Car Deal Canada

St. Catharines Car Loans

St. Catharines Car

In St. Catharines and across Canada, most people need financing in order to purchase a new or used vehicle. With the average price of a new vehicle hovering around $40,000 CAD in 2022, and used cars still costing in the tens of thousands of dollars, paying cash is simply not an option for most buyers.

That’s where car loans come in – they allow you to spread out the cost of your vehicle over months or years, making that shiny new ride much more affordable. But with so many options out there for loans and financing, it can be hard to know where to start.

In this comprehensive guide, we’ll walk you through everything you need to know about getting a car loan in St. Catharines and the rest of Canada. We’ll look at the different types of loans, interest rates, how credit scores affect your options, and tips for getting the best deal. Whether you have perfect credit or are rebuilding, you’ll learn how to get approved and find a payment that fits your budget.

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Types of Car Loans Available

When shopping for a car loan, one of the first decisions you’ll need to make is whether you want to finance a new or used vehicle. Both options have their pros and cons.

 

New Car Loans

New car loans typically have lower interest rates and longer repayment terms than used car loans. Interest rates can range from 0% for certain promotions up to around 5% for buyers with excellent credit. Loan terms are usually 36 to 72 months.

The benefit of a new car loan is you get the latest model with the newest features. New cars also come with warranties to cover repairs for the first few years. The downside is that new cars depreciate quickly, so you may end up owing more than the car is worth if you want to sell or trade it in after a few years.

 

Used Car Loans

For a used car, interest rates are higher, usually in the 5-10% range depending on your credit score. Loan terms are shorter too, typically 24 to 60 months.

The benefit of a used car loan is you pay a lower price upfront. The used car has already undergone initial depreciation. The downside is interest rates are higher, and older cars may require more maintenance and repairs which add to your total cost of ownership.

When weighing new vs. used, consider your budget, current financial situation, and how long you plan to own the vehicle. Both options have their merits for the right buyer.

 

How Car Loans Work

When financing a car purchase, the car itself serves as collateral for the loan. This means the lender can repossess the car if you default on the loan. Here’s an overview of how the car loan process typically works:

 

  1. Get Pre-Approved

Before shopping for a car, it’s wise to get pre-approved for a car loan. This allows you to know your budget and interest rate ahead of time. Pre-approval is quick and doesn’t obligate you to accept the loan.

 

  1. Find the Right Car

Once pre-approved, you can focus your car search on vehicles that fit your budget and needs. Having financing already secured gives you bargaining power when negotiating with dealers.

 

  1. Finalize the Loan

After selecting a car, you’ll finalize the loan details including the interest rate, loan term, down payment amount, trade-in value, fees, and monthly payments.

 

  1. Sign the Paperwork

You’ll sign the final loan agreement paperwork and take possession of the car. The lender will perfect their security interest by noting the lien on the vehicle’s title.

 

  1. Make Monthly Payments

As agreed upon, you’ll make monthly payments over the loan term until it’s paid off. Payments go toward the principal, interest, and any fees.

That covers the basic process of obtaining car loan financing! With an auto loan, you can pay off the car over time while still enjoying it right away.

 

Interest Rates for Car Loans

Interest rates can vary widely when financing a car in Canada. According to Statistics Canada, the average interest rate for a car loan is 8.33%, but rates can range anywhere from 5% to 29% depending on your credit situation and the lender.

Lenders assess how much risk you pose as a borrower when determining what interest rate to offer you. The higher the risk, the higher the rate since the lender wants to compensate for the additional risk.

Here are some of the key factors that influence your interest rate:

 

  • Credit score – The higher your credit score, the lower the rate since you’re seen as lower risk.
  • Down payment – The more you put down, the lower the rate since you’re financing less.
  • Loan term – Shorter terms often have lower rates.
  • Your income and debt levels – If you have high income and low debts, you may qualify for a lower rate.
  • Type of vehicle – New cars often qualify for better rates than used.
  • Lender programs – Some lenders offer lower rates for certain borrowers as part of special programs.

 

So when shopping for a car loan, it pays to check your credit, optimize your down payment if possible, and compare rates from different lenders to find the lowest rate available to you.

 

Banks for Car Loans

For residents of St. Catharines looking to finance a new or used vehicle, some of the top banks to consider for car loans include:

 

TD Canada Trust

TD Canada Trust offers competitive interest rates on auto loans and flexible terms from 12 to 96 months. Pre-approval is available to determine rates and loan amounts before shopping. TD also offers flexible payment options and the ability to defer payments for up to 120 days in case of financial hardship.

 

RBC Royal Bank

Royal Bank of Canada is one of the big five banks in Canada and provides auto financing through RBC Royal Bank. RBC offers online applications, fast approvals, and low interest rates. Loans terms range from 12 to 84 months, with flexible repayment options.

 

Scotiabank

The Bank of Nova Scotia, also known as Scotiabank, provides car loans with no fees or prepayment penalties. Scotiabank offers terms from 12 to 84 months and provides pre-approval. Used vehicle loans and specialty financing is available for unique situations.

 

CIBC

The Canadian Imperial Bank of Commerce (CIBC) offers competitive interest rates on new and used vehicle loans. CIBC provides flexible terms from 12 to 96 months, with options to defer payments for up to 6 months. Fast approvals and pre-approvals are available.

 

National Bank

National Bank of Canada offers online applications for easy auto financing. Flexible terms range from 12 to 84 months. Pre-approval lets buyers know their budget and rate before shopping. Existing National Bank clients may receive preferred rates.

 

Credit Unions for Car Loans

Credit unions can be a great option for getting a car loan in St. Catharines. Here are some of the top credit unions for car loans in the area:

 

Meridian Credit Union – Meridian has very competitive rates starting as low as 3.99% for new vehicles and 4.99% for used. They offer flexible terms from 12-96 months. Meridian has branches located throughout Niagara.

 

FirstOntario Credit Union – FirstOntario offers rates as low as 3.99% on new and used vehicle loans. They have a quick and easy online application process and several locations in St. Catharines.

 

Niagara Credit Union – Niagara Credit Union provides great rates for their members. They offer terms from 12-84 months and have branches in St. Catharines, Niagara Falls, Welland, and Fort Erie.

 

Libro Credit Union – Libro has an online car loan calculator to help you estimate payments. Their rates are competitive and they offer flexible terms. Libro has a St. Catharines branch located on Ontario Street.

 

Coast Capital Savings Federal Credit Union – Coast Capital has competitive pricing for car loans. Although they don’t have a branch located in St. Catharines, members can apply and manage their loans online or by phone.

 

Dealerships Offering Financing in St. Catharines

When looking for car financing, visiting local dealerships in St. Catharines is a convenient option. Many dealerships have their own financing departments and work with lenders to offer competitive rates and loan terms to customers. Here are some of the top dealerships with financing options in St. Catharines:

 

Performance Toyota

Performance Toyota is a reputable Toyota dealership located on Ontario Street in St. Catharines. They have an onsite finance department that offers financing through Toyota Financial Services. Customers can apply for new and used vehicle loans, including leases, right at the dealership.

 

Subaru of Niagara

This Subaru dealer provides financing through Subaru Financial Services Canada for new and used Subaru models. Their finance team helps customers through every step of the application and approval process. They offer competitive interest rates and flexible terms.

 

Audi St. Catharines

The Audi dealership in St. Catharines has a finance center focused on getting customers approved for Audi Financial Services loans. They handle new, used, and CPO Audi financing, including leases. The knowledgeable staff simplifies the process.

 

Kia of St. Catharines

This Kia dealer works with Kia Financial to offer financing on new and used vehicles. Their financing team has experience helping those with no credit history get their first auto loan. They provide an easy application process.

 

Skyway Fine Cars

Skyway Fine Cars provides financing assistance for used vehicles of various makes and models. They have an in-house financing department that works to secure customers competitive rates through trusted lenders.

 

Bad Credit Car Loans

If you have bad credit or no credit history, getting approved for a traditional car loan can be challenging. However, there are still options available to help you get financing.

Lenders that specialize in bad credit loans will often approve borrowers with credit scores as low as 500. The tradeoff is that your interest rate will be much higher than those with good credit. Rates for bad credit car loans can range from 10% on the low end up to over 20% for applicants with very poor credit.

Some lenders to consider for bad credit car loans in St. Catharines include:

 

  • Car Deal Canada
  • Canada Drives
  • AutoLoans.ca
  • The Loan Arranger

 

To get approved, the lender will want to see proof of income, residency, and may request a higher down payment. Having a co-signer with better credit can also improve your chances. Shop around with multiple lenders, as rates and approval criteria will vary. With some work, those with less-than-ideal credit can still find a car loan in St. Catharines.

 

Refinancing Existing Car Loans

If you took out a car loan when you had bad credit or were paying a high interest rate, refinancing can potentially help lower your payments and interest rate. Refinancing involves taking out a new loan to pay off your existing auto loan. It allows you to take advantage of better credit or lower interest rates now available.

