APR and borrowing cost
APR is designed to express the annual cost of borrowing, but the disclosure should also show the dollar cost of borrowing and the total obligation.
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The lowest payment is not necessarily the lowest-cost offer. Compare APR, amount financed, term, payment frequency, total cost of borrowing, fees, optional products, prepayment conditions and any negative equity included in the loan.
APR is designed to express the annual cost of borrowing, but the disclosure should also show the dollar cost of borrowing and the total obligation.
A longer term can lower each payment while increasing the time in debt and often increasing total interest. Confirm whether payments are weekly, biweekly, semi-monthly or monthly.
Check the selling price, taxes, fees, optional products, trade allowance, loan payout, down payment and any negative equity. The amount financed should reconcile to the agreement.
Products such as protection plans, warranties or insurance can add cost. Ask whether each item is optional, what it covers and how cancellation works.
Ask whether extra payments or early payoff are permitted and whether any conditions apply. Also consider how quickly the vehicle may depreciate relative to the loan balance.
Not without comparing term, APR, amount financed and total borrowing cost.
They can be. Review every line of the agreement and ask which products are optional.
That depends on the agreement and applicable rules. Confirm the prepayment terms before signing.
Content owner: NewWheels editorial team · Last reviewed: 2026-08-05 · Next review: 2026-10-05
Sources: Financial Consumer Agency of Canada—car financing guidance; Alberta automotive sales disclosure principles