details on:

  • Your income, expenses and employment
  • Your credit history and score
  • The amount you want to borrow
  • The vehicle you plan to buy

 

The lender will verify this information and provide you with a pre-approval letter if you qualify. This letter will specify the loan amount, interest rate, and terms you’ve been approved for. In most cases, the pre-approval is good for 30-60 days. With a pre-approval letter in hand, you can head to the dealerships knowing you already have financing lined up at competitive rates.

 

Finding the Right Car

Once you have been pre-approved for an auto loan, you can start shopping for the right vehicle within your budget. Here are some tips for selecting a car after getting pre-approved:

Know your budget. Your pre-approval letter will state the maximum loan amount you qualify for. Make sure to factor in taxes, fees, insurance, etc. when determining the total price you can afford.

Research prices and compare options. Look at both new and used vehicles in your budget. Compare prices, features, reliability ratings, fuel efficiency, etc. to narrow down choices.

Negotiate the purchase price. Remember that the pre-approved amount is the maximum loan, not what you must spend. Negotiating a lower sales price will save on the total loan amount.

Understand the loan terms. Double-check that the loan amount, interest rate, down payment and monthly payments align with your pre-approval.

Avoid overspending. It’s easy to get tempted by upgrade packages and extras. Stick to your budget and resist the urge to spend beyond your means.

Get an inspection on used cars. Have a mechanic you trust inspect any used vehicle before finalizing the purchase.

Take the loan terms to the dealer. The pre-approval gives you leverage to negotiate the best financing.

Make sure the loan application matches. Provide the dealer with the same information you gave for pre-approval for a smooth final approval.

Review all documents carefully before signing. Read the fine print to avoid any surprises or extra fees.

 

Submitting Final Application

After you select a car from a dealership, you will submit a final loan application to purchase the vehicle. The dealer will have a finance department that can facilitate this process and submit your application to lenders. Working with the dealer for the final application can save time and make the process smoother. The dealer will obtain the necessary information and documentation from you to include with the application, such as:

 

  • Your driver’s license and proof of insurance
  • Income documentation like recent pay stubs
  • Your Social Insurance Number for credit checks
  • Information on any trade-in vehicle you plan to use

 

The dealer will then submit your completed application to banks, credit unions, or other lenders they work with. Often, there are lenders that dealers frequently partner with that offer incentives or special rates. Let the dealer know if you already have pre-approval with a particular lender, as they may be able to match or beat the rate.

Working with the dealer allows them to advocate and negotiate with lenders on your behalf. They want your business, so they will present your application in the best possible light to lenders and aim to secure favourable loan terms. This can make the final approval process faster and smoother compared to applying completely on your own.

Just be sure to still read the fine print of any loan contract the dealer secures and avoid simply accepting extra products or services you may not need. However their assistance can help you get a competitive rate and make the financing process easier.

 

Conclusion

Getting the best possible auto loan terms requires advance preparation, research, and smart negotiating. The key takeaways for securing favourable financing on your next car purchase in Edmonton include:

 

  • Check your credit report and focus on optimizing your score – this is one of the biggest factors in determining your rate.
  • Calculate your budget, down payment amount, and determine if you can afford the monthly payments on the loan term.
  • Shop around with multiple banks, credit unions, and dealerships. Compare all rates and terms.
  • Get pre-approved first so you know what rates you qualify for, then negotiate the final price of the car.
  • Avoid extras like extended warranties and focus only on the purchase price and APR.
  • Carefully review the loan contract before signing and make sure you understand all the terms and costs.

 

By following these tips and doing your homework, you’ll be prepared to get the most favourable auto loan rates and terms in Edmonton. Take your time, assess all options, and don’t feel pressured into accepting a deal that doesn’t meet your needs and budget.

Questions About Car Loans in Edmonton?

To get the lowest car loan rates in Edmonton, first check your credit score and focus on improving it if needed. Shop around and compare rates from banks, credit unions, and dealerships. Getting pre-approved can help secure competitive rates. Provide a larger down payment of 20% or more and opt for a shorter loan term of 3 years. Avoid extras like extended warranties that increase the loan amount.

To qualify for the lowest advertised car loan rates from most lenders in Edmonton, you typically need a credit score of 720 or higher. Those with scores in the good range of 660-719 can still qualify for competitive rates around 5-7% for new cars and 6-10% for used cars. Subprime borrowers under 660 may pay higher rates but can still get approved.

Most lenders in Edmonton require a minimum down payment of 5-10% of the vehicle purchase price. However, a down payment of 20% or more is recommended to get the best interest rates and show lenders you are financially invested. Large down payments also lower the amount you have to borrow.

For new cars, current average interest rates from major lenders in Edmonton range from 4-7% for borrowers with good credit (scores above 660). Those with excellent credit scores above 720 can qualify for rates as low as 0-3% from some lenders.

For used cars, average interest rates are higher, typically ranging from 6-10% for buyers in Edmonton with good credit scores between 660 and 719. Those with poor credit below 660 may pay rates from 10-20% or more when financing a used vehicle.

Pre-approval allows you to shop knowing your budget and maximum loan amount. It locks in an interest rate upfront. Pre-approval also gives you leverage to negotiate the best deal on a car, since the dealer knows you are a serious buyer.

Typical documents needed for an Edmonton car loan application include your driver’s license, proof of insurance, recent pay stubs to verify income, your social insurance number, details on any trade-in vehicle, and personal references.

With all required documents submitted, it typically takes 1-3 days to get an approval decision on an Edmonton car loan. Pre-approvals can come back within 24 hours. The dealer’s finance team can also advocate to get a fast loan decision once they submit your application.

Yes, getting a pre-approval first is recommended so you know your budget and can negotiate the best deal. The dealership may be able to beat your pre-approved rate. But having a pre-approval as a backup gives you leverage in securing favorable financing terms.

