No matter whether it’s new or pre-loved, buying a car is always an exciting time. However, it can also be stressful, as today’s decisions have financial effects that may extend way into the future. But there are ways of streamlining this process and lessening the risks. So let’s join the auto loan experts at Laneway Auto Loans and Sales and see what they have to say.

Exactly What Is an Auto Loan?

When you borrow money to buy a car, you’re signing up for what will probably be the second-largest commitment of your life, in terms of time and money. Car loans are secured, which means they are backed by collateral – the vehicle itself. Additionally, your personal credit score is used to measure your perceived ability to pay back your loan, which affects the amount of financing offered to you, and even how easy it is to get an offer.

What Components Are Involved in Car Loans in Nova Scotia?

In principle, there are three major components of auto financing that you should consider when shopping for cars in the Atlantic Provinces:

  • Vehicle: The details of your choice of wheels – make, model, trim, year, accessories, and condition – all affect its sales price. On top of this, you should add 15% Harmonised Sales Tax on used vehicles purchased from dealerships in the Maritimes, as well as mandatory insurance, with the premiums depending on age, gender, and driving history. Safety inspections are required every two years, for license plate registration so make sure this is included in your ordeal, to avoid any unpleasant surprises;
  • Interest Rate: This is the amount that the lender charges you for providing you with a lump sum to complete your purchase. Generally varying from a welcome 3% to a scorching 30%, interest rates in Canada averaged out at around 6.5% by year-end 2022. New cars may even be offered at 0% interest. The bill of sale should show the total cost of your loan over the selected term, indicating the total amount of simple interest you’ll be paying, plus the principal amount;
  • Term: This is the length of time (between 12 and 96 months) that you’ll be paying off your loan. Although longer terms lead to smaller monthly instalments, the overall effect on your personal finances may be negative. In a worst-case scenario, there’s the possibility of being ‘underwater’ on your loan. This is when your vehicle has depreciated to such an extent that it’s worth less than the outstanding amount you still to pay off, known as negative equity. At the same time, repair costs are likely to soar, making it harder to sell.

Extra Factors That Might Pump up Your Auto Financing in Halifax

Eastern Canada’s harsh climate means you need an extra set of winter tyres and rims, with annual undercoating to protect against erosion caused by salt. If your budget is tight, you might want to consider upping your loan to include these two features, as a decent set of winter tires and rims may cost up to $1,000. Another unexpected budget-breaker could be parking in Halifax: a municipal overnight parking ban runs from December 15 to March 31. Although enforced only during clearing operations after declared weather events, this could still involve significant expenditures, depending on where you live. A small down payment or a low credit score will pump up the end-cost of any auto loan. Putting down the minimum amount means you need to borrow more (and thus pay more in interest); a credit score of less than 650 ratchets up the annual percentage rate (APR) charged on your loan.


Planning your next car purchase carefully, with expert advice from the Laneway specialists, is a smart move that could save you thousands of dollars over the next few years. 

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