Different options are available if you decide to purchase your vehicle on credit.
Remember that making the lowest possible monthly payments can be tempting, but it is generally more costly. This makes sense as the repayment of the principal is spread out over a longer term, and interest fees will be added.
Financing offered by the merchant
When you finance your vehicle through the credit company affiliated with the merchant, it is considered an instalment sale. You will pay for the vehicle in a series of instalments over a given period of time.
The merchant retains ownership of the vehicle until you have paid for it in full, even though you take possession at the time of purchase.
Before entering into an instalment sale contract with you, the merchant must evaluate your ability to reimburse the credit applied for. To find out more, refer to the evaluation of your ability to pay page.
If merchants offer you "0% financing" or "0% interest," ask them if the interest rate is identical to the credit rate that will appear in the contract. Doing so can help you avoid unpleasant surprises.
Credit charges represent the true cost of your loan. They include interest, but also, where applicable, insurance subscribed through the merchant (notwithstanding exceptions), administration fees, the value of the discount granted to consumers who pay cash, etc. The interest rate may therefore be 0%, while the credit rate may in fact be higher.
Fees for insurance in case of death or invalidity are part of the credit charges, if you accept the insurance offered by the merchant. You are not, however, obligated to subscribe to this insurance.
Borrowing from a financial institution
Borrowing from a financial institution can be advantageous. You may be able to take advantage of the discount that the merchant offers to customers who pay cash.
There are differences to consider between taking out a vehicle loan or a personal loan. From a legal standpoint, a vehicle loan generally constitutes an instalment sale and not a true loan. This means that the financial institution retains ownership of the vehicle until you have paid for it in full, even though you take possession at the time of purchase. A personal loan offers greater flexibility, as you can sell your vehicle at any time, without having to ask permission from the lender.
You can use a calculator (in French only) to determine certain amounts, such as the monthly payments or the interest rate.
Last update : October 29, 2020
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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.