Watch for added fees like documentation fees ($75-$500+), dealer prep fees ($400-$800), and extras like GAP insurance when financing in Edmonton. Make sure to negotiate an out-the-door price inclusive of fees so there are no surprises.

If you have bad credit, your best option is to apply with a co-signer who has good credit to qualify for lower rates. Allowing the dealer to submit your application to subprime lenders can also get you approved, albeit at higher rates.

No, you should always compare any dealer loan offer to rates from banks and credit unions first. Dealers get incentives to upsell loan add-ons, so make sure you understand all the terms and costs before accepting the dealer’s first offer.

Ways to reduce your monthly payment include making a larger down payment to lower the loan principal, choosing a longer loan term like 6 years, opting for a lower-priced used vehicle rather than new, or negotiating a lower purchase price for the vehicle.

Most lenders offer terms from 2 to 8 years for Edmonton car loans. Short term loans range from 24-48 months. Longer terms of 60 months (5 years) or 72-84 months (6-7 years) have lower monthly payments but higher total interest costs.

Longer loans (6-7 years) do reduce your monthly payment, but you pay much more in total interest over the life of the loan. Aim for the shortest term you can afford – 3-5 years is ideal to pay less interest and own your car sooner.

The best rates on used car loans will come from lenders like credit unions, banks, and online lenders. Dealer financing often charges 1-4% higher rates on used cars. Shopping around is key to finding the most competitive used car loan rates.

Avoid excessively long loan terms of 72 months or more and loans requiring no down payment, as these indicate you can’t afford the car. Be wary of variable interest rate loans as rates could rise over time. Avoid loans requiring credit insurance or extended warranties.

Most lenders will approve loans up to a maximum of 115% of the vehicle purchase price. So on a $30,000 car, you could qualify for a loan around $34,500 including taxes and fees. The maximum amount you can borrow also depends on your income, existing debts, and credit score.

Personal loans tend to have higher interest rates compared to auto loans from most lenders. You also don’t get the same purchase protections when buying a car with a personal loan rather than a standard auto loan. So a car-specific auto loan is the better financing option.

Personal loans tend to have higher interest rates compared to auto loans from most lenders. You also don’t get the same purchase protections when buying a car with a personal loan rather than a standard auto loan. So a car-specific auto loan is the better financing option.

 

Current Edmonton Auto Loan Rates

Average new car loan rates from major banks and lenders in Edmonton currently range between 4-7% for borrowers with good to excellent credit.

 

Here are some current new car loan rates being offered in Edmonton as of January 2023:

  • TD Auto Finance: Rates from 4.99% for new vehicles
  • RBC Royal Bank: Rates from 4.74% for new vehicles
  • Scotiabank: Rates from 4.99% for new vehicles
  • CIBC: Rates from 4.99% for new vehicles

 

For used vehicles, average interest rates are higher, typically ranging from 6-10% for buyers with good credit.

Used car rates can vary more depending on factors like vehicle age, mileage, and lender.

 

Here are some current used car loan rate ranges from major Edmonton lenders:

  • TD Auto Finance: Rates from 6.99% for used vehicles
  • RBC Royal Bank: Rates from 6.84% for used vehicles under $20K
  • ATB Financial: Rates from 7.09% for used vehicles

 

In general, those with better credit scores and lower loan amounts will qualify for the lowest advertised rates.

 

New vs Used Vehicle Loan Rates

New vehicles tend to qualify for lower interest rates compared to used vehicles. Average interest rates for new cars range from 0% to 6.99%, while used car rates are higher, typically between 5% and 22.99%.

This difference is largely due to the fact that new cars depreciate in value more slowly than used cars, especially in the first few years after purchase. Since the new car will retain a higher portion of its value over the loan term, lenders consider new cars to be lower-risk collateral for the loan. Used cars depreciate faster, so lenders charge higher rates to account for the faster loss in value.

Loan terms also tend to be more favorable for new car buyers. For example, 0% financing deals are commonly advertised for new cars, but rarely offered for used cars. New car loan terms can extend as long as 8 years, while used car loans typically max out at 6 years.

The better rates and longer loan terms available for new car purchases allow buyers to get lower monthly payments. However, longer loans also mean paying more total interest over the life of the loan. Used car buyers benefit from shorter loan terms that allow them to build equity and own their vehicles sooner.

 

Loan Term Pros and Cons

When financing a vehicle purchase in Edmonton, one of the key decisions you’ll need to make is selecting the length of your auto loan term. The loan term is the amount of time you have to repay the loan amount.

Shorter loan terms usually range from 24 to 48 months, while longer loans can stretch out to 72 months or even 84 months. There are some key pros and cons to weigh when choosing between shorter and longer auto loan terms.

 

Pros of Shorter Loan Terms

Some benefits of opting for a shorter 24-48 month auto loan include:

  • Lower interest charges over the life of the loan – you’ll pay less in total interest with a shorter-term
  • Faster equity buildup in the vehicle – you’ll reach positive equity sooner
  • Lower monthly payments after the loan is paid off
  • Shorter commitment – you’re not locked in for a lengthy 6-7 years

 

Pros of Longer Loan Terms

Some potential advantages of longer 60-84 month loans include:

  • Lower monthly payments – spreading the payments over more time reduces the monthly cost
  • Ability to purchase more expensive vehicles that may be unaffordable on a shorter-term
  • Potentially approval for borrowers with limited credit history
  • More flexibility in monthly budgeting with smaller required payments

 

When weighing loan term options, it’s important to crunch the numbers and evaluate both affordability today and total interest paid over the life of the loan. Your individual financial situation should guide whether shorter or longer terms make more sense.