The best time to refinance a car loan is when you can get at least 2% lower interest rate than your current loan. This threshold makes it worth paying any fees associated with refinancing. You also want to refinance when you still have at least 12 months left on your current loan term. This allows you to get the maximum interest savings from the refinance.

To refinance, you first need to check your credit score to ensure you qualify for improved rates. Shop around with banks, credit unions, and dealerships and compare interest rate offers. Calculate your potential monthly and total interest savings from refinancing. Then complete a loan application with the lender offering the best terms. You will sign a new loan contract and your old auto loan will be paid off. Make sure to read the fine print for any prepayment penalties from your existing lender.

Refinancing an auto loan is an excellent strategy if you can lower your interest rate by 2% or more. It results in lowered monthly payments, interest savings, and faster debt repayment. Just be sure to compare all options to find the best refinance loan terms.

 

Lease Buyouts

One option at the end of a car lease is to buy out the lease and keep the vehicle. There are some pros and cons to consider when deciding whether to buy out your lease.

The main benefits of buying out your lease are:

 

  • You keep a car you already know the history and condition of.
  • You avoid having to shop for and finance another vehicle.
  • Any equity you’ve built in the vehicle transfers to you instead of the leasing company.
  • You avoid disposition fees charged by the leasing company.

 

The potential downsides include:

 

  • You may be able to find a better deal on a newer model vehicle.
  • The buyout price may be higher than current market value.
  • You’ll need to arrange financing for the buyout.
  • You’ll now be responsible for repairs and maintenance.

 

If you have positive equity in the vehicle and can get good financing terms, buying out the lease can make a lot of sense. But run the numbers carefully and compare to other options before deciding.

 

Improving Credit for Better Rates

Your credit score plays a big role in determining the interest rate you can qualify for on a car loan. The higher your credit score, the better the rate you can get. Here are some tips for improving your credit score to potentially get approved for a lower rate on your next auto loan:

 

  • Pay all your bills on time – Payment history makes up a significant portion of your credit score. Get in the habit of paying all your bills on time, including credit cards, utilities, phone bills, etc.
  • Pay down balances – Keep credit card balances low. High balances can negatively impact your credit utilization ratio.
  • Limit new credit applications – Each new credit application can cause a small, temporary drop in your credit score. Avoid applying for multiple new credits in a short period of time.
  • Monitor your credit report – Review your credit report regularly and dispute any inaccurate information that could be bringing your score down.
  • Become an authorized user – Ask a family member with good credit to add you as an authorized user on their credit card. It can help boost your score.

 

With a higher credit score, you may qualify for the best rates on a new or used car loan, potentially saving you hundreds or even thousands of dollars over the term of the loan. Give yourself plenty of time to work on improving your credit before shopping for a car loan.

 

Co-Signing a Car Loan

Co-signing a car loan can be a good option for some borrowers who may not qualify for financing on their own. A co-signer agrees to be responsible for the loan payments if the primary borrower defaults. This allows the borrower to qualify for better interest rates that they may not get otherwise.

Co-signing makes the most sense when:

 

  • The primary borrower has little or poor credit history – Having an established co-signer with good credit can help them get approved and build credit.
  • The primary borrower has high debt-to-income ratio – A co-signer with lower DTI can help balance this out.
  • The borrower is young and hasn’t established credit yet – Parents often co-sign for students or young adults to help them get their first car loan.
  • Borrower can’t provide sufficient income documentation – Self-employed or gig workers can use a co-signer to supplement this.
  • The borrower plans to refinance the loan into their own name – After 1-2 years of on-time payments, they can refinance without the co-signer.

 

The co-signer takes on equal responsibility for the loan, so it should be someone the borrower trusts to make the payments if needed. Overall, co-signing can open up more affordable financing options when done carefully and responsibly.

 

Pre-Approval Process

Getting pre-approved for a car loan before visiting the dealership can give you leverage in negotiating the final price. Here’s an overview of the pre-approval process:

 

Start With Research

To get pre-approved, first research interest rates and terms from banks, credit unions and online lenders. This will help you find the best loan options before applying.

 

Gather Documentation

Lenders will require proof of income, identity, residence and potentially other documentation for the pre-approval. Have these ready before starting applications.

 

Apply for Pre-Approval

Submit a car loan application with your desired lender. This is a soft credit check that won’t impact your score. If approved, you’ll get a pre-approval letter with loan terms.

 

Shop With Leverage

Bring your pre-approval letter when shopping for a car. This gives you negotiating power, as the dealer knows you already have financing secured.

Getting pre-approved can simplify the financing process and help you score the best deal. Make sure to shop around for the most competitive pre-approval terms.

 

Documents Needed

When applying for a car loan, there are certain documents you’ll need to provide to lenders to verify your identity, income, and ability to repay the loan. Having these documents ready can help streamline the application and approval process.

Here are some of the main documents lenders will require:

 

  • Driver’s license – This verifies your identity and that you are legally allowed to drive.
  • Social insurance number – Required for the credit check lenders run to see your credit history.
  • Proof of income – Recent pay stubs or a letter from your employer to confirm your income. Self-employed may need tax returns.
  • Proof of residence – Utility bills or bank statements with your current address.
  • Down payment – Proof you have the down payment amount, like bank statements.
  • Proof of auto insurance – You’ll need liability coverage before driving the car off the lot.
  • Trade-in paperwork – If you’re trading in a vehicle, the title, loan payoff information, etc.

 

Having all these documents ready will show lenders you are organized and prepared. It can help speed up the loan approval process so you can drive your new car home sooner.

 

Conclusion

If you’re in the St. Catharines, Ontario area and looking to finance a car purchase, there are several options available for securing an auto loan. Whether your credit is pristine or poor, dealerships, banks, credit unions, and specialized lenders in the region can likely assist with affordable financing terms. By comparing interest rates, repayment terms, and fees, you can find the best loan for your current situation.

Preparation is key – go into the lending process with a solid budget, proof of income, a reasonable down payment, and knowing your credit score. Shopping around beforehand online can give you an idea of what deals might apply. Consider lending incentives, manufacturer financing offers, and the possibility of a co-signer if need be.

Working to improve your credit score and history in advance will open up better loan offers with lower interest rates. But even with less-than-perfect credit, subprime lending exists to help you get reasonable financing for buying a reliable vehicle. With persistence and diligence, those in the St. Catharines area can secure suitable auto financing through the many lenders serving the region.

Questions About Car Loans in St. Catharines?

The average interest rate for car loans in St. Catharines tends to be around 8-10%. However, rates can vary significantly depending on your credit score and history. Those with excellent credit can qualify for rates as low as 3-4%, while those with poor credit may pay interest rates of 15% or higher. When shopping for a car loan, be sure to compare rates from multiple lenders to find the best deal.

Several lenders in St. Catharines specialize in bad credit auto loans, including Cars Unlimited Niagara, Courtesy Auto Sales Inc., Canada Drives, AutoLoans.ca, Clean and Shine Auto Sales Ltd, Two Guys Quality Cars, Kia of St. Catharines, Skyway Fine Cars, and more. These dealerships work with special finance lenders focused on applicants with credit challenges. They can often help those with bankruptcies, repossessions, and collections get approved. While interest rates may be higher, a bad credit auto loan can help you get reliable transportation.

Some of the easiest places to get approved for a car loan in St. Catharines are buy here, pay here dealerships like Cars Unlimited Niagara, Courtesy Auto Sales Inc., Clean and Shine Auto Sales Ltd, Two Guys Quality Cars, and Kia of St. Catharines. These dealerships have their own in-house financing and tend to be more flexible on credit requirements than banks or other lenders. They understand credit challenges and can work with unique situations. The loan terms may not be ideal, but they do make it simple to drive home with a vehicle when you need one.

The amount you need down for a car loan really depends on your credit situation. Those with good credit can often get approved for $0 down car loans. However, the stronger your credit score, the less money down that will be required. Those with poor credit should expect to put down at least $1,000 – $2,000 on even an older used vehicle to improve the chances of getting approved. Putting additional money down also helps keep the monthly payments affordable on a car loan. Speak to the finance manager to determine the optimal amount down based on your budget and credit profile.

Most lenders in St. Catharines offer car loan terms from 24 to 84 months (2 to 7 years). 36 and 48 month terms are very common for used cars, while 60 and 72 month terms help keep payments low on newer vehicle purchases. Those with good credit can sometimes even get 84-96 month loans (8 years) from some new car dealers, but these lengthy terms also mean you’ll be paying significantly more interest over the life of the loan. Carefully consider what loan term aligns best to your budget and financial goals before signing your auto finance contract.

