Used Car Financing
How Does Financing a Car Work?
Financing a car is a straightforward process that allows you to purchase a vehicle without paying the entire amount at once. For example, you find a $25,000 sedan, but you don't have $25,000 sitting in the bank. When you finance the purchase, a lender loans you the money you need, and you sign an agreement that you will repay a portion of the loan each month for a set term. You can also factor in any additional fees or warranty coverage into the loan, allowing you to add extended protection without the overwhelm of a high down payment or upfront out-of-pocket expenses.
You can finance a vehicle through a dealership or a lender like your bank, but by shopping with IDrive Canada, you're getting the benefits of both. We're a premier automotive finance company that offers financing on thousands of vehicles. Why is this important, and how does it distinguish us from other lenders?
At a traditional dealership, you may shop their inventory and find the perfect vehicle only to realize that you don't qualify for financing or can't get approved for a loan. This is a significant waste of time and adds to your stress of finding the right car at an affordable price. When you shop with IDrive Canada, we reverse the process by gathering your financial information first via tools like our Virtual Credit Consultant so that you can get approved and then start shopping. This lets you know upfront how much you can afford to finance, putting you in greater control of the process.
Common Finance Terms and Phrases
The automotive industry is filled with phrases and jargon that can seem foreign to most. Unfortunately, the same is true for the finance process, which is inundated with terms like "borrower," "lender," "interest rate," "amortization," "assets," and more. We're here to help demystify these terms, arming you with the knowledge to face the finance process with confidence.
- Borrower: You. You're the person taking out the loan or borrowing the money for the purchase.
- Lender: Us. The institution giving you the loan to make the purchase.
- Amortization: The process of paying off the loan at a set rate over a predetermined period. For example, $300 per month for 60 months. Annual Percentage Rate (APR): The rate you pay each year to borrow money. The higher the APR, the higher cost to you.
- Cosigner: An individual with good credit who co-signs the loan and is responsible for paying should the borrower default.
- Debt-to-Income Ratio: The measure of how much you owe (debt) compared to how much you earn (income), which tells a lender if you make enough money to repay the loan.
- Default: When you fail to repay the loan, which can lead to repossession and a negative impact on your credit score.
- Equity: The difference between what you owe on the vehicle and its actual value. Negative equity means the vehicle is worth less than what you owe; positive equity means it's worth more than what you owe. Ideally, you want to put yourself in a positive equity situation.
- Lien: If you default on the loan, this is the lender's right to sell the vehicle to recover its value and their investment.
- Principal: The money you agree to repay. Your monthly payment is first applied to outstanding fees and interest, then principal.
- Term: The period over which a loan is repaid.
How Will IDrive Canada Help Me?
Think about the stress that comes with the traditional car-buying process. You spend hours looking for the perfect car, truck, or SUV, narrowing your options based on your driving needs and budget. Then, just when you think you've found the ideal model, you discover that all your hard work was for nothing. You can't get approved for financing, meaning you have to start the process all over.
But what if it didn't have to be this way? What if you could work with a team committed to streamlining the process and setting you up for financial success? That's what it means to work with IDrive Canada.
We know that financial setbacks can happen to anyone, so we take great pride in our ability to work with all types of credit. Because of this, we take a different approach to the car-buying process and start with the financial aspect. We like to get the most stressful part out of the way so you can enjoy the entire experience.
Instead of wasting hours looking for the perfect model, we start with the pre-qualification process. During this step, you'll provide basic information like your name, address, and phone number. Then, you can browse eligible models and find the perfect car, truck, or SUV. Once you've narrowed your options, you can move the sale forward at your own pace, providing us information on your financial background, such as your approximate income and information about your vehicle trade-in. From there, your work is done as we take over the process, putting you one step closer to getting behind the wheel of the vehicle of your dreams!