 

Factors Affecting Your Auto Loan Rate

There are several key factors that influence the loan rate and terms you will be offered when financing a vehicle purchase in Edmonton:

Credit Score – Your credit score is one of the biggest determinants of your interest rate. Borrowers with excellent credit (720+ score) will qualify for the lowest rates from lenders. Those with poor credit will pay higher interest rates.

Down Payment Amount – The size of your down payment is another major factor. Larger down payments reduce the amount you have to borrow, lowering risk for the lender. A 20-50% down payment can result in significantly better rates.

Loan Term – Opting for a shorter loan term (3 years) often results in a lower interest rate than longer terms (5-7 years). Shorter terms equal less interest paid over the life of the loan.

Vehicle Type – Loans for new cars typically have lower rates than used cars. Financing an older used car with high mileage could mean paying a higher interest rate.

Income/Debt Levels – Your income-to-debt ratio is factored in. Lenders want to confirm your income is enough to comfortably handle the proposed auto loan payments.

 

How to Get the Best Deal on an Auto Loan in Edmonton

Getting the best possible deal on your auto loan requires doing your research upfront and employing some savvy negotiation strategies. Here are some tips to save money on your financing:

 

  • Shop around and compare rates from different lenders like banks, credit unions, and dealerships. Getting quotes from multiple places ensures you don’t miss out on the best rate. 
  • Consider getting pre-approved before starting your car search. This shows dealers you’re a serious buyer and can give you stronger negotiating power on the purchase price.
  • Always negotiate the vehicle purchase price first before discussing financing terms. This prevents the dealer from showing inflated rates.
  • Optimize your down payment and loan term to get the best rate. Larger down payments and shorter terms often get lower rates.
  • Look for lenders like credit unions running special rates or incentives that could score you a lower APR.
  • Make sure to avoid agreeing to unnecessary add-ons like extended warranties that inflate the loan amount.

 

Taking these steps will help you secure the most competitive auto financing rate in Edmonton and save substantially on interest charges over the loan term.

 

Avoiding Extra Fees

When financing a car, it’s important to be aware of any extra fees that can be tacked on to your auto loan. Some common fees to watch out for include:

  • Documentation fees – This covers the dealer’s administrative costs for processing your loan, but can range from $75 to over $500.
  • Dealer preparation fees – Charges for getting the car ready for sale that can add a few hundred dollars.
  • GAP insurance – Covers the difference between the loan balance and insurance payout if the car is totalled, but may be unnecessary with sufficient down payment.

 

To avoid paying excessive fees, be sure to negotiate the final price inclusive of fees and know which ones are required versus optional add-ons. You can also use an auto loan calculator to estimate the total loan cost with fees. By being an informed buyer, you can make sure you don’t agree to any unnecessary extras that inflate the price of your loan.

 

Mistakes to Avoid When Applying for an Auto Loan

Making any of these common mistakes during the auto loan application process could end up costing you big in the form of higher interest rates or loan denial:

 

Only Applying to One Lender

It’s crucial that you shop around and apply to multiple lenders, including banks, credit unions, and dealerships. Rates and terms can vary significantly, so applying to just one lender could mean missing out on considerable savings.

 

Not Checking Your Credit First

Your credit score and report are key factors that determine your loan eligibility and interest rate. Be sure to check your credit before applying so you know where you stand. If needed, take steps to improve your credit profile before submitting applications.

 

Putting Down Too Little Down Payment

A sizable down payment reduces the loan principal and shows lenders you’re financially invested. Putting little to nothing down results in higher rates or possible rejection.

 

Agreeing to a Term That’s Too Long

While lower monthly payments may be tempting, an excessively long loan term (72-84 months) means you’ll pay much more interest over time. Try to keep the term to 60 months or under.

 

Focusing Only on the Monthly Payment

Don’t just look at the monthly amount without considering the total interest charges over the loan’s lifespan. A lower monthly payment could actually mean you pay thousands more overall.

 

Optimizing Your Credit

Having good or excellent credit is one of the most impactful factors in securing the lowest auto loan rates in Edmonton. There are a number of strategies you can use to optimize your credit score and report prior to applying for an auto loan:

First, make sure to check your credit reports for any errors that may be negatively affecting your score. Dispute any inaccurate or erroneous information with the credit bureaus to get it corrected.

Pay all your bills on time, including credit cards, utilities, cell phone bills, etc. Payment history makes up a major part of your credit score calculation, so diligently paying on time will provide a boost.

Also try to lower your credit utilization ratio by paying down balances, especially on revolving credit lines like credit cards. Experts recommend keeping utilization below 30%.

Finally, avoid applying for too many new loans or credit cards in a short period of time. Each application causes a hard inquiry on your credit, which can temporarily ding your score if you have too many.

Following these tips can quickly help raise your credit score so you’re in a better position when applying for an auto loan in Edmonton.

 

Calculating Budget

Figuring out your budget and how much you can afford to spend is one of the most important steps when financing a car purchase. You’ll need to determine your down payment amount as well as an affordable monthly payment.

Experts generally recommend your monthly car payment should be 10-15% of your take-home pay after taxes. For example, if your monthly take-home income is $4,000, your car payment should be around $400-600 per month.

Your down payment amount will also impact the monthly payment. Putting down 20% or more can lower your monthly costs, but lower down payments are possible if you have good credit. Use an auto loan calculator to play with different down payment and loan amount scenarios to find affordable options.

Taking these budget factors into account before shopping for a car ensures you only look at vehicles that fit within your means. Staying within your repayment budget while getting the features you want makes financing a car purchase manageable.

 

Lender Research

One of the most important steps to getting the best auto loan is taking the time to research and compare loan options from different lenders. The major banks in Edmonton that offer auto financing include RBC, TD, Scotiabank, BMO, CIBC, and ATB Financial. There are also several credit unions like Servus Credit Union, First Calgary Financial, and Aldergrove Credit Union that are worth looking into.