Yes, visiting a lender like a bank, credit union, or dealership in St. Catharines can pre-approve you for a car loan prior to visiting the dealership. Pre-approval locks in an interest rate and loan amount tailored to your financial situation. That way, when you find the vehicle you want, the financing is already lined up. Pre-approval also gives you negotiating leverage on your car purchase and trade-in value. You’ll know exactly what you can afford and what monthly payment works for your budget. Highly recommended before setting foot on the dealership lot.

When applying for auto financing, most St. Catharines lenders require:

 

– Valid government-issued photo ID

– Proof of income – recent pay stubs or tax documents

– Proof of address – utility bill, bank statement etc.

– Social insurance number

– List of references – family, friends, employers etc.

– Down payment

 

Having these documents ready speeds up the application and approval process. Those with challenged credit may need to provide additional documents to support the loan request. Be cooperative in providing what the lender requests to improve your chances of getting approved.

The very best way to get the lowest interest rate is to have a strong credit score over 720 and stable income. Ask the lender if there are any current promotions or discounted rates available that you may qualify for. Having a large down payment or trade-in also helps secure preferential pricing. Finally, comparing rates from multiple competing lenders rather than just accepting the dealer’s first offer saves potentially thousands of dollars in interest charges over the loan. So shop around both online and locally to find the most competitive auto financing rate for your situation.

**Pros of Leasing:**

– Lower monthly payments

– Drive a new car more often

– Limited financial risk if car is damaged

 

**Cons of Leasing:**

– Never build any equity

– Strict mileage limits

– Expensive wear and tear fees at lease end

 

**Pros of Financing:**

– Build equity as loan balances decrease

– No mileage restrictions

– Keep the vehicle long-term if desired

 

**Cons of Financing:**

– Higher monthly payments

– Loans last many years to pay off

– Stuck with any negative equity from prior deals

 

Weigh your budget, expected mileage needs, and long term plans to decide if leasing or financing makes more sense when acquiring your next set of wheels.

 

Most lenders in St. Catharines require that at least 6 months have passed before allowing a car loan to be refinanced. This allows some payment history to be established on the existing auto loan before taking out a new one. Refinancing after a year or two is ideal. Doing so gives access to better rates after your credit score has improved and substantial payments have been made to pay down the principal balance. Just beware of early repayment penalties written into some auto finance contracts if paying off the loan very quickly after origination via a refinance.

The best used car loan rates are often available at St. Catharines area credit unions such as Meridian and FirstOntario Credit Union. They offer very competitive financing specials from time to time on both new and used vehicle loans. Local dealerships like Cars Unlimited Niagara, Courtesy Auto Sales Inc., Canada Drives, and AutoLoans.ca also specialize in used car loans with flexible credit requirements. They have access to national subprime lenders focused specifically on financing vehicles purchased from select local dealerships across Canada.

If you have sufficient savings to pay cash, running the numbers often reveals that financing and investing the money instead generates substantially more wealth over the long run. For example, if investing the funds conservatively yields 5% annually, and the interest rate on the car loan is only 3%, you come out much further ahead by financing the vehicle. This allows the invested funds to grow exponentially through the power of compound interest rather than being depleted in a large one-time cash payment. Just be disciplined about investing the money wisely rather than spending it on other things.

Defaulting on a car loan has severe consequences:

 

– The lender can repossess your vehicle at any time.

– Your credit score will plummet, making future loans very difficult.

– Any collateral used to secure the loan can be seized and sold.

– You may owe significant fees for transportation and storage of the repossessed vehicle.

– Future wages may be garnished to repay the vehicle balance.

– The lender can take legal action forcing asset liquidation or bankruptcy.

 

As such, it is critical to prioritize car loan payments above any other debts and contact the lender immediately if struggling to make payments on time. Open communication and proactive planning can help prevent a default and vehicle repossession.

Yes, there are a few options for obtaining an auto loan in St. Catharines after bankruptcy or consumer proposal:

 

– Wait at least 12 months for improved chances of approval

– Apply at dealerships like Skyway Fine Cars or AutoLoans.ca specializing in post-bankruptcy auto financing

– Have a strong, consistent income source to show the lender

– Make a large down payment from savings

– Bring a co-signer with good credit to strengthen the application

 

While interest rates may be higher, and loan amounts lower, having reliable transportation is vital to rebuilding your credit post-bankruptcy. An approved car loan also demonstrates you are bouncing back strongly.

 

The easiest auto loans to get approved for in St. Catharines with bad credit tend to be:

 

– Older used vehicles with over 100k miles

– Higher mileage imports like Toyota, Honda, Hyundai

– Loans under $10,000 balance with short 24-36 month terms

– Secured loans using clear car titles or other collateral

 

Lenders view these types of auto loans as lower risk, even with challenged credit. Avoid newer vehicles on longer term loans unless you have significant income and cash to put down. Start small until your credit score recovers above 600.

Most lenders prefer applicants to have at least 6 months at their current job. However, those with more tenure of 1-2+ years have the very best approval odds and rates. If changing jobs recently, having the same type of work on your resume still helps versus entering an entirely new career. Providing prior W2’s and pay stubs can supplement recent income docs if needed. Also be sure your employer will verify your employment status and income with lenders during the verification process.

 

Yes, some subprime lenders and special finance dealerships like AutoLoans.ca and Skyway Fine Cars can assist with auto loan approvals using disability payments, social assistance, pensions, and other non-traditional income sources. To improve your chances, have consistent monthly deposits from the assistance programs, provide income statements detailing payment amounts and durations, and ideally have a down payment from savings. Cosigners may also be required to meet minimum income thresholds on certain car deals. But approvals are definitely possible even on limited fixed income sources.

Here are some tips to improve eligibility for auto loan approvals in St. Catharines:

 

– Pay all bills on time each month to steadily increase your credit score

– Obtain copies of your credit reports to resolve any errors or discrepancies

– Save up a down payment fund from tax refunds or other sources

– Keep your existing auto loans and debts in good standing

– Enroll in credit counseling or financial literacy programs

– Maintain stable housing and employment

– Live within your means by minimizing expenses

– Apply with a creditworthy cosigner if needed

 

Building your credit fitness and demonstrating responsible money management make lenders much more comfortable extending you a car loan.

Major banks and credit unions like Scotiabank, TD Canada Trust, CIBC, Meridian, and FirstOntario Credit Union report loan payment history directly to both TransUnion and Equifax. This helps build positive credit references each month by making consistent on-time payments. Many subprime lenders like Rifco and Carfinco also report payment activity. However, some smaller buy here, pay here dealerships may not report to the credit bureaus. So ask upfront about their reporting policies before signing your auto finance contract.

 

Types of Car Loans Available

When shopping for a car loan, one of the first decisions you’ll need to make is whether you want to finance a new or used vehicle. Both options have their pros and cons.

 

New Car Loans

New car loans typically have lower interest rates and longer repayment terms than used car loans. Interest rates can range from 0% for certain promotions up to around 5% for buyers with excellent credit. Loan terms are usually 36 to 72 months.

The benefit of a new car loan is you get the latest model with the newest features. New cars also come with warranties to cover repairs for the first few years. The downside is that new cars depreciate quickly, so you may end up owing more than the car is worth if you want to sell or trade it in after a few years.

 

Used Car Loans

For a used car, interest rates are higher, usually in the 5-10% range depending on your credit score. Loan terms are shorter too, typically 24 to 60 months.

The benefit of a used car loan is you pay a lower price upfront. The used car has already undergone initial depreciation. The downside is interest rates are higher, and older cars may require more maintenance and repairs which add to your total cost of ownership.

When weighing new vs. used, consider your budget, current financial situation, and how long you plan to own the vehicle. Both options have their merits for the right buyer.

 

How Car Loans Work

When financing a car purchase, the car itself serves as collateral for the loan. This means the lender can repossess the car if you default on the loan. Here’s an overview of how the car loan process typically works:

 

  1. Get Pre-Approved

Before shopping for a car, it’s wise to get pre-approved for a car loan. This allows you to know your budget and interest rate ahead of time. Pre-approval is quick and doesn’t obligate you to accept the loan.

 

  1. Find the Right Car

Once pre-approved, you can focus your car search on vehicles that fit your budget and needs. Having financing already secured gives you bargaining power when negotiating with dealers.

 

  1. Finalize the Loan

After selecting a car, you’ll finalize the loan details including the interest rate, loan term, down payment amount, trade-in value, fees, and monthly payments.

 

  1. Sign the Paperwork

You’ll sign the final loan agreement paperwork and take possession of the car. The lender will perfect their security interest by noting the lien on the vehicle’s title.

 

  1. Make Monthly Payments

As agreed upon, you’ll make monthly payments over the loan term until it’s paid off. Payments go toward the principal, interest, and any fees.

That covers the basic process of obtaining car loan financing! With an auto loan, you can pay off the car over time while still enjoying it right away.

 

Interest Rates for Car Loans

Interest rates can vary widely when financing a car in Canada. According to Statistics Canada, the average interest rate for a car loan is 8.33%, but rates can range anywhere from 5% to 29% depending on your credit situation and the lender.

