Car Financing in Ontario | Ontario Car Buying Guide [UPDATED 2019]

When it comes to purchasing a car, there are a few ways you can go about paying for it. If you’re fortunate, you’ll have enough money saved up to buy the vehicle outright, but if you’re like the majority people living in Ontario, you’ll find yourself needing to get either a lease or financing.

How to Lease a Car in Ontario

When it comes to leasing a vehicle, you’ll enter an agreement with either or dealership or leasing company that will provide the car to you for a limited time. In turn, you will have a set monthly payment and be responsible for both insurance and maintenance.

This sort of arrangement provides some key benefits:

1. Leases are usually given on shorter terms.
2. Due to paying only for the depreciation value instead of full value, you’ll end up with lower monthly payments.
3. You will usually be given the option to buy the car at the end of your lease.
4. You’ll have the option to get newer, better performing cars at the end of the lease, should you choose not to buy the current one.

Leasing also comes with few downsides:

1. Leases may restrict your options on how you can use the car, often with penalties for breaking them.
2. There may be additional fees at the end of the lease.
3. A new car, on average, is only worth about 37% of what you’ll end up paying for it during the term.
4. Depending on the model you choose, leasing may be a good or poor decision financially.

It’s key that you explore all your options for your budget and vehicle choice before making a final decision on leasing a car.

How to Finance a Car in Ontario

If you decide to go the financing route for purchasing your vehicle, you’ll be getting a loan directly from a bank, credit union, or dealership in order to cover the full cost.

When it comes to financing, you can look forward to these benefits:

1. As you’ll be buying the car straight out, you’ll have no restrictions on the model or features you can choose from.
2. You can get a car loan on both used and new vehicles.
3. You are able to resell the car to pay off your loan before the end date.
4. It’s far easier to terminate a loan, at any point you can pay off the remaining debt without any penalty fees.
5. You can negotiate the length of time you’ll take to pay off your loan.
6. You have full ownership of the car, which means you can use it however you would like.

Getting a Loan with No or Bad Credit in Ontario

For a large number of people, getting financial assistance through either of these routes can be difficult, due to either poor or no credit. The reasons for these situations vary from bankruptcies, or simply being new to Canada.

When you apply for a lease or a loan, a credit check will be performed. If you have no credit or bad credit, this can prevent you from getting a loan or lease.

That being said, it is not impossible, you still get a car in these situations using the following methods:

1. Improve your credit with credit cards, bank accounts, and smaller loans.
2. Pay off any currently outstanding debts, if possible.
3. Seek out companies that offer “subprime” leases and loans.
4. Seek out lenders who specifically work with poor credit or new Canadians.

Should You Lease, Finance, or Buy Your Car

Each method will be better suited to specific living and financial situations, but there are a few universal positives and negatives to each option for you to consider.

When it comes to leasing your car, it tends to only be beneficial if you can find terms that suite your specific needs.

Positives

1. You’ll usually wind up with a lower monthly payment with a loan and you’ll only pay for some of the cars overall value.
2. If you like the idea of driving a new car every few years or so, leasing will allow that without racking up costs.

Negatives

1. You don’t actually own the vehicle, which means you’ll need to stay within the terms and restrictions or face fees as a result.
2. You will have to lease a newer, pricer vehicle, as leasing cannot pay for used cars.

When financing a vehicle, you are taking out a loan to pay for it, which is generally a better route for most Canadians.

Positives

1. You own your car, you can do whatever you want with it at any time without facing penalties.
2. Useful if you want to own one car for a long period of time, but still keep yourself flexible to other options in the future.

Negatives

1. Financing generally comes with higher monthly payments and lengthier lease terms.

If both of the previous routes don’t sound like the right fit, your only other option will be to buy the car in full.

Positives

1. You’ll save money in the long term as you avoid the interest charges associated with monthly payments.
2. You own the vehicle outright, which will allow you to use it however you want without restrictions.

Negatives

1. The upfront cost is much greater and often unaffordable.

How you are going to pay for your vehicle is one of the most important steps on your road to owning that new car. For this reason, it shouldn’t be taken lightly.

If you are struggling with figuring out which is the best option for you, or need assistance with bad credit, we can help.

Don’t settle for less, we can get you into the car you want, with an arrangement that works best for you.