Car loans: how they differ from a cash loan
The car is the collateral. Two consequences follow: the rate is markedly lower (RRSO 9.5–10.8%, roughly half of a typical cash loan), and the bank requires AC (comprehensive auto insurance) for the life of the loan.
The down payment matters more than people expect. Putting 30% down lowers the monthly payment, yes. It also lowers the RRSO the bank offers, because the bank sees less risk. If you can wait three months and put 30% down instead of 10%, it usually pays for itself.
- ✓New or used cars (age limit depends on the bank)
- ✓Down payment: 10–30%
- ✓Typical RRSO: 9.5–10.8% (specialist car banks)
- ✓Term: 24 to 120 months