When comparing lenders, look at their posted auto loan interest rates and determine if they offer discounts for certain credit scores. Also find out loan terms, down payment requirements, and any applicable fees for setting up and managing the loan. Some banks and credit unions promote special discounted rates or incentives like cash-back offers to attract new borrowers.

In addition to banks and credit unions, you may want to check rates from online lenders like Car Deal Canada and Canada Drives. While you likely won’t qualify for the lowest advertised rates since those require a perfect credit profile, online lenders can still offer competitive financing options. Your own insurance provider may also be a source for financing through insurance premium financing plans.

Dealerships often partner with lenders to offer financing as well. Compare their loan offers to ones you have pre-approved through a bank. The dealership may be able to beat the rate, allowing you to finalize the loan right there instead of going through a pre-approval lender. Just be sure to still compare all options and read the fine print.

Spend some time upfront reaching out to banks, credit unions, and other lenders for rate quotes and pre-approval. By taking the time to research all your options, you can find the lender offering the optimal auto loan rates and terms for your credit profile and financial situation.

 

Getting Pre-Approved

Getting pre-approved for an auto loan before you start shopping for a vehicle can give you a big advantage and help you secure the best rates and terms in Edmonton. Here’s an overview of the key benefits of getting pre-approved and how the pre-approval process works:

 

The main benefits of pre-approval include:

  • Knowing your budget and maximum loan amount before shopping
  • Having negotiating leverage with dealers since you’re a serious buyer
  • Locking in an interest rate ahead of time
  • Streamlining the financing process at the dealership

 

To get pre-approved, you’ll need to submit a loan application with your desired lender. This usually includes providing details on:

  • Your income, expenses and employment
  • Your credit history and score
  • The amount you want to borrow
  • The vehicle you plan to buy

 

The lender will verify this information and provide you with a pre-approval letter if you qualify. This letter will specify the loan amount, interest rate, and terms you’ve been approved for. In most cases, the pre-approval is good for 30-60 days. With a pre-approval letter in hand, you can head to the dealerships knowing you already have financing lined up at competitive rates.

 

Finding the Right Car

Once you have been pre-approved for an auto loan, you can start shopping for the right vehicle within your budget. Here are some tips for selecting a car after getting pre-approved:

Know your budget. Your pre-approval letter will state the maximum loan amount you qualify for. Make sure to factor in taxes, fees, insurance, etc. when determining the total price you can afford.

Research prices and compare options. Look at both new and used vehicles in your budget. Compare prices, features, reliability ratings, fuel efficiency, etc. to narrow down choices.

Negotiate the purchase price. Remember that the pre-approved amount is the maximum loan, not what you must spend. Negotiating a lower sales price will save on the total loan amount.

Understand the loan terms. Double-check that the loan amount, interest rate, down payment and monthly payments align with your pre-approval.

Avoid overspending. It’s easy to get tempted by upgrade packages and extras. Stick to your budget and resist the urge to spend beyond your means.

Get an inspection on used cars. Have a mechanic you trust inspect any used vehicle before finalizing the purchase.

Take the loan terms to the dealer. The pre-approval gives you leverage to negotiate the best financing.

Make sure the loan application matches. Provide the dealer with the same information you gave for pre-approval for a smooth final approval.

Review all documents carefully before signing. Read the fine print to avoid any surprises or extra fees.

 

Submitting Final Application

After you select a car from a dealership, you will submit a final loan application to purchase the vehicle. The dealer will have a finance department that can facilitate this process and submit your application to lenders. Working with the dealer for the final application can save time and make the process smoother. The dealer will obtain the necessary information and documentation from you to include with the application, such as:

 

  • Your driver’s license and proof of insurance
  • Income documentation like recent pay stubs
  • Your Social Insurance Number for credit checks
  • Information on any trade-in vehicle you plan to use

 

The dealer will then submit your completed application to banks, credit unions, or other lenders they work with. Often, there are lenders that dealers frequently partner with that offer incentives or special rates. Let the dealer know if you already have pre-approval with a particular lender, as they may be able to match or beat the rate.

Working with the dealer allows them to advocate and negotiate with lenders on your behalf. They want your business, so they will present your application in the best possible light to lenders and aim to secure favourable loan terms. This can make the final approval process faster and smoother compared to applying completely on your own.

Just be sure to still read the fine print of any loan contract the dealer secures and avoid simply accepting extra products or services you may not need. However their assistance can help you get a competitive rate and make the financing process easier.

 

Conclusion

Getting the best possible auto loan terms requires advance preparation, research, and smart negotiating. The key takeaways for securing favourable financing on your next car purchase in Edmonton include:

 

  • Check your credit report and focus on optimizing your score – this is one of the biggest factors in determining your rate.
  • Calculate your budget, down payment amount, and determine if you can afford the monthly payments on the loan term.
  • Shop around with multiple banks, credit unions, and dealerships. Compare all rates and terms.
  • Get pre-approved first so you know what rates you qualify for, then negotiate the final price of the car.
  • Avoid extras like extended warranties and focus only on the purchase price and APR.
  • Carefully review the loan contract before signing and make sure you understand all the terms and costs.

 

By following these tips and doing your homework, you’ll be prepared to get the most favourable auto loan rates and terms in Edmonton. Take your time, assess all options, and don’t feel pressured into accepting a deal that doesn’t meet your needs and budget.

Questions About Car Loans in Edmonton?

To get the lowest car loan rates in Edmonton, first check your credit score and focus on improving it if needed. Shop around and compare rates from banks, credit unions, and dealerships. Getting pre-approved can help secure competitive rates. Provide a larger down payment of 20% or more and opt for a shorter loan term of 3 years. Avoid extras like extended warranties that increase the loan amount.

