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

In Ontario, understanding the nuances between dealer-financed and bank/credit union car loans is crucial for securing the best deal. Dealer financing offers unparalleled convenience, often providing attractive promotional rates, particularly for new vehicles, as manufacturers subsidize these to stimulate sales. However, these options are typically limited to captive lenders or preferred partners, and rates for used cars or non-promotional models might be less competitive. Conversely, obtaining a pre-approved loan from a bank or credit union allows you to shop for the most favourable Annual Percentage Rate (APR) *before* visiting a dealership, giving you significant negotiating power on the vehicle's price. This distinction matters immensely because comparing the APR and total cost from multiple sources ensures you secure the most competitive financing, potentially saving thousands over the loan term, especially in the current economic climate where interest rates can fluctuate. By separating the financing negotiation from the vehicle purchase, you gain transparency and control, aligning with consumer protection principles in Ontario, ultimately leading to a more informed and cost-effective acquisition.

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