Lenders assess how much risk you pose as a borrower when determining what interest rate to offer you. The higher the risk, the higher the rate since the lender wants to compensate for the additional risk.

Here are some of the key factors that influence your interest rate:

 

  • Credit score – The higher your credit score, the lower the rate since you’re seen as lower risk.
  • Down payment – The more you put down, the lower the rate since you’re financing less.
  • Loan term – Shorter terms often have lower rates.
  • Your income and debt levels – If you have high income and low debts, you may qualify for a lower rate.
  • Type of vehicle – New cars often qualify for better rates than used.
  • Lender programs – Some lenders offer lower rates for certain borrowers as part of special programs.

 

So when shopping for a car loan, it pays to check your credit, optimize your down payment if possible, and compare rates from different lenders to find the lowest rate available to you.

 

Banks for Car Loans

For residents of St. Catharines looking to finance a new or used vehicle, some of the top banks to consider for car loans include:

 

TD Canada Trust

TD Canada Trust offers competitive interest rates on auto loans and flexible terms from 12 to 96 months. Pre-approval is available to determine rates and loan amounts before shopping. TD also offers flexible payment options and the ability to defer payments for up to 120 days in case of financial hardship.

 

RBC Royal Bank

Royal Bank of Canada is one of the big five banks in Canada and provides auto financing through RBC Royal Bank. RBC offers online applications, fast approvals, and low interest rates. Loans terms range from 12 to 84 months, with flexible repayment options.

 

Scotiabank

The Bank of Nova Scotia, also known as Scotiabank, provides car loans with no fees or prepayment penalties. Scotiabank offers terms from 12 to 84 months and provides pre-approval. Used vehicle loans and specialty financing is available for unique situations.

 

CIBC

The Canadian Imperial Bank of Commerce (CIBC) offers competitive interest rates on new and used vehicle loans. CIBC provides flexible terms from 12 to 96 months, with options to defer payments for up to 6 months. Fast approvals and pre-approvals are available.

 

National Bank

National Bank of Canada offers online applications for easy auto financing. Flexible terms range from 12 to 84 months. Pre-approval lets buyers know their budget and rate before shopping. Existing National Bank clients may receive preferred rates.

 

Credit Unions for Car Loans

Credit unions can be a great option for getting a car loan in St. Catharines. Here are some of the top credit unions for car loans in the area:

 

Meridian Credit Union – Meridian has very competitive rates starting as low as 3.99% for new vehicles and 4.99% for used. They offer flexible terms from 12-96 months. Meridian has branches located throughout Niagara.

 

FirstOntario Credit Union – FirstOntario offers rates as low as 3.99% on new and used vehicle loans. They have a quick and easy online application process and several locations in St. Catharines.

 

Niagara Credit Union – Niagara Credit Union provides great rates for their members. They offer terms from 12-84 months and have branches in St. Catharines, Niagara Falls, Welland, and Fort Erie.

 

Libro Credit Union – Libro has an online car loan calculator to help you estimate payments. Their rates are competitive and they offer flexible terms. Libro has a St. Catharines branch located on Ontario Street.

 

Coast Capital Savings Federal Credit Union – Coast Capital has competitive pricing for car loans. Although they don’t have a branch located in St. Catharines, members can apply and manage their loans online or by phone.

 

Dealerships Offering Financing in St. Catharines

When looking for car financing, visiting local dealerships in St. Catharines is a convenient option. Many dealerships have their own financing departments and work with lenders to offer competitive rates and loan terms to customers. Here are some of the top dealerships with financing options in St. Catharines:

 

Performance Toyota

Performance Toyota is a reputable Toyota dealership located on Ontario Street in St. Catharines. They have an onsite finance department that offers financing through Toyota Financial Services. Customers can apply for new and used vehicle loans, including leases, right at the dealership.

 

Subaru of Niagara

This Subaru dealer provides financing through Subaru Financial Services Canada for new and used Subaru models. Their finance team helps customers through every step of the application and approval process. They offer competitive interest rates and flexible terms.

 

Audi St. Catharines

The Audi dealership in St. Catharines has a finance center focused on getting customers approved for Audi Financial Services loans. They handle new, used, and CPO Audi financing, including leases. The knowledgeable staff simplifies the process.

 

Kia of St. Catharines

This Kia dealer works with Kia Financial to offer financing on new and used vehicles. Their financing team has experience helping those with no credit history get their first auto loan. They provide an easy application process.

 

Skyway Fine Cars

Skyway Fine Cars provides financing assistance for used vehicles of various makes and models. They have an in-house financing department that works to secure customers competitive rates through trusted lenders.

 

Bad Credit Car Loans

If you have bad credit or no credit history, getting approved for a traditional car loan can be challenging. However, there are still options available to help you get financing.

Lenders that specialize in bad credit loans will often approve borrowers with credit scores as low as 500. The tradeoff is that your interest rate will be much higher than those with good credit. Rates for bad credit car loans can range from 10% on the low end up to over 20% for applicants with very poor credit.

Some lenders to consider for bad credit car loans in St. Catharines include:

 

  • Car Deal Canada
  • Canada Drives
  • AutoLoans.ca
  • The Loan Arranger

 

To get approved, the lender will want to see proof of income, residency, and may request a higher down payment. Having a co-signer with better credit can also improve your chances. Shop around with multiple lenders, as rates and approval criteria will vary. With some work, those with less-than-ideal credit can still find a car loan in St. Catharines.

 

Refinancing Existing Car Loans

If you took out a car loan when you had bad credit or were paying a high interest rate, refinancing can potentially help lower your payments and interest rate. Refinancing involves taking out a new loan to pay off your existing auto loan. It allows you to take advantage of better credit or lower interest rates now available.

The best time to refinance a car loan is when you can get at least 2% lower interest rate than your current loan. This threshold makes it worth paying any fees associated with refinancing. You also want to refinance when you still have at least 12 months left on your current loan term. This allows you to get the maximum interest savings from the refinance.

To refinance, you first need to check your credit score to ensure you qualify for improved rates. Shop around with banks, credit unions, and dealerships and compare interest rate offers. Calculate your potential monthly and total interest savings from refinancing. Then complete a loan application with the lender offering the best terms. You will sign a new loan contract and your old auto loan will be paid off. Make sure to read the fine print for any prepayment penalties from your existing lender.

Refinancing an auto loan is an excellent strategy if you can lower your interest rate by 2% or more. It results in lowered monthly payments, interest savings, and faster debt repayment. Just be sure to compare all options to find the best refinance loan terms.

 

Lease Buyouts

One option at the end of a car lease is to buy out the lease and keep the vehicle. There are some pros and cons to consider when deciding whether to buy out your lease.

The main benefits of buying out your lease are:

 

  • You keep a car you already know the history and condition of.
  • You avoid having to shop for and finance another vehicle.
  • Any equity you’ve built in the vehicle transfers to you instead of the leasing company.
  • You avoid disposition fees charged by the leasing company.

 

The potential downsides include:

 

  • You may be able to find a better deal on a newer model vehicle.
  • The buyout price may be higher than current market value.
  • You’ll need to arrange financing for the buyout.
  • You’ll now be responsible for repairs and maintenance.

 

If you have positive equity in the vehicle and can get good financing terms, buying out the lease can make a lot of sense. But run the numbers carefully and compare to other options before deciding.

 

Improving Credit for Better Rates

Your credit score plays a big role in determining the interest rate you can qualify for on a car loan. The higher your credit score, the better the rate you can get. Here are some tips for improving your credit score to potentially get approved for a lower rate on your next auto loan:

 

  • Pay all your bills on time – Payment history makes up a significant portion of your credit score. Get in the habit of paying all your bills on time, including credit cards, utilities, phone bills, etc.
  • Pay down balances – Keep credit card balances low. High balances can negatively impact your credit utilization ratio.
  • Limit new credit applications – Each new credit application can cause a small, temporary drop in your credit score. Avoid applying for multiple new credits in a short period of time.
  • Monitor your credit report – Review your credit report regularly and dispute any inaccurate information that could be bringing your score down.
  • Become an authorized user – Ask a family member with good credit to add you as an authorized user on their credit card. It can help boost your score.

 

With a higher credit score, you may qualify for the best rates on a new or used car loan, potentially saving you hundreds or even thousands of dollars over the term of the loan. Give yourself plenty of time to work on improving your credit before shopping for a car loan.

 

Co-Signing a Car Loan

Co-signing a car loan can be a good option for some borrowers who may not qualify for financing on their own. A co-signer agrees to be responsible for the loan payments if the primary borrower defaults. This allows the borrower to qualify for better interest rates that they may not get otherwise.

