In AB, what should I know about dealer-financed vs bank loan for car loans?

In Alberta, choosing between dealer-financed and a bank or credit union car loan involves distinct considerations that significantly impact your total cost and buying experience. Dealer financing offers unparalleled convenience, often providing manufacturer-backed promotional rates, such as 0% or very low APRs, especially on new vehicles as market conditions in 2025 continue to drive competition for sales. However, these attractive rates may not be available for all models or credit profiles, and dealers might sometimes prioritize lenders offering them higher commissions, potentially obscuring the most competitive rate for your specific situation or bundling less transparent fees.

Conversely, securing a loan directly from a bank or credit union in Alberta typically provides greater transparency and allows you to obtain pre-approval, which acts as cash in hand and significantly strengthens your negotiation position on the vehicle's price itself. These financial institutions, regulated under federal or provincial frameworks, often offer highly competitive rates for qualified borrowers, and their focus is solely on the loan product, not the vehicle sale.

Ultimately, the 'why this matters' for consumers in Alberta boils down to the Annual Percentage Rate (APR) and the total cost of borrowing over the loan term. Always compare the APR, not just the monthly payment, from multiple sources-including your own financial institution-before finalizing a purchase to ensure you secure the most favourable terms and avoid unnecessary expenses, leveraging Alberta's robust consumer protection laws for clear disclosure.