To qualify for the lowest advertised car loan rates from most lenders in Edmonton, you typically need a credit score of 720 or higher. Those with scores in the good range of 660-719 can still qualify for competitive rates around 5-7% for new cars and 6-10% for used cars. Subprime borrowers under 660 may pay higher rates but can still get approved.

Most lenders in Edmonton require a minimum down payment of 5-10% of the vehicle purchase price. However, a down payment of 20% or more is recommended to get the best interest rates and show lenders you are financially invested. Large down payments also lower the amount you have to borrow.

For new cars, current average interest rates from major lenders in Edmonton range from 4-7% for borrowers with good credit (scores above 660). Those with excellent credit scores above 720 can qualify for rates as low as 0-3% from some lenders.

For used cars, average interest rates are higher, typically ranging from 6-10% for buyers in Edmonton with good credit scores between 660 and 719. Those with poor credit below 660 may pay rates from 10-20% or more when financing a used vehicle.

Pre-approval allows you to shop knowing your budget and maximum loan amount. It locks in an interest rate upfront. Pre-approval also gives you leverage to negotiate the best deal on a car, since the dealer knows you are a serious buyer.

Typical documents needed for an Edmonton car loan application include your driver’s license, proof of insurance, recent pay stubs to verify income, your social insurance number, details on any trade-in vehicle, and personal references.

With all required documents submitted, it typically takes 1-3 days to get an approval decision on an Edmonton car loan. Pre-approvals can come back within 24 hours. The dealer’s finance team can also advocate to get a fast loan decision once they submit your application.

Yes, getting a pre-approval first is recommended so you know your budget and can negotiate the best deal. The dealership may be able to beat your pre-approved rate. But having a pre-approval as a backup gives you leverage in securing favorable financing terms.

Watch for added fees like documentation fees ($75-$500+), dealer prep fees ($400-$800), and extras like GAP insurance when financing in Edmonton. Make sure to negotiate an out-the-door price inclusive of fees so there are no surprises.

If you have bad credit, your best option is to apply with a co-signer who has good credit to qualify for lower rates. Allowing the dealer to submit your application to subprime lenders can also get you approved, albeit at higher rates.

No, you should always compare any dealer loan offer to rates from banks and credit unions first. Dealers get incentives to upsell loan add-ons, so make sure you understand all the terms and costs before accepting the dealer’s first offer.

Ways to reduce your monthly payment include making a larger down payment to lower the loan principal, choosing a longer loan term like 6 years, opting for a lower-priced used vehicle rather than new, or negotiating a lower purchase price for the vehicle.

Most lenders offer terms from 2 to 8 years for Edmonton car loans. Short term loans range from 24-48 months. Longer terms of 60 months (5 years) or 72-84 months (6-7 years) have lower monthly payments but higher total interest costs.

Longer loans (6-7 years) do reduce your monthly payment, but you pay much more in total interest over the life of the loan. Aim for the shortest term you can afford – 3-5 years is ideal to pay less interest and own your car sooner.

The best rates on used car loans will come from lenders like credit unions, banks, and online lenders. Dealer financing often charges 1-4% higher rates on used cars. Shopping around is key to finding the most competitive used car loan rates.

Avoid excessively long loan terms of 72 months or more and loans requiring no down payment, as these indicate you can’t afford the car. Be wary of variable interest rate loans as rates could rise over time. Avoid loans requiring credit insurance or extended warranties.

Most lenders will approve loans up to a maximum of 115% of the vehicle purchase price. So on a $30,000 car, you could qualify for a loan around $34,500 including taxes and fees. The maximum amount you can borrow also depends on your income, existing debts, and credit score.

Personal loans tend to have higher interest rates compared to auto loans from most lenders. You also don’t get the same purchase protections when buying a car with a personal loan rather than a standard auto loan. So a car-specific auto loan is the better financing option.

Personal loans tend to have higher interest rates compared to auto loans from most lenders. You also don’t get the same purchase protections when buying a car with a personal loan rather than a standard auto loan. So a car-specific auto loan is the better financing option.

 

Current Edmonton Auto Loan Rates

Average new car loan rates from major banks and lenders in Edmonton currently range between 4-7% for borrowers with good to excellent credit.

 

Here are some current new car loan rates being offered in Edmonton as of January 2023:

  • TD Auto Finance: Rates from 4.99% for new vehicles
  • RBC Royal Bank: Rates from 4.74% for new vehicles
  • Scotiabank: Rates from 4.99% for new vehicles
  • CIBC: Rates from 4.99% for new vehicles

 

For used vehicles, average interest rates are higher, typically ranging from 6-10% for buyers with good credit.

Used car rates can vary more depending on factors like vehicle age, mileage, and lender.

 

Here are some current used car loan rate ranges from major Edmonton lenders:

  • TD Auto Finance: Rates from 6.99% for used vehicles
  • RBC Royal Bank: Rates from 6.84% for used vehicles under $20K
  • ATB Financial: Rates from 7.09% for used vehicles

 

In general, those with better credit scores and lower loan amounts will qualify for the lowest advertised rates.

 

New vs Used Vehicle Loan Rates

New vehicles tend to qualify for lower interest rates compared to used vehicles. Average interest rates for new cars range from 0% to 6.99%, while used car rates are higher, typically between 5% and 22.99%.

This difference is largely due to the fact that new cars depreciate in value more slowly than used cars, especially in the first few years after purchase. Since the new car will retain a higher portion of its value over the loan term, lenders consider new cars to be lower-risk collateral for the loan. Used cars depreciate faster, so lenders charge higher rates to account for the faster loss in value.

Loan terms also tend to be more favorable for new car buyers. For example, 0% financing deals are commonly advertised for new cars, but rarely offered for used cars. New car loan terms can extend as long as 8 years, while used car loans typically max out at 6 years.