Co-signing makes the most sense when:

 

  • The primary borrower has little or poor credit history – Having an established co-signer with good credit can help them get approved and build credit.
  • The primary borrower has high debt-to-income ratio – A co-signer with lower DTI can help balance this out.
  • The borrower is young and hasn’t established credit yet – Parents often co-sign for students or young adults to help them get their first car loan.
  • Borrower can’t provide sufficient income documentation – Self-employed or gig workers can use a co-signer to supplement this.
  • The borrower plans to refinance the loan into their own name – After 1-2 years of on-time payments, they can refinance without the co-signer.

 

The co-signer takes on equal responsibility for the loan, so it should be someone the borrower trusts to make the payments if needed. Overall, co-signing can open up more affordable financing options when done carefully and responsibly.

 

Pre-Approval Process

Getting pre-approved for a car loan before visiting the dealership can give you leverage in negotiating the final price. Here’s an overview of the pre-approval process:

 

Start With Research

To get pre-approved, first research interest rates and terms from banks, credit unions and online lenders. This will help you find the best loan options before applying.

 

Gather Documentation

Lenders will require proof of income, identity, residence and potentially other documentation for the pre-approval. Have these ready before starting applications.

 

Apply for Pre-Approval

Submit a car loan application with your desired lender. This is a soft credit check that won’t impact your score. If approved, you’ll get a pre-approval letter with loan terms.

 

Shop With Leverage

Bring your pre-approval letter when shopping for a car. This gives you negotiating power, as the dealer knows you already have financing secured.

Getting pre-approved can simplify the financing process and help you score the best deal. Make sure to shop around for the most competitive pre-approval terms.

 

Documents Needed

When applying for a car loan, there are certain documents you’ll need to provide to lenders to verify your identity, income, and ability to repay the loan. Having these documents ready can help streamline the application and approval process.

Here are some of the main documents lenders will require:

 

  • Driver’s license – This verifies your identity and that you are legally allowed to drive.
  • Social insurance number – Required for the credit check lenders run to see your credit history.
  • Proof of income – Recent pay stubs or a letter from your employer to confirm your income. Self-employed may need tax returns.
  • Proof of residence – Utility bills or bank statements with your current address.
  • Down payment – Proof you have the down payment amount, like bank statements.
  • Proof of auto insurance – You’ll need liability coverage before driving the car off the lot.
  • Trade-in paperwork – If you’re trading in a vehicle, the title, loan payoff information, etc.

 

Having all these documents ready will show lenders you are organized and prepared. It can help speed up the loan approval process so you can drive your new car home sooner.

 

Conclusion

If you’re in the St. Catharines, Ontario area and looking to finance a car purchase, there are several options available for securing an auto loan. Whether your credit is pristine or poor, dealerships, banks, credit unions, and specialized lenders in the region can likely assist with affordable financing terms. By comparing interest rates, repayment terms, and fees, you can find the best loan for your current situation.

Preparation is key – go into the lending process with a solid budget, proof of income, a reasonable down payment, and knowing your credit score. Shopping around beforehand online can give you an idea of what deals might apply. Consider lending incentives, manufacturer financing offers, and the possibility of a co-signer if need be.

Working to improve your credit score and history in advance will open up better loan offers with lower interest rates. But even with less-than-perfect credit, subprime lending exists to help you get reasonable financing for buying a reliable vehicle. With persistence and diligence, those in the St. Catharines area can secure suitable auto financing through the many lenders serving the region.

Questions About Car Loans in St. Catharines?

The average interest rate for car loans in St. Catharines tends to be around 8-10%. However, rates can vary significantly depending on your credit score and history. Those with excellent credit can qualify for rates as low as 3-4%, while those with poor credit may pay interest rates of 15% or higher. When shopping for a car loan, be sure to compare rates from multiple lenders to find the best deal.

Several lenders in St. Catharines specialize in bad credit auto loans, including Cars Unlimited Niagara, Courtesy Auto Sales Inc., Canada Drives, AutoLoans.ca, Clean and Shine Auto Sales Ltd, Two Guys Quality Cars, Kia of St. Catharines, Skyway Fine Cars, and more. These dealerships work with special finance lenders focused on applicants with credit challenges. They can often help those with bankruptcies, repossessions, and collections get approved. While interest rates may be higher, a bad credit auto loan can help you get reliable transportation.

Some of the easiest places to get approved for a car loan in St. Catharines are buy here, pay here dealerships like Cars Unlimited Niagara, Courtesy Auto Sales Inc., Clean and Shine Auto Sales Ltd, Two Guys Quality Cars, and Kia of St. Catharines. These dealerships have their own in-house financing and tend to be more flexible on credit requirements than banks or other lenders. They understand credit challenges and can work with unique situations. The loan terms may not be ideal, but they do make it simple to drive home with a vehicle when you need one.

The amount you need down for a car loan really depends on your credit situation. Those with good credit can often get approved for $0 down car loans. However, the stronger your credit score, the less money down that will be required. Those with poor credit should expect to put down at least $1,000 – $2,000 on even an older used vehicle to improve the chances of getting approved. Putting additional money down also helps keep the monthly payments affordable on a car loan. Speak to the finance manager to determine the optimal amount down based on your budget and credit profile.

Most lenders in St. Catharines offer car loan terms from 24 to 84 months (2 to 7 years). 36 and 48 month terms are very common for used cars, while 60 and 72 month terms help keep payments low on newer vehicle purchases. Those with good credit can sometimes even get 84-96 month loans (8 years) from some new car dealers, but these lengthy terms also mean you’ll be paying significantly more interest over the life of the loan. Carefully consider what loan term aligns best to your budget and financial goals before signing your auto finance contract.

Yes, visiting a lender like a bank, credit union, or dealership in St. Catharines can pre-approve you for a car loan prior to visiting the dealership. Pre-approval locks in an interest rate and loan amount tailored to your financial situation. That way, when you find the vehicle you want, the financing is already lined up. Pre-approval also gives you negotiating leverage on your car purchase and trade-in value. You’ll know exactly what you can afford and what monthly payment works for your budget. Highly recommended before setting foot on the dealership lot.

When applying for auto financing, most St. Catharines lenders require:

 

– Valid government-issued photo ID

– Proof of income – recent pay stubs or tax documents

– Proof of address – utility bill, bank statement etc.

– Social insurance number

– List of references – family, friends, employers etc.

– Down payment

 

Having these documents ready speeds up the application and approval process. Those with challenged credit may need to provide additional documents to support the loan request. Be cooperative in providing what the lender requests to improve your chances of getting approved.

The very best way to get the lowest interest rate is to have a strong credit score over 720 and stable income. Ask the lender if there are any current promotions or discounted rates available that you may qualify for. Having a large down payment or trade-in also helps secure preferential pricing. Finally, comparing rates from multiple competing lenders rather than just accepting the dealer’s first offer saves potentially thousands of dollars in interest charges over the loan. So shop around both online and locally to find the most competitive auto financing rate for your situation.

**Pros of Leasing:**

– Lower monthly payments

– Drive a new car more often

– Limited financial risk if car is damaged

 

**Cons of Leasing:**

– Never build any equity

– Strict mileage limits

– Expensive wear and tear fees at lease end

 

**Pros of Financing:**

– Build equity as loan balances decrease

– No mileage restrictions

– Keep the vehicle long-term if desired

 

**Cons of Financing:**

– Higher monthly payments

– Loans last many years to pay off

– Stuck with any negative equity from prior deals

 

Weigh your budget, expected mileage needs, and long term plans to decide if leasing or financing makes more sense when acquiring your next set of wheels.

 

Most lenders in St. Catharines require that at least 6 months have passed before allowing a car loan to be refinanced. This allows some payment history to be established on the existing auto loan before taking out a new one. Refinancing after a year or two is ideal. Doing so gives access to better rates after your credit score has improved and substantial payments have been made to pay down the principal balance. Just beware of early repayment penalties written into some auto finance contracts if paying off the loan very quickly after origination via a refinance.

The best used car loan rates are often available at St. Catharines area credit unions such as Meridian and FirstOntario Credit Union. They offer very competitive financing specials from time to time on both new and used vehicle loans. Local dealerships like Cars Unlimited Niagara, Courtesy Auto Sales Inc., Canada Drives, and AutoLoans.ca also specialize in used car loans with flexible credit requirements. They have access to national subprime lenders focused specifically on financing vehicles purchased from select local dealerships across Canada.

If you have sufficient savings to pay cash, running the numbers often reveals that financing and investing the money instead generates substantially more wealth over the long run. For example, if investing the funds conservatively yields 5% annually, and the interest rate on the car loan is only 3%, you come out much further ahead by financing the vehicle. This allows the invested funds to grow exponentially through the power of compound interest rather than being depleted in a large one-time cash payment. Just be disciplined about investing the money wisely rather than spending it on other things.

Defaulting on a car loan has severe consequences:

 

– The lender can repossess your vehicle at any time.

– Your credit score will plummet, making future loans very difficult.

– Any collateral used to secure the loan can be seized and sold.

