Should I rent a car or finance a car?
In Canada, almost one-third of new cars are leased rather than purchased. Some certified used cars are also available for rent. But when you compare your options – lease a car, finance a car and buy a car in cash – how do they stack up?
We have examined car financing options and cash purchases. Car leasing opens a window for short-term driving of vehicles with lower monthly payments. The biggest difference between buying a car and renting a car is that you return the rental car at the end of the lease.
You can lease or buy another vehicle, or you can buy the residual value of the lease. It is a popular choice due to its flexibility.
When leasing, please note the following:
- Excess wear and excess mileage charges may apply.
- The car you drive is not yours.
- After you hand in the lease, you start over.
- Given easy access to affordable vehicles and low auto finance rates, there’s a good reason why more than two-thirds of buyers still choose to finance through leases.
Financing a car is an expense, and borrowing money has a cost—especially the interest cost. In almost all cases, the cost of financing a car purchase is low, giving you the flexibility to use your money elsewhere.
But which type of auto financing is right for you? Let’s see if it’s a personal loan or a car loan.
Can I buy a car with a personal loan?
If you need credit to purchase a vehicle, one option is a personal loan. In most cases, a personal loan is unique in that it is unsecured. There is no security for the money you borrow. Also, borrowed funds can be used for almost anything you want to buy.
To get a personal loan in Canada, all you have to do is meet the eligibility requirements and apply to a bank, credit union or online lender.
No matter where you get your personal loan, the process is the same.
Complete an application form with your personal information and documents to support your loan application.
Your application will be reviewed to determine your eligibility for a loan.
The term and interest rate are set by the lender.
If your application is approved, funds can be transferred to your bank account on the same day.
Personal loan or car loan: pros and cons
Car loans differ from personal loans in one important way: You can only use the money to buy a specific vehicle. But if you’re buying a vehicle anyway, that’s not a problem. A car loan is a secured loan, which means that the vehicle you purchase is used as collateral. When your loan application is secured, you have a higher chance of being approved and a higher interest rate than an unsecured personal loan.
To get a car loan, you can go to any bank or dealer to apply. The financial manager sends your application to the lender, who reviews it and decides whether to grant the loan.
If you’re ready to buy a car today, it’s a good idea to get pre-approval for auto financing before disposing of the vehicle. With Canada Drives, you can approve your car loan and book your perfect car without ever leaving your living room!
Personal loan or car loan – which one is right for you? Each has its own advantages and disadvantages, but both are options when shopping for a new car.
The benefits of a personal loan to buy a car are:
- Flexibility – You can choose any car as long as you have the necessary funds.
- Fixed terms – You know your interest rate and term in advance.
- This option pays for things other than your new car.
- The ability to choose secured or unsecured loans.
Car loan benefits typically include:
Loans with lower interest rates (compared to unsecured personal loans) can last up to 84 months or more.
Apply and finance quickly so you can get on the road faster, often the same day!
Loan conditions are relaxed.
However, a car loan has a lien on title until it is paid in full, so your car is not yours until the final payment is made.
When is the best time of year to buy?
Everyone always wonders, “When is the best time to buy a new car?” The honest truth is, the best time of year to buy a car is…when you need a new car! Whether you’re buying a new or used car, you’ll find special deals every season – Christmas, New Years, Thanksgiving, Canada Day and more.