The better rates and longer loan terms available for new car purchases allow buyers to get lower monthly payments. However, longer loans also mean paying more total interest over the life of the loan. Used car buyers benefit from shorter loan terms that allow them to build equity and own their vehicles sooner.

 

Loan Term Pros and Cons

When financing a vehicle purchase in Edmonton, one of the key decisions you’ll need to make is selecting the length of your auto loan term. The loan term is the amount of time you have to repay the loan amount.

Shorter loan terms usually range from 24 to 48 months, while longer loans can stretch out to 72 months or even 84 months. There are some key pros and cons to weigh when choosing between shorter and longer auto loan terms.

 

Pros of Shorter Loan Terms

Some benefits of opting for a shorter 24-48 month auto loan include:

  • Lower interest charges over the life of the loan – you’ll pay less in total interest with a shorter-term
  • Faster equity buildup in the vehicle – you’ll reach positive equity sooner
  • Lower monthly payments after the loan is paid off
  • Shorter commitment – you’re not locked in for a lengthy 6-7 years

 

Pros of Longer Loan Terms

Some potential advantages of longer 60-84 month loans include:

  • Lower monthly payments – spreading the payments over more time reduces the monthly cost
  • Ability to purchase more expensive vehicles that may be unaffordable on a shorter-term
  • Potentially approval for borrowers with limited credit history
  • More flexibility in monthly budgeting with smaller required payments

 

When weighing loan term options, it’s important to crunch the numbers and evaluate both affordability today and total interest paid over the life of the loan. Your individual financial situation should guide whether shorter or longer terms make more sense.

 

Factors Affecting Your Auto Loan Rate

There are several key factors that influence the loan rate and terms you will be offered when financing a vehicle purchase in Edmonton:

Credit Score – Your credit score is one of the biggest determinants of your interest rate. Borrowers with excellent credit (720+ score) will qualify for the lowest rates from lenders. Those with poor credit will pay higher interest rates.

Down Payment Amount – The size of your down payment is another major factor. Larger down payments reduce the amount you have to borrow, lowering risk for the lender. A 20-50% down payment can result in significantly better rates.

Loan Term – Opting for a shorter loan term (3 years) often results in a lower interest rate than longer terms (5-7 years). Shorter terms equal less interest paid over the life of the loan.

Vehicle Type – Loans for new cars typically have lower rates than used cars. Financing an older used car with high mileage could mean paying a higher interest rate.

Income/Debt Levels – Your income-to-debt ratio is factored in. Lenders want to confirm your income is enough to comfortably handle the proposed auto loan payments.

 

How to Get the Best Deal on an Auto Loan in Edmonton

Getting the best possible deal on your auto loan requires doing your research upfront and employing some savvy negotiation strategies. Here are some tips to save money on your financing:

 

  • Shop around and compare rates from different lenders like banks, credit unions, and dealerships. Getting quotes from multiple places ensures you don’t miss out on the best rate. 
  • Consider getting pre-approved before starting your car search. This shows dealers you’re a serious buyer and can give you stronger negotiating power on the purchase price.
  • Always negotiate the vehicle purchase price first before discussing financing terms. This prevents the dealer from showing inflated rates.
  • Optimize your down payment and loan term to get the best rate. Larger down payments and shorter terms often get lower rates.
  • Look for lenders like credit unions running special rates or incentives that could score you a lower APR.
  • Make sure to avoid agreeing to unnecessary add-ons like extended warranties that inflate the loan amount.

 

Taking these steps will help you secure the most competitive auto financing rate in Edmonton and save substantially on interest charges over the loan term.

 

Avoiding Extra Fees

When financing a car, it’s important to be aware of any extra fees that can be tacked on to your auto loan. Some common fees to watch out for include:

  • Documentation fees – This covers the dealer’s administrative costs for processing your loan, but can range from $75 to over $500.
  • Dealer preparation fees – Charges for getting the car ready for sale that can add a few hundred dollars.
  • GAP insurance – Covers the difference between the loan balance and insurance payout if the car is totalled, but may be unnecessary with sufficient down payment.

 

To avoid paying excessive fees, be sure to negotiate the final price inclusive of fees and know which ones are required versus optional add-ons. You can also use an auto loan calculator to estimate the total loan cost with fees. By being an informed buyer, you can make sure you don’t agree to any unnecessary extras that inflate the price of your loan.

 

Mistakes to Avoid When Applying for an Auto Loan

Making any of these common mistakes during the auto loan application process could end up costing you big in the form of higher interest rates or loan denial:

 

Only Applying to One Lender

It’s crucial that you shop around and apply to multiple lenders, including banks, credit unions, and dealerships. Rates and terms can vary significantly, so applying to just one lender could mean missing out on considerable savings.

 

Not Checking Your Credit First

Your credit score and report are key factors that determine your loan eligibility and interest rate. Be sure to check your credit before applying so you know where you stand. If needed, take steps to improve your credit profile before submitting applications.

 

Putting Down Too Little Down Payment

A sizable down payment reduces the loan principal and shows lenders you’re financially invested. Putting little to nothing down results in higher rates or possible rejection.

 

Agreeing to a Term That’s Too Long

While lower monthly payments may be tempting, an excessively long loan term (72-84 months) means you’ll pay much more interest over time. Try to keep the term to 60 months or under.

 

Focusing Only on the Monthly Payment

Don’t just look at the monthly amount without considering the total interest charges over the loan’s lifespan. A lower monthly payment could actually mean you pay thousands more overall.

 

Optimizing Your Credit

Having good or excellent credit is one of the most impactful factors in securing the lowest auto loan rates in Edmonton. There are a number of strategies you can use to optimize your credit score and report prior to applying for an auto loan:

First, make sure to check your credit reports for any errors that may be negatively affecting your score. Dispute any inaccurate or erroneous information with the credit bureaus to get it corrected.