– You may owe significant fees for transportation and storage of the repossessed vehicle.

– Future wages may be garnished to repay the vehicle balance.

– The lender can take legal action forcing asset liquidation or bankruptcy.

 

As such, it is critical to prioritize car loan payments above any other debts and contact the lender immediately if struggling to make payments on time. Open communication and proactive planning can help prevent a default and vehicle repossession.

Yes, there are a few options for obtaining an auto loan in St. Catharines after bankruptcy or consumer proposal:

 

– Wait at least 12 months for improved chances of approval

– Apply at dealerships like Skyway Fine Cars or AutoLoans.ca specializing in post-bankruptcy auto financing

– Have a strong, consistent income source to show the lender

– Make a large down payment from savings

– Bring a co-signer with good credit to strengthen the application

 

While interest rates may be higher, and loan amounts lower, having reliable transportation is vital to rebuilding your credit post-bankruptcy. An approved car loan also demonstrates you are bouncing back strongly.

 

The easiest auto loans to get approved for in St. Catharines with bad credit tend to be:

 

– Older used vehicles with over 100k miles

– Higher mileage imports like Toyota, Honda, Hyundai

– Loans under $10,000 balance with short 24-36 month terms

– Secured loans using clear car titles or other collateral

 

Lenders view these types of auto loans as lower risk, even with challenged credit. Avoid newer vehicles on longer term loans unless you have significant income and cash to put down. Start small until your credit score recovers above 600.

Most lenders prefer applicants to have at least 6 months at their current job. However, those with more tenure of 1-2+ years have the very best approval odds and rates. If changing jobs recently, having the same type of work on your resume still helps versus entering an entirely new career. Providing prior W2’s and pay stubs can supplement recent income docs if needed. Also be sure your employer will verify your employment status and income with lenders during the verification process.

 

Yes, some subprime lenders and special finance dealerships like AutoLoans.ca and Skyway Fine Cars can assist with auto loan approvals using disability payments, social assistance, pensions, and other non-traditional income sources. To improve your chances, have consistent monthly deposits from the assistance programs, provide income statements detailing payment amounts and durations, and ideally have a down payment from savings. Cosigners may also be required to meet minimum income thresholds on certain car deals. But approvals are definitely possible even on limited fixed income sources.

Here are some tips to improve eligibility for auto loan approvals in St. Catharines:

 

– Pay all bills on time each month to steadily increase your credit score

– Obtain copies of your credit reports to resolve any errors or discrepancies

– Save up a down payment fund from tax refunds or other sources

– Keep your existing auto loans and debts in good standing

– Enroll in credit counseling or financial literacy programs

– Maintain stable housing and employment

– Live within your means by minimizing expenses

– Apply with a creditworthy cosigner if needed

 

Building your credit fitness and demonstrating responsible money management make lenders much more comfortable extending you a car loan.

Major banks and credit unions like Scotiabank, TD Canada Trust, CIBC, Meridian, and FirstOntario Credit Union report loan payment history directly to both TransUnion and Equifax. This helps build positive credit references each month by making consistent on-time payments. Many subprime lenders like Rifco and Carfinco also report payment activity. However, some smaller buy here, pay here dealerships may not report to the credit bureaus. So ask upfront about their reporting policies before signing your auto finance contract.

 

Types of Car Loans Available

When shopping for a car loan, one of the first decisions you’ll need to make is whether you want to finance a new or used vehicle. Both options have their pros and cons.

 

New Car Loans

New car loans typically have lower interest rates and longer repayment terms than used car loans. Interest rates can range from 0% for certain promotions up to around 5% for buyers with excellent credit. Loan terms are usually 36 to 72 months.

The benefit of a new car loan is you get the latest model with the newest features. New cars also come with warranties to cover repairs for the first few years. The downside is that new cars depreciate quickly, so you may end up owing more than the car is worth if you want to sell or trade it in after a few years.

 

Used Car Loans

For a used car, interest rates are higher, usually in the 5-10% range depending on your credit score. Loan terms are shorter too, typically 24 to 60 months.

The benefit of a used car loan is you pay a lower price upfront. The used car has already undergone initial depreciation. The downside is interest rates are higher, and older cars may require more maintenance and repairs which add to your total cost of ownership.

When weighing new vs. used, consider your budget, current financial situation, and how long you plan to own the vehicle. Both options have their merits for the right buyer.

 

How Car Loans Work

When financing a car purchase, the car itself serves as collateral for the loan. This means the lender can repossess the car if you default on the loan. Here’s an overview of how the car loan process typically works:

 

  1. Get Pre-Approved

Before shopping for a car, it’s wise to get pre-approved for a car loan. This allows you to know your budget and interest rate ahead of time. Pre-approval is quick and doesn’t obligate you to accept the loan.

 

  1. Find the Right Car

Once pre-approved, you can focus your car search on vehicles that fit your budget and needs. Having financing already secured gives you bargaining power when negotiating with dealers.

 

  1. Finalize the Loan

After selecting a car, you’ll finalize the loan details including the interest rate, loan term, down payment amount, trade-in value, fees, and monthly payments.

 

  1. Sign the Paperwork

You’ll sign the final loan agreement paperwork and take possession of the car. The lender will perfect their security interest by noting the lien on the vehicle’s title.

 

  1. Make Monthly Payments

As agreed upon, you’ll make monthly payments over the loan term until it’s paid off. Payments go toward the principal, interest, and any fees.

That covers the basic process of obtaining car loan financing! With an auto loan, you can pay off the car over time while still enjoying it right away.

 

Interest Rates for Car Loans

Interest rates can vary widely when financing a car in Canada. According to Statistics Canada, the average interest rate for a car loan is 8.33%, but rates can range anywhere from 5% to 29% depending on your credit situation and the lender.

Lenders assess how much risk you pose as a borrower when determining what interest rate to offer you. The higher the risk, the higher the rate since the lender wants to compensate for the additional risk.

Here are some of the key factors that influence your interest rate:

 

  • Credit score – The higher your credit score, the lower the rate since you’re seen as lower risk.
  • Down payment – The more you put down, the lower the rate since you’re financing less.
  • Loan term – Shorter terms often have lower rates.
  • Your income and debt levels – If you have high income and low debts, you may qualify for a lower rate.
  • Type of vehicle – New cars often qualify for better rates than used.
  • Lender programs – Some lenders offer lower rates for certain borrowers as part of special programs.

 

So when shopping for a car loan, it pays to check your credit, optimize your down payment if possible, and compare rates from different lenders to find the lowest rate available to you.

 

Banks for Car Loans

For residents of St. Catharines looking to finance a new or used vehicle, some of the top banks to consider for car loans include:

 

TD Canada Trust

TD Canada Trust offers competitive interest rates on auto loans and flexible terms from 12 to 96 months. Pre-approval is available to determine rates and loan amounts before shopping. TD also offers flexible payment options and the ability to defer payments for up to 120 days in case of financial hardship.

 

RBC Royal Bank

Royal Bank of Canada is one of the big five banks in Canada and provides auto financing through RBC Royal Bank. RBC offers online applications, fast approvals, and low interest rates. Loans terms range from 12 to 84 months, with flexible repayment options.

 

Scotiabank

The Bank of Nova Scotia, also known as Scotiabank, provides car loans with no fees or prepayment penalties. Scotiabank offers terms from 12 to 84 months and provides pre-approval. Used vehicle loans and specialty financing is available for unique situations.

 

CIBC

The Canadian Imperial Bank of Commerce (CIBC) offers competitive interest rates on new and used vehicle loans. CIBC provides flexible terms from 12 to 96 months, with options to defer payments for up to 6 months. Fast approvals and pre-approvals are available.

 

National Bank

National Bank of Canada offers online applications for easy auto financing. Flexible terms range from 12 to 84 months. Pre-approval lets buyers know their budget and rate before shopping. Existing National Bank clients may receive preferred rates.

 

Credit Unions for Car Loans

Credit unions can be a great option for getting a car loan in St. Catharines. Here are some of the top credit unions for car loans in the area:

 

Meridian Credit Union – Meridian has very competitive rates starting as low as 3.99% for new vehicles and 4.99% for used. They offer flexible terms from 12-96 months. Meridian has branches located throughout Niagara.

 

FirstOntario Credit Union – FirstOntario offers rates as low as 3.99% on new and used vehicle loans. They have a quick and easy online application process and several locations in St. Catharines.

 

Niagara Credit Union – Niagara Credit Union provides great rates for their members. They offer terms from 12-84 months and have branches in St. Catharines, Niagara Falls, Welland, and Fort Erie.

 

Libro Credit Union – Libro has an online car loan calculator to help you estimate payments. Their rates are competitive and they offer flexible terms. Libro has a St. Catharines branch located on Ontario Street.

 

Coast Capital Savings Federal Credit Union – Coast Capital has competitive pricing for car loans. Although they don’t have a branch located in St. Catharines, members can apply and manage their loans online or by phone.

