Best Auto Loan Checklist for Your First Car in Canada

By John Hayden

Welcome to Canada! If you’re a new arrival eager to explore the attractions of this vast land, buying a car is probably the first major purchase you’ll make. So here’s a useful auto loan checklist. After all, you need to get around and check out all the options before deciding on the biggest family purchase of all: a new home.

Initially, you need to decide between an auto loan or a lease. These are the two most common vehicle financing options in Canada:

with a loan, you’ll own the vehicle once the debt is paid off, although it will be worth considerably less, and with maintenance costs probably rising;
with a lease, you pay less each month but never own the asset, although you can easily upgrade to a newer model every couple of years;

Practical Auto Loan Checklist

As a start, here’s a practical checklist for your auto loan. This will streamline your car-buying journey, making sure it’s an enjoyable and positive experience.

First, set your monthly car payment ceiling in your budget, factoring in expenses like insurance, fuel, maintenance, and parking. For easier calculations, use one of the many online calculators available on lender websites;
Next, research vehicles online at dealerships (which are more secure than personal deals) and shortlist a few models, classifying features and options as must-have, would-be-nice, and unnecessary;
Go hands-on and test drive your shortlisted favourites, preferably under conditions that are not ideal (in bad weather, at dusk, and on poor roads), so you get a good idea of how each model handles under tough Canadian conditions;
As you might not have built up a credit score yet in Canada, check out your vehicle financing options, once a final price has been agreed with the dealer, including the Royal Bank of Canada, which offers vehicle financing with no Canadian credit history;
If you decide on a used vehicle (even from a dealership), get the vehicle history report before asking an independent mechanic to conduct a pre-purchase inspection (PPI), so possible problem areas requiring extra-detailed analysis are pinpointed right from the start;
Finally, get car insurance quotes before making a decision, as you must have car insurance in Canada, to provide financial protection against a wide variety of risks.

Prudent Vehicle Financing

With so many other demands on your budget, you may decide to follow in the footsteps of many other newcomers to Canada, buying a used car to start with, as you settle into your new life. So here’s a list of questions you should ask, making sure you pick your new-to-you wheels with confidence:

So what’s the mileage and general condition? (Allowing the seller to provide information about known issues)
Tell me, are there any replacements or updates? (with documentation indicating added value);
Has it been maintained regularly, including oil changes (preferably with service records);
May I see the vehicle ownership papers and the VIN? (Also photo ID, if you’re buying directly from the owner)
Do you have a full vehicle history report? (If not, get the VIN and buy one yourself)
Could I go for a test drive of thirty minutes to an hour? (So you can assess how the car runs and whether it would fit your lifestyle)
May I take the car for an independent pre-purchase inspection? (to get an expert opinion on what’s happening under the hood)

Should any fixable problems come to light in the course of this run-up to transfer, try to work with the seller and get them repaired before agreeing to purchase the vehicle. Seize this opportunity to ask why the car is being sold (rising maintenance costs are a good possibility for older models) and try and find out where it has been driven, and by whom.

Remember: the more you know about your new wheels, the better the deal you can make!