At Carlantic Auto Sales, we know that buying a new or used car is an exciting milestone—but figuring out how to pay for it can feel overwhelming. While some buyers can pay in full upfront, most choose to finance their purchase through an auto loan. This allows you to spread out the cost over time with manageable monthly payments through a bank, credit union, or dealership financing.
Financing not only makes car ownership more accessible but also helps build your credit when payments are made on time. However, it’s important to consider that interest charges mean you’ll pay more in the long run. We’re here to help you understand the pros and cons so you can make the best decision for your budget.
This guide will walk you through the key steps of financing a vehicle, giving you the confidence to secure a loan and drive away in your next car!
Checking Your Credit Score
Before financing a vehicle, one of the first things you should do is check your credit score. Lenders use this score to determine your creditworthiness and the interest rate they’ll offer you. Knowing your score in advance helps you understand your approval chances and the loan terms you may qualify for.
There are several ways to check your credit score for free. Many banks provide access through online banking, and credit monitoring services like Credit Karma and Borrowell offer free score tracking. It’s also a good idea to check with both Equifax and TransUnion, Canada’s two main credit bureaus, for a complete picture of your credit health.
Credit scores in Canada range from 300 to 900, with higher scores indicating better credit. A score above 680 is considered good and qualifies for the best loan rates, while a score below 600 can make financing more challenging.
However, your credit score is just one part of the equation. Reviewing your full credit report helps you identify errors and understand what’s affecting your score—such as payment history, credit utilization, and account age. Being informed about your credit profile puts you in a stronger position when applying for an auto loan.
At Carlantic Auto Sales, we encourage customers to check their credit early in the process. This allows you to improve your score if needed, correct any errors, and set realistic expectations for your financing options. Taking this step in advance gives you more control and confidence when securing a car loan.
Get Pre-Approved for an Auto Loan
Getting pre-approved for an auto loan before proceeding can make the financing process smoother and give you more control over your purchase. Here’s why pre-approval is a smart move:
- Know Your Budget – Pre-approval helps you understand the maximum loan amount and monthly payments you qualify for based on your credit, income, and expenses.
- Stronger Negotiating Power – A pre-approval letter shows sellers that you’re a serious buyer, which can give you leverage when negotiating the vehicle price.
- Compare Loan Offers – By applying with multiple lenders, you can compare interest rates and loan terms to find the best deal.
To get started, you’ll typically need to provide:
- Personal Information – Name, address, date of birth, and Social Insurance Number (SIN)
- Proof of Income – Recent pay stubs, tax returns, or employment verification
- Down Payment Amount – If applicable, how much you’re putting down on the vehicle
- Vehicle Details – Make, model, year, mileage, and estimated value (if purchasing a specific car)
Lenders will conduct a hard credit check and review your financial history, income, and debts to determine whether you qualify and what loan terms they can offer. Having a pre-approval with Carlantic Auto Sales gives you confidence and puts you in a strong position to get the best financing deal possible.
Calculate Total Costs
When financing a car, it’s important to consider the full cost of ownership—not just the purchase price. Additional expenses like fees, interest, taxes, and insurance can impact your budget. Here’s what to factor in:
Loan Fees
Lenders may charge certain fees when setting up your auto loan, including:
- Lender Admin Fee – A one-time fee for processing the loan, typically around $799.00.
- Documentation Fee – Covers administrative and paperwork costs, often averaging around $300.
- Title and Registration Fees – Costs vary by province but generally range from $300 to $500.
By understanding these extra costs upfront, you can better prepare your budget and avoid surprises during the financing process. At Carlantic Auto Sales, we’re here to help you navigate these expenses so you can drive away with confidence!
Sign the Paperwork
Once you’ve finalized the purchase price and secured your auto loan, the last step is signing the paperwork. While it might be tempting to rush through this process, it’s crucial to take your time and carefully review every detail before signing.
Your purchase agreement will outline the final sales contract, including the agreed-upon price, trade-in value (if applicable), fees, and taxes. Double-check that everything matches the deal you negotiated. You’ll also receive loan documents that specify your financing terms—pay close attention to the interest rate, payment schedule, fees, and any other loan details.
Additionally, dealerships may offer extras like extended warranties, GAP insurance, or maintenance plans.
Some dealerships may try to speed up the signing process, but don’t let yourself be rushed. Take all the time you need to go over the paperwork thoroughly—doing so can help you avoid costly mistakes down the road.
At Carlantic Auto Sales, we encourage our customers to review everything carefully and ask questions before signing. Buying a car is a big financial decision, and we want to ensure you feel confident in every step of the process!
Make Timely Payments
When financing a vehicle, making your monthly payments on time is essential. Late payments can lead to penalties, extra fees, and a negative impact on your credit score. Here’s why staying on top of your auto loan payments is so important:
- Avoid Late Fees – Most lenders charge a late fee, typically a percentage of your monthly payment, if you miss the due date.
- Prevent Interest Rate Increases – Some loan agreements allow lenders to raise your interest rate if you make late payments.
- Protect Your Credit Score – Payment history is one of the biggest factors in your credit score. On-time payments improve your credit, while late payments can lower it.
- Keep Your Loan in Good Standing – Missing multiple payments can lead to default, and in the worst case, your lender could repossess the vehicle.
- Renew Your Registration – In some areas, proof of current loan payments may be required to renew your vehicle registration.
To avoid missed payments, consider setting reminders, enrolling in autopay, or creating a solid budget to stay on track. A strong payment history will not only help you maintain your current loan but also make it easier to qualify for future financing.
Pay Down Your Principal Faster & Save
At Carlantic Auto Sales, we want to help you get the most out of your vehicle financing. One of the smartest moves you can make after financing a car is to pay extra toward the principal balance each month. The principal is the original loan amount—before interest and fees. By making additional payments directly toward it, you can reduce your loan term, lower your total interest costs, and build equity faster.
The Benefits of Extra Principal Payments:
✅ Lower Interest Costs – Interest is calculated based on your remaining principal. The faster you reduce it, the less interest accrues.
✅ Pay Off Your Loan Sooner – Consistently making extra payments can shave years off your loan term.
✅ Save Money Overall – Less interest and a shorter loan mean you pay less for your vehicle in the long run.
✅ Build Equity Faster – Extra principal payments increase your ownership stake in the car more quickly.
Even a small extra payment can make a big impact. For instance, on a $20,000 loan at 4% interest over 5 years, adding just $50 per month could help you pay off your loan almost 10 months early and save over $500 in interest. The more you contribute, the greater the savings.
If you’re considering this strategy, check your loan terms to ensure there are no penalties for early payments. The sooner you start, the more you can save over the life of your auto loan.
Conclusion
At Carlantic Auto Sales, we understand that financing a vehicle can feel overwhelming. However, breaking it down into simple steps makes the process much easier. Start by checking your credit, getting pre-approved, comparing loan options, reviewing all terms and fees, and thoroughly inspecting the vehicle before making a final decision. Once you’ve secured financing, making timely payments and paying down the principal faster can help you save in the long run.
By following these steps, you can secure the best loan terms and drive away with a vehicle that fits your budget and lifestyle. While the process takes careful planning, the reward of owning your car outright makes it all worthwhile. With the right preparation, you can confidently navigate your financing journey and enjoy a stress-free car-buying experience with Carlantic Auto Sales. Click the button below to begin the auto finance process!