 

Dealerships Offering Financing in St. Catharines

When looking for car financing, visiting local dealerships in St. Catharines is a convenient option. Many dealerships have their own financing departments and work with lenders to offer competitive rates and loan terms to customers. Here are some of the top dealerships with financing options in St. Catharines:

 

Performance Toyota

Performance Toyota is a reputable Toyota dealership located on Ontario Street in St. Catharines. They have an onsite finance department that offers financing through Toyota Financial Services. Customers can apply for new and used vehicle loans, including leases, right at the dealership.

 

Subaru of Niagara

This Subaru dealer provides financing through Subaru Financial Services Canada for new and used Subaru models. Their finance team helps customers through every step of the application and approval process. They offer competitive interest rates and flexible terms.

 

Audi St. Catharines

The Audi dealership in St. Catharines has a finance center focused on getting customers approved for Audi Financial Services loans. They handle new, used, and CPO Audi financing, including leases. The knowledgeable staff simplifies the process.

 

Kia of St. Catharines

This Kia dealer works with Kia Financial to offer financing on new and used vehicles. Their financing team has experience helping those with no credit history get their first auto loan. They provide an easy application process.

 

Skyway Fine Cars

Skyway Fine Cars provides financing assistance for used vehicles of various makes and models. They have an in-house financing department that works to secure customers competitive rates through trusted lenders.

 

Bad Credit Car Loans

If you have bad credit or no credit history, getting approved for a traditional car loan can be challenging. However, there are still options available to help you get financing.

Lenders that specialize in bad credit loans will often approve borrowers with credit scores as low as 500. The tradeoff is that your interest rate will be much higher than those with good credit. Rates for bad credit car loans can range from 10% on the low end up to over 20% for applicants with very poor credit.

Some lenders to consider for bad credit car loans in St. Catharines include:

 

  • Car Deal Canada
  • Canada Drives
  • AutoLoans.ca
  • The Loan Arranger

 

To get approved, the lender will want to see proof of income, residency, and may request a higher down payment. Having a co-signer with better credit can also improve your chances. Shop around with multiple lenders, as rates and approval criteria will vary. With some work, those with less-than-ideal credit can still find a car loan in St. Catharines.

 

Refinancing Existing Car Loans

If you took out a car loan when you had bad credit or were paying a high interest rate, refinancing can potentially help lower your payments and interest rate. Refinancing involves taking out a new loan to pay off your existing auto loan. It allows you to take advantage of better credit or lower interest rates now available.

The best time to refinance a car loan is when you can get at least 2% lower interest rate than your current loan. This threshold makes it worth paying any fees associated with refinancing. You also want to refinance when you still have at least 12 months left on your current loan term. This allows you to get the maximum interest savings from the refinance.

To refinance, you first need to check your credit score to ensure you qualify for improved rates. Shop around with banks, credit unions, and dealerships and compare interest rate offers. Calculate your potential monthly and total interest savings from refinancing. Then complete a loan application with the lender offering the best terms. You will sign a new loan contract and your old auto loan will be paid off. Make sure to read the fine print for any prepayment penalties from your existing lender.

Refinancing an auto loan is an excellent strategy if you can lower your interest rate by 2% or more. It results in lowered monthly payments, interest savings, and faster debt repayment. Just be sure to compare all options to find the best refinance loan terms.

 

Lease Buyouts

One option at the end of a car lease is to buy out the lease and keep the vehicle. There are some pros and cons to consider when deciding whether to buy out your lease.

The main benefits of buying out your lease are:

 

  • You keep a car you already know the history and condition of.
  • You avoid having to shop for and finance another vehicle.
  • Any equity you’ve built in the vehicle transfers to you instead of the leasing company.
  • You avoid disposition fees charged by the leasing company.

 

The potential downsides include:

 

  • You may be able to find a better deal on a newer model vehicle.
  • The buyout price may be higher than current market value.
  • You’ll need to arrange financing for the buyout.
  • You’ll now be responsible for repairs and maintenance.

 

If you have positive equity in the vehicle and can get good financing terms, buying out the lease can make a lot of sense. But run the numbers carefully and compare to other options before deciding.

 

Improving Credit for Better Rates

Your credit score plays a big role in determining the interest rate you can qualify for on a car loan. The higher your credit score, the better the rate you can get. Here are some tips for improving your credit score to potentially get approved for a lower rate on your next auto loan:

 

  • Pay all your bills on time – Payment history makes up a significant portion of your credit score. Get in the habit of paying all your bills on time, including credit cards, utilities, phone bills, etc.
  • Pay down balances – Keep credit card balances low. High balances can negatively impact your credit utilization ratio.
  • Limit new credit applications – Each new credit application can cause a small, temporary drop in your credit score. Avoid applying for multiple new credits in a short period of time.
  • Monitor your credit report – Review your credit report regularly and dispute any inaccurate information that could be bringing your score down.
  • Become an authorized user – Ask a family member with good credit to add you as an authorized user on their credit card. It can help boost your score.

 

With a higher credit score, you may qualify for the best rates on a new or used car loan, potentially saving you hundreds or even thousands of dollars over the term of the loan. Give yourself plenty of time to work on improving your credit before shopping for a car loan.

 

Co-Signing a Car Loan

Co-signing a car loan can be a good option for some borrowers who may not qualify for financing on their own. A co-signer agrees to be responsible for the loan payments if the primary borrower defaults. This allows the borrower to qualify for better interest rates that they may not get otherwise.

Co-signing makes the most sense when:

 

  • The primary borrower has little or poor credit history – Having an established co-signer with good credit can help them get approved and build credit.
  • The primary borrower has high debt-to-income ratio – A co-signer with lower DTI can help balance this out.
  • The borrower is young and hasn’t established credit yet – Parents often co-sign for students or young adults to help them get their first car loan.
  • Borrower can’t provide sufficient income documentation – Self-employed or gig workers can use a co-signer to supplement this.
  • The borrower plans to refinance the loan into their own name – After 1-2 years of on-time payments, they can refinance without the co-signer.

 

The co-signer takes on equal responsibility for the loan, so it should be someone the borrower trusts to make the payments if needed. Overall, co-signing can open up more affordable financing options when done carefully and responsibly.

 

Pre-Approval Process

Getting pre-approved for a car loan before visiting the dealership can give you leverage in negotiating the final price. Here’s an overview of the pre-approval process:

 

Start With Research

To get pre-approved, first research interest rates and terms from banks, credit unions and online lenders. This will help you find the best loan options before applying.

 

Gather Documentation

Lenders will require proof of income, identity, residence and potentially other documentation for the pre-approval. Have these ready before starting applications.

 

Apply for Pre-Approval

Submit a car loan application with your desired lender. This is a soft credit check that won’t impact your score. If approved, you’ll get a pre-approval letter with loan terms.

 

Shop With Leverage

Bring your pre-approval letter when shopping for a car. This gives you negotiating power, as the dealer knows you already have financing secured.

Getting pre-approved can simplify the financing process and help you score the best deal. Make sure to shop around for the most competitive pre-approval terms.

 

Documents Needed

When applying for a car loan, there are certain documents you’ll need to provide to lenders to verify your identity, income, and ability to repay the loan. Having these documents ready can help streamline the application and approval process.

Here are some of the main documents lenders will require:

 

  • Driver’s license – This verifies your identity and that you are legally allowed to drive.
  • Social insurance number – Required for the credit check lenders run to see your credit history.
  • Proof of income – Recent pay stubs or a letter from your employer to confirm your income. Self-employed may need tax returns.
  • Proof of residence – Utility bills or bank statements with your current address.
  • Down payment – Proof you have the down payment amount, like bank statements.
  • Proof of auto insurance – You’ll need liability coverage before driving the car off the lot.
  • Trade-in paperwork – If you’re trading in a vehicle, the title, loan payoff information, etc.

 

Having all these documents ready will show lenders you are organized and prepared. It can help speed up the loan approval process so you can drive your new car home sooner.

 

Conclusion

If you’re in the St. Catharines, Ontario area and looking to finance a car purchase, there are several options available for securing an auto loan. Whether your credit is pristine or poor, dealerships, banks, credit unions, and specialized lenders in the region can likely assist with affordable financing terms. By comparing interest rates, repayment terms, and fees, you can find the best loan for your current situation.

Preparation is key – go into the lending process with a solid budget, proof of income, a reasonable down payment, and knowing your credit score. Shopping around beforehand online can give you an idea of what deals might apply. Consider lending incentives, manufacturer financing offers, and the possibility of a co-signer if need be.

Working to improve your credit score and history in advance will open up better loan offers with lower interest rates. But even with less-than-perfect credit, subprime lending exists to help you get reasonable financing for buying a reliable vehicle. With persistence and diligence, those in the St. Catharines area can secure suitable auto financing through the many lenders serving the region.