Pay all your bills on time, including credit cards, utilities, cell phone bills, etc. Payment history makes up a major part of your credit score calculation, so diligently paying on time will provide a boost.

Also try to lower your credit utilization ratio by paying down balances, especially on revolving credit lines like credit cards. Experts recommend keeping utilization below 30%.

Finally, avoid applying for too many new loans or credit cards in a short period of time. Each application causes a hard inquiry on your credit, which can temporarily ding your score if you have too many.

Following these tips can quickly help raise your credit score so you’re in a better position when applying for an auto loan in Edmonton.

 

Calculating Budget

Figuring out your budget and how much you can afford to spend is one of the most important steps when financing a car purchase. You’ll need to determine your down payment amount as well as an affordable monthly payment.

Experts generally recommend your monthly car payment should be 10-15% of your take-home pay after taxes. For example, if your monthly take-home income is $4,000, your car payment should be around $400-600 per month.

Your down payment amount will also impact the monthly payment. Putting down 20% or more can lower your monthly costs, but lower down payments are possible if you have good credit. Use an auto loan calculator to play with different down payment and loan amount scenarios to find affordable options.

Taking these budget factors into account before shopping for a car ensures you only look at vehicles that fit within your means. Staying within your repayment budget while getting the features you want makes financing a car purchase manageable.

 

Lender Research

One of the most important steps to getting the best auto loan is taking the time to research and compare loan options from different lenders. The major banks in Edmonton that offer auto financing include RBC, TD, Scotiabank, BMO, CIBC, and ATB Financial. There are also several credit unions like Servus Credit Union, First Calgary Financial, and Aldergrove Credit Union that are worth looking into.

When comparing lenders, look at their posted auto loan interest rates and determine if they offer discounts for certain credit scores. Also find out loan terms, down payment requirements, and any applicable fees for setting up and managing the loan. Some banks and credit unions promote special discounted rates or incentives like cash-back offers to attract new borrowers.

In addition to banks and credit unions, you may want to check rates from online lenders like Car Deal Canada and Canada Drives. While you likely won’t qualify for the lowest advertised rates since those require a perfect credit profile, online lenders can still offer competitive financing options. Your own insurance provider may also be a source for financing through insurance premium financing plans.

Dealerships often partner with lenders to offer financing as well. Compare their loan offers to ones you have pre-approved through a bank. The dealership may be able to beat the rate, allowing you to finalize the loan right there instead of going through a pre-approval lender. Just be sure to still compare all options and read the fine print.

Spend some time upfront reaching out to banks, credit unions, and other lenders for rate quotes and pre-approval. By taking the time to research all your options, you can find the lender offering the optimal auto loan rates and terms for your credit profile and financial situation.

 

Getting Pre-Approved

Getting pre-approved for an auto loan before you start shopping for a vehicle can give you a big advantage and help you secure the best rates and terms in Edmonton. Here’s an overview of the key benefits of getting pre-approved and how the pre-approval process works:

 

The main benefits of pre-approval include:

  • Knowing your budget and maximum loan amount before shopping
  • Having negotiating leverage with dealers since you’re a serious buyer
  • Locking in an interest rate ahead of time
  • Streamlining the financing process at the dealership

 

To get pre-approved, you’ll need to submit a loan application with your desired lender. This usually includes providing details on:

  • Your income, expenses and employment
  • Your credit history and score
  • The amount you want to borrow
  • The vehicle you plan to buy

 

The lender will verify this information and provide you with a pre-approval letter if you qualify. This letter will specify the loan amount, interest rate, and terms you’ve been approved for. In most cases, the pre-approval is good for 30-60 days. With a pre-approval letter in hand, you can head to the dealerships knowing you already have financing lined up at competitive rates.

 

Finding the Right Car

Once you have been pre-approved for an auto loan, you can start shopping for the right vehicle within your budget. Here are some tips for selecting a car after getting pre-approved:

Know your budget. Your pre-approval letter will state the maximum loan amount you qualify for. Make sure to factor in taxes, fees, insurance, etc. when determining the total price you can afford.

Research prices and compare options. Look at both new and used vehicles in your budget. Compare prices, features, reliability ratings, fuel efficiency, etc. to narrow down choices.

Negotiate the purchase price. Remember that the pre-approved amount is the maximum loan, not what you must spend. Negotiating a lower sales price will save on the total loan amount.

Understand the loan terms. Double-check that the loan amount, interest rate, down payment and monthly payments align with your pre-approval.

Avoid overspending. It’s easy to get tempted by upgrade packages and extras. Stick to your budget and resist the urge to spend beyond your means.

Get an inspection on used cars. Have a mechanic you trust inspect any used vehicle before finalizing the purchase.

Take the loan terms to the dealer. The pre-approval gives you leverage to negotiate the best financing.

Make sure the loan application matches. Provide the dealer with the same information you gave for pre-approval for a smooth final approval.

Review all documents carefully before signing. Read the fine print to avoid any surprises or extra fees.

 

Submitting Final Application

After you select a car from a dealership, you will submit a final loan application to purchase the vehicle. The dealer will have a finance department that can facilitate this process and submit your application to lenders. Working with the dealer for the final application can save time and make the process smoother. The dealer will obtain the necessary information and documentation from you to include with the application, such as:

 

  • Your driver’s license and proof of insurance
  • Income documentation like recent pay stubs
  • Your Social Insurance Number for credit checks
  • Information on any trade-in vehicle you plan to use

 

The dealer will then submit your completed application to banks, credit unions, or other lenders they work with. Often, there are lenders that dealers frequently partner with that offer incentives or special rates. Let the dealer know if you already have pre-approval with a particular lender, as they may be able to match or beat the rate.

