Published September 26, 2026
Make sure the vehicle deal is the same
Start with the same vehicle price, taxes and fees, trade allowance and down payment. If one offer includes optional products and the other does not, separate those amounts first. Otherwise you are comparing two different purchases rather than two ways to finance the same one.
Write down the amount financed for each offer. This is the principal on which borrowing costs are based. Ask for a breakdown if the number is higher than you expected.
Put the borrowing terms in one table
- Amount financed and any down payment or trade equity.
- Annual percentage rate and whether the rate can change.
- Term in months and payment frequency.
- Total of all payments and total cost of borrowing.
- Fees, optional products and any conditions about early repayment.
Why payment alone can mislead
For an illustration, imagine the same $20,000 amount financed at a hypothetical 8% annual rate. A 48-month term has a higher regular payment than a 72-month term, but fewer months of interest. The exact payments depend on the loan calculation and contract, so use the written disclosure or a calculator for real offers. The point is to compare the total paid, not choose by the smallest periodic number.
The Financial Consumer Agency of Canada warns that longer terms can increase total interest and extend the period of negative equity. That matters if you may need to sell or trade the vehicle before the loan is paid off.
Ask about what is optional
Extended warranties, protection plans and other add-ons can change the amount financed. Ask what each product costs, whether it is optional, what it covers and whether you can review the terms before agreeing. Compare the financing offer both with and without optional products so the underlying loan remains clear.
If the offers are from different lenders, check each lender’s written terms instead of assuming the same rules apply. Keep copies of the documents you review.
Choose a loan that fits the vehicle and your budget
Leave room for insurance, fuel, tires and maintenance after the loan payment. A shorter term may lower borrowing cost but only helps if its payment is comfortable. If neither offer works, consider a lower-priced vehicle, different down payment or more time to save. Approval and actual terms depend on the lender’s review.
DrivePEI’s payment filter is only an estimate based on a shopper-entered rate and vehicle price before taxes and fees. Request written financing terms for an actual decision.