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Questions About Car Loans in St. Catharines?

The average interest rate for car loans in St. Catharines tends to be around 8-10%. However, rates can vary significantly depending on your credit score and history. Those with excellent credit can qualify for rates as low as 3-4%, while those with poor credit may pay interest rates of 15% or higher. When shopping for a car loan, be sure to compare rates from multiple lenders to find the best deal.

Several lenders in St. Catharines specialize in bad credit auto loans, including Cars Unlimited Niagara, Courtesy Auto Sales Inc., Canada Drives, AutoLoans.ca, Clean and Shine Auto Sales Ltd, Two Guys Quality Cars, Kia of St. Catharines, Skyway Fine Cars, and more. These dealerships work with special finance lenders focused on applicants with credit challenges. They can often help those with bankruptcies, repossessions, and collections get approved. While interest rates may be higher, a bad credit auto loan can help you get reliable transportation.

Some of the easiest places to get approved for a car loan in St. Catharines are buy here, pay here dealerships like Cars Unlimited Niagara, Courtesy Auto Sales Inc., Clean and Shine Auto Sales Ltd, Two Guys Quality Cars, and Kia of St. Catharines. These dealerships have their own in-house financing and tend to be more flexible on credit requirements than banks or other lenders. They understand credit challenges and can work with unique situations. The loan terms may not be ideal, but they do make it simple to drive home with a vehicle when you need one.

The amount you need down for a car loan really depends on your credit situation. Those with good credit can often get approved for $0 down car loans. However, the stronger your credit score, the less money down that will be required. Those with poor credit should expect to put down at least $1,000 – $2,000 on even an older used vehicle to improve the chances of getting approved. Putting additional money down also helps keep the monthly payments affordable on a car loan. Speak to the finance manager to determine the optimal amount down based on your budget and credit profile.

Most lenders in St. Catharines offer car loan terms from 24 to 84 months (2 to 7 years). 36 and 48 month terms are very common for used cars, while 60 and 72 month terms help keep payments low on newer vehicle purchases. Those with good credit can sometimes even get 84-96 month loans (8 years) from some new car dealers, but these lengthy terms also mean you’ll be paying significantly more interest over the life of the loan. Carefully consider what loan term aligns best to your budget and financial goals before signing your auto finance contract.

Yes, visiting a lender like a bank, credit union, or dealership in St. Catharines can pre-approve you for a car loan prior to visiting the dealership. Pre-approval locks in an interest rate and loan amount tailored to your financial situation. That way, when you find the vehicle you want, the financing is already lined up. Pre-approval also gives you negotiating leverage on your car purchase and trade-in value. You’ll know exactly what you can afford and what monthly payment works for your budget. Highly recommended before setting foot on the dealership lot.

When applying for auto financing, most St. Catharines lenders require:

 

– Valid government-issued photo ID

– Proof of income – recent pay stubs or tax documents

– Proof of address – utility bill, bank statement etc.

– Social insurance number

– List of references – family, friends, employers etc.

– Down payment

 

Having these documents ready speeds up the application and approval process. Those with challenged credit may need to provide additional documents to support the loan request. Be cooperative in providing what the lender requests to improve your chances of getting approved.

The very best way to get the lowest interest rate is to have a strong credit score over 720 and stable income. Ask the lender if there are any current promotions or discounted rates available that you may qualify for. Having a large down payment or trade-in also helps secure preferential pricing. Finally, comparing rates from multiple competing lenders rather than just accepting the dealer’s first offer saves potentially thousands of dollars in interest charges over the loan. So shop around both online and locally to find the most competitive auto financing rate for your situation.

**Pros of Leasing:**

– Lower monthly payments

– Drive a new car more often

– Limited financial risk if car is damaged

 

**Cons of Leasing:**

– Never build any equity

– Strict mileage limits

– Expensive wear and tear fees at lease end

 

**Pros of Financing:**

– Build equity as loan balances decrease

– No mileage restrictions

– Keep the vehicle long-term if desired

 

**Cons of Financing:**

– Higher monthly payments

– Loans last many years to pay off

– Stuck with any negative equity from prior deals

 

Weigh your budget, expected mileage needs, and long term plans to decide if leasing or financing makes more sense when acquiring your next set of wheels.

 

Most lenders in St. Catharines require that at least 6 months have passed before allowing a car loan to be refinanced. This allows some payment history to be established on the existing auto loan before taking out a new one. Refinancing after a year or two is ideal. Doing so gives access to better rates after your credit score has improved and substantial payments have been made to pay down the principal balance. Just beware of early repayment penalties written into some auto finance contracts if paying off the loan very quickly after origination via a refinance.

The best used car loan rates are often available at St. Catharines area credit unions such as Meridian and FirstOntario Credit Union. They offer very competitive financing specials from time to time on both new and used vehicle loans. Local dealerships like Cars Unlimited Niagara, Courtesy Auto Sales Inc., Canada Drives, and AutoLoans.ca also specialize in used car loans with flexible credit requirements. They have access to national subprime lenders focused specifically on financing vehicles purchased from select local dealerships across Canada.

If you have sufficient savings to pay cash, running the numbers often reveals that financing and investing the money instead generates substantially more wealth over the long run. For example, if investing the funds conservatively yields 5% annually, and the interest rate on the car loan is only 3%, you come out much further ahead by financing the vehicle. This allows the invested funds to grow exponentially through the power of compound interest rather than being depleted in a large one-time cash payment. Just be disciplined about investing the money wisely rather than spending it on other things.

Defaulting on a car loan has severe consequences:

 

– The lender can repossess your vehicle at any time.

– Your credit score will plummet, making future loans very difficult.

– Any collateral used to secure the loan can be seized and sold.

– You may owe significant fees for transportation and storage of the repossessed vehicle.

– Future wages may be garnished to repay the vehicle balance.

– The lender can take legal action forcing asset liquidation or bankruptcy.

 

As such, it is critical to prioritize car loan payments above any other debts and contact the lender immediately if struggling to make payments on time. Open communication and proactive planning can help prevent a default and vehicle repossession.

Yes, there are a few options for obtaining an auto loan in St. Catharines after bankruptcy or consumer proposal:

 

– Wait at least 12 months for improved chances of approval

– Apply at dealerships like Skyway Fine Cars or AutoLoans.ca specializing in post-bankruptcy auto financing

– Have a strong, consistent income source to show the lender

– Make a large down payment from savings

– Bring a co-signer with good credit to strengthen the application

 

While interest rates may be higher, and loan amounts lower, having reliable transportation is vital to rebuilding your credit post-bankruptcy. An approved car loan also demonstrates you are bouncing back strongly.

 

The easiest auto loans to get approved for in St. Catharines with bad credit tend to be:

 

– Older used vehicles with over 100k miles

– Higher mileage imports like Toyota, Honda, Hyundai

– Loans under $10,000 balance with short 24-36 month terms

– Secured loans using clear car titles or other collateral

 

Lenders view these types of auto loans as lower risk, even with challenged credit. Avoid newer vehicles on longer term loans unless you have significant income and cash to put down. Start small until your credit score recovers above 600.

Most lenders prefer applicants to have at least 6 months at their current job. However, those with more tenure of 1-2+ years have the very best approval odds and rates. If changing jobs recently, having the same type of work on your resume still helps versus entering an entirely new career. Providing prior W2’s and pay stubs can supplement recent income docs if needed. Also be sure your employer will verify your employment status and income with lenders during the verification process.

 

Yes, some subprime lenders and special finance dealerships like AutoLoans.ca and Skyway Fine Cars can assist with auto loan approvals using disability payments, social assistance, pensions, and other non-traditional income sources. To improve your chances, have consistent monthly deposits from the assistance programs, provide income statements detailing payment amounts and durations, and ideally have a down payment from savings. Cosigners may also be required to meet minimum income thresholds on certain car deals. But approvals are definitely possible even on limited fixed income sources.

Here are some tips to improve eligibility for auto loan approvals in St. Catharines:

 

– Pay all bills on time each month to steadily increase your credit score

– Obtain copies of your credit reports to resolve any errors or discrepancies

– Save up a down payment fund from tax refunds or other sources

– Keep your existing auto loans and debts in good standing

– Enroll in credit counseling or financial literacy programs

– Maintain stable housing and employment

– Live within your means by minimizing expenses

– Apply with a creditworthy cosigner if needed

 

Building your credit fitness and demonstrating responsible money management make lenders much more comfortable extending you a car loan.

Major banks and credit unions like Scotiabank, TD Canada Trust, CIBC, Meridian, and FirstOntario Credit Union report loan payment history directly to both TransUnion and Equifax. This helps build positive credit references each month by making consistent on-time payments. Many subprime lenders like Rifco and Carfinco also report payment activity. However, some smaller buy here, pay here dealerships may not report to the credit bureaus. So ask upfront about their reporting policies before signing your auto finance contract.

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