Finance car, alternatives to finance vehicule

When buy a car, you have several vehicle financing options. If you have enough money to pay off the full value of the car right away, you can buy the car in cash, but that’s rare. Most canadians must obtain a loan from a bank or other lender through leasing or financing to pay for their car. Below you can read our guide on the topic of corporate car leasing and financing, and what are the pros and cons of this.


Buy a car with vehicle financing

When you get auto financing, you can get a loan directly from a bank, dealer or credit union to buy the full value of the car. You can negotiate the loan repayment period, interest rate and monthly payment amount. If a car costs $10,000 and you only need to pay $4,000 right away, ask to put the remaining $6,000 on the loan and in return charge more interest than the monthly payment for the loan term to be allocated .


These are the advantages of auto financing:

  • No restrictions – because you’re buying your car and there are no restrictions on how you can use or customize it
  • Early loan cancellation – you can repay the full loan balance at any time without additional penalties
  • Flexibility – you can get a used car loan, not just a new car, you can resell the value and use it to pay off the loan early


When you finance your vehicle, you take full ownership. You can ride as much as you want without paying any restrictions or additional fines. You can also sell or trade the vehicle before the loan matures and pay off the balance with value without additional payments.


Leasing a car

When you lease a vehicle, you enter into a contract with a dealer or rental company that allows you to use the vehicle for a specific period of time. In return, you have fixed monthly lease payments for the duration of the lease and are responsible for insurance and maintenance. At the end of the lease, you can either purchase the vehicle or return it to the dealer before renting or purchasing another vehicle.


Renting a car has several benefits:

  • Lower monthly payments – you only pay for the depreciation of the car, not its full value
  • Shorter term – leases usually don’t last that long
  • Newer car – since you don’t buy a car, you can rent another new car at the end of the semester


However, there are limits to what you can do with the vehicle, and there will be additional charges if you don’t comply – for example, a limit on how many kilometers you can drive it per year. You will also pay an additional fee if you wish to terminate the tenancy agreement early.


Buying a car with financial restrictions

For some people, leasing or financing a vehicle is more difficult. This includes people with bad credit due to previous bankruptcy or other financial difficulties, or people with no credit, such as B. The reason is that banks or dealers run credit checks on leases and loans. If you have bad credit or no credit history in the past, they think you are at risk of non-payment.

However, buying a car is not impossible if you have bad credit or no credit at all. You can improve your credit by opening a bank account, getting a credit card or a small loan, and making all payments on time. This shows that you are trustworthy and able to pay on time.

If you still have bad credit, there are many companies that offer “subprime” leases and loans if you need a car urgently. These have stricter terms and higher interest payments since you are still considered a risk, but good financial firms will make sure they work with you to find a vehicle you can still afford.


Car Financing x Car Leasing x Buying a Car in Cash

There are three different ways to buy or pay for a vehicle, each with their own pros and cons.


If you rent a vehicle, it is usually only worthwhile if the conditions suit your needs:

  • Pro – your monthly interest rate is usually lower than the loan and only pays a portion of the vehicle’s value
  • Pro – if you want a new car every few years, you can do it without spending that much
  • Cons – you don’t own a rental vehicle and you will have to pay potentially very expensive fines if you don’t meet the conditions and restrictions
  • Cons – Can’t rent a used car, cheaper than a new car


Financing a vehicle or paying for a loan is often more attractive to car buyers in Ontario. Here are the pros and cons:

  • Pro – you own the car and can use it as much as you want without fear of penalties
  • Pro – more useful for people who want to own the car for many years but want flexibility in what to buy and when they can end their loan
  • Scam – usually has higher monthly payments and longer terms than leases


The only way to avoid interest and additional charges when buying a vehicle is to buy it outright and pay the full value of the vehicle up front. Here are the pros and cons of this option:

  • Pro – You can save a lot of money in the long run as you don’t have to pay any interest on monthly instalments
  • Professional – As with financing, you own the car and there are no restrictions or potential penalties on how you use or customize it
  • Cons – Upfront costs are much higher, so you’ll need a lot of cash to buy most cars outright


When buying a car in advance, it’s important to know your needs. For example, if you drive it more than average, you will have to pay a fine if you rent it. However, if you use it sparingly and want to save on your payment, you can upgrade to a new car every few years and save once a month.