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Understanding car loans can feel overwhelming, but we’re here to break it down for you.

Here, you’ll learn how car loan payments are calculated, including interest rates, loan terms, and monthly payment amounts, so you can plan confidently! We’ll also walk you through what’s typically required to qualify for a loan, from credit scores to income and documentation. Plus, we’ll explain how managing a car loan responsibly can actually help build and improve your credit over time. Whether you’re a first-time buyer or looking to upgrade, we want to help you make informed, smart decisions.

Principle

The principal of a car loan is the original amount you borrow to purchase the vehicle, before any interest or fees are added. For example, if you buy a car for $20,000 and put down $5,000, your loan principal would be $15,000. As you make payments, part goes toward reducing the principal, while the rest covers the interest charged by the lender. Reducing the principal faster can help lower the total interest you pay over the life of the loan.
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Term

The term of a car loan refers to the length of time you agree to repay the loan, usually expressed in months. Common loan terms are 36, 48, 60, or 72 months. A longer term usually means lower monthly payments but more interest paid over time, while a shorter term typically has higher monthly payments but less total interest. Understanding your loan term helps you balance what you can afford each month with how much you’ll pay overall.
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Interest Rate

The interest rate of a car loan is the percentage the lender charges you for borrowing the money. It’s applied to the loan principal and helps determine how much you pay in addition to the amount you borrowed. A lower interest rate means you’ll pay less over the life of the loan, while a higher rate increases the total cost. Your credit score, loan term, year and condition of the vehicle, and the lender’s policies all affect the rate you’re offered.
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Your car loan’s principal, term, and interest rate all work together to determine how much you’ll really pay. Even a 1-2% difference in the interest rate can mean thousands of extra dollars over the life of the loan. That’s where CreditShift is different from regular auto dealerships. We work with every major auto lender in Canada to secure you the lowest rates and the best terms. We’re shifting the power away from the banks and back to you, the consumer, by helping you secure better rates and terms that keep more money in your pocket, not theirs.

What is required to qualify?

Employment & Income

Typically, you need to be at your current job for three or more months and earn at least $1,800 per month to qualify for a car loan, but with CreditShift, approvals can happen with as little as one month on the job. We also consider other forms of income, including certain types of government assistance, cash jobs, and self employment, to help more people get approved and on the road faster.

Driver’s License

A driver’s license isn’t always required to get approved for a car loan. While most lenders prefer a full license, we work with several who accept learner’s permits — and even some who only require a valid government-issued ID. At CreditShift, we’re all about opening more doors to help you get behind the wheel.

Bank Account

You will need an active bank account to get approved for a car loan. Some lenders require you to provide a void cheque or a pre-authorized debit form so they can set up your loan payments. If you’re unsure how to get these, our team at CreditShift is here to guide you through the steps and make sure you’re ready.

Down Payment

We specialize in $0 down car loans, so a down payment isn’t required, but if you have money saved up, it can work in your favor! Putting money down can help lower your monthly payments or shorten your loan term, which means you’ll save money on interest, over time. At CreditShift, we help you find the best option for your situation, whether that’s with or without a down payment.

Current Address

You’ll need to provide your current Canadian address when applying for a car loan. Any Canadian address will work. If you’ve been at your current address for less than two years, we’ll also need your previous address to complete the application. Don’t worry, CreditShift makes it easy to provide this info and keep the process moving smoothly.

Contact Details

This part is easy! You will just need to provide your basic contact details. We’ll ask for your full name, date of birth, email address, and phone number so we can process your application and keep you updated. At CreditShift, we keep it simple and hassle-free!

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Applying for financing with CreditShift is fast, easy, and designed to work for everyone. No matter your credit situation — good, bad, or just starting out — we work to get you approved with the lowest interest rates possible. Our online application takes just 2 minutes to complete, and we handle the rest, making sure you get the best deal without the stress.

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If you have any additional questions about car loans do not hesitate to visit our Help Centre.