Cheapest Way to Finance a Car in Ontario: A Money-Saving Guide
Cheapest Way to Finance a Car in Ontario: A Money-Saving Guide
Posted on July 18, 2025
Looking for the cheapest way to finance a car in Ontario? With vehicle prices rising, it's more important than ever to find a financing option that fits your budget without piling on extra costs.
The good news is, there are smart ways to reduce what you pay in interest and fees over the life of your loan.
Here’s how to make sure you're getting the most affordable deal possible when financing a vehicle in Ontario.
What Does “Cheapest” Really Mean in Car Financing?
The cheapest way to finance a car isn’t just about securing a low monthly payment. A lower monthly bill often means a longer loan term, which can result in higher total interest paid over time.
True affordability means:
- Low interest rates
- Shorter loan terms
- Minimal fees or extras
- A manageable monthly payment
In other words, the best financing option is the one with the lowest total cost—not just the smallest payment.
Step 1: Know Your Credit Score Before Applying
Your credit score is a key factor in determining the interest rate you’ll be offered. In Ontario, a higher credit score typically leads to lower interest rates on car loans.
Check your score through trusted Canadian services like Borrowell or Credit Karma. If your score is low, consider taking time to improve it by:
- Paying down debts
- Avoiding new credit applications
- Making payments on time
Even a small improvement can lead to significant savings over the loan’s term.
Step 2: Compare Multiple Financing Options in Ontario
One of the cheapest ways to finance a car in Ontario is to compare offers from different lenders. Don’t limit yourself to the financing offered at the dealership. Consider:
- Major Canadian banks offering auto loans
- Online lenders with competitive rates
- Manufacturer promotions on new cars
Look for the lowest annual percentage rate (APR) and always read the full loan terms. Some low-interest offers may have conditions like large down payments or short-term limits.
Step 3: Get Pre-Approved to Lock in Better Rates
Getting pre-approved before shopping for a car gives you a clear idea of your budget and often helps you secure a better rate. Many Ontario lenders offer online pre-approval tools with no obligation.
Pre-approval benefits include:
- Knowing your maximum loan amount
- Understanding your interest rate ahead of time
- Making faster and more confident buying decisions
Pre-approvals are typically valid for 30–90 days, giving you flexibility as you shop.
Step 4: Make a Larger Down Payment
Putting more money down upfront is one of the cheapest ways to finance a car. The more you can pay upfront, the less you need to borrow—and the less interest you’ll pay.
Aim for a down payment of 10–20% of the car’s value. This not only lowers the total loan amount but also reduces the risk of being underwater on your loan (owing more than the car is worth).
Step 5: Choose the Shortest Loan Term You Can Afford
Loan terms typically range from 24 to 84 months. While longer terms mean lower monthly payments, they often come with higher interest costs.
Choosing a shorter term—such as 36 or 48 months—can save you hundreds or even thousands of dollars. If your budget allows, opt for the shortest loan that keeps payments manageable.
Final Thoughts on Financing a Car in Ontario Affordably
The cheapest way to finance a car in Ontario isn’t a one-size-fits-all solution, but it always starts with good information and careful planning.
By checking your credit score, comparing lenders, getting pre-approved, making a larger down payment, and selecting a shorter loan term, you can significantly reduce the cost of borrowing.
Financing a car doesn't have to be expensive—if you take the right steps, it can be a smart and affordable part of your financial journey.
If you're ready for a car loan in Southern Ontario, we'd love to help with that! Simply fill in the form below to get started.