Working with the dealer allows them to advocate and negotiate with lenders on your behalf. They want your business, so they will present your application in the best possible light to lenders and aim to secure favourable loan terms. This can make the final approval process faster and smoother compared to applying completely on your own.

Just be sure to still read the fine print of any loan contract the dealer secures and avoid simply accepting extra products or services you may not need. However their assistance can help you get a competitive rate and make the financing process easier.

 

Conclusion

Getting the best possible auto loan terms requires advance preparation, research, and smart negotiating. The key takeaways for securing favourable financing on your next car purchase in Edmonton include:

 

  • Check your credit report and focus on optimizing your score – this is one of the biggest factors in determining your rate.
  • Calculate your budget, down payment amount, and determine if you can afford the monthly payments on the loan term.
  • Shop around with multiple banks, credit unions, and dealerships. Compare all rates and terms.
  • Get pre-approved first so you know what rates you qualify for, then negotiate the final price of the car.
  • Avoid extras like extended warranties and focus only on the purchase price and APR.
  • Carefully review the loan contract before signing and make sure you understand all the terms and costs.

 

By following these tips and doing your homework, you’ll be prepared to get the most favourable auto loan rates and terms in Edmonton. Take your time, assess all options, and don’t feel pressured into accepting a deal that doesn’t meet your needs and budget.

Get Approved Today

See if you qualify in under 60 seconds

Questions About Car Loans in Edmonton?

To get the lowest car loan rates in Edmonton, first check your credit score and focus on improving it if needed. Shop around and compare rates from banks, credit unions, and dealerships. Getting pre-approved can help secure competitive rates. Provide a larger down payment of 20% or more and opt for a shorter loan term of 3 years. Avoid extras like extended warranties that increase the loan amount.

To qualify for the lowest advertised car loan rates from most lenders in Edmonton, you typically need a credit score of 720 or higher. Those with scores in the good range of 660-719 can still qualify for competitive rates around 5-7% for new cars and 6-10% for used cars. Subprime borrowers under 660 may pay higher rates but can still get approved.

Most lenders in Edmonton require a minimum down payment of 5-10% of the vehicle purchase price. However, a down payment of 20% or more is recommended to get the best interest rates and show lenders you are financially invested. Large down payments also lower the amount you have to borrow.

For new cars, current average interest rates from major lenders in Edmonton range from 4-7% for borrowers with good credit (scores above 660). Those with excellent credit scores above 720 can qualify for rates as low as 0-3% from some lenders.

For used cars, average interest rates are higher, typically ranging from 6-10% for buyers in Edmonton with good credit scores between 660 and 719. Those with poor credit below 660 may pay rates from 10-20% or more when financing a used vehicle.

Pre-approval allows you to shop knowing your budget and maximum loan amount. It locks in an interest rate upfront. Pre-approval also gives you leverage to negotiate the best deal on a car, since the dealer knows you are a serious buyer.

Typical documents needed for an Edmonton car loan application include your driver’s license, proof of insurance, recent pay stubs to verify income, your social insurance number, details on any trade-in vehicle, and personal references.

With all required documents submitted, it typically takes 1-3 days to get an approval decision on an Edmonton car loan. Pre-approvals can come back within 24 hours. The dealer’s finance team can also advocate to get a fast loan decision once they submit your application.

Yes, getting a pre-approval first is recommended so you know your budget and can negotiate the best deal. The dealership may be able to beat your pre-approved rate. But having a pre-approval as a backup gives you leverage in securing favorable financing terms.

Watch for added fees like documentation fees ($75-$500+), dealer prep fees ($400-$800), and extras like GAP insurance when financing in Edmonton. Make sure to negotiate an out-the-door price inclusive of fees so there are no surprises.

If you have bad credit, your best option is to apply with a co-signer who has good credit to qualify for lower rates. Allowing the dealer to submit your application to subprime lenders can also get you approved, albeit at higher rates.

No, you should always compare any dealer loan offer to rates from banks and credit unions first. Dealers get incentives to upsell loan add-ons, so make sure you understand all the terms and costs before accepting the dealer’s first offer.

Ways to reduce your monthly payment include making a larger down payment to lower the loan principal, choosing a longer loan term like 6 years, opting for a lower-priced used vehicle rather than new, or negotiating a lower purchase price for the vehicle.

Most lenders offer terms from 2 to 8 years for Edmonton car loans. Short term loans range from 24-48 months. Longer terms of 60 months (5 years) or 72-84 months (6-7 years) have lower monthly payments but higher total interest costs.

Longer loans (6-7 years) do reduce your monthly payment, but you pay much more in total interest over the life of the loan. Aim for the shortest term you can afford – 3-5 years is ideal to pay less interest and own your car sooner.

The best rates on used car loans will come from lenders like credit unions, banks, and online lenders. Dealer financing often charges 1-4% higher rates on used cars. Shopping around is key to finding the most competitive used car loan rates.

Avoid excessively long loan terms of 72 months or more and loans requiring no down payment, as these indicate you can’t afford the car. Be wary of variable interest rate loans as rates could rise over time. Avoid loans requiring credit insurance or extended warranties.

Most lenders will approve loans up to a maximum of 115% of the vehicle purchase price. So on a $30,000 car, you could qualify for a loan around $34,500 including taxes and fees. The maximum amount you can borrow also depends on your income, existing debts, and credit score.

Personal loans tend to have higher interest rates compared to auto loans from most lenders. You also don’t get the same purchase protections when buying a car with a personal loan rather than a standard auto loan. So a car-specific auto loan is the better financing option.

Personal loans tend to have higher interest rates compared to auto loans from most lenders. You also don’t get the same purchase protections when buying a car with a personal loan rather than a standard auto loan. So a car-specific auto loan is the better financing option.

Get Approved Today

See if you qualify in under 60 seconds