Your Questions Answered
If you do not find answers to your questions about car loans here, please contact an RBC Royal Bank credit specialist.
Should I lease a car or borrow to buy one?
Although it's not trouble-free, leasing offers low monthly payments and the opportunity to change cars every two or three years. In the long run, a car loan may be a less expensive alternative. Whatever you choose to do, gather the right information and you'll be sure to drive a better deal.
I read somewhere that car loans offer low payments too. How does it work? What are the advantages?
Similar to a lease, the financial institution establishes a future resale value (also called "buy-back" value) for your car at the end of the loan term you choose. Terms are usually available for two to five years. The buy-back value is used to reduce the amount you have to repay during the term of your loan. You pay the interest only on the car's buy-back value and the principal and interest on your remaining loan balance. Your monthly costs are lower because a portion of your payment is deferred until the end of your chosen term.
With a Royal Buy-Back loan, you can usually enjoy all these advantages that leasing can't offer:
- You're not locked in - as the owner of the car, you are free to sell or trade it in whenever you choose without penalty.
- There's no need to make a down payment, leave a security deposit, or pay any up-front or back-end fees
- You can choose fixed or variable interest rates and switch between them without penalty.
- If necessary, you can even arrange to defer a month's payment from time to time during the term of your loan.
- You own your car outright - the car is registered under your name.
How do I go about applying for a car loan?
Many dealers offer RBC Royal Bank auto financing. To find one, click here. Alternatively, you can visit your branch, apply by phone by calling 1-800-Royal® 9-9, or even use the on-line loan application in this Web site - whichever is most convenient for you.
How are the payments structured?
For fixed-term loans, each monthly payment consists of a portion of interest and a portion of principal. The proportion of interest is higher in the first payment, and it reduces as the principal is repaid.
Can I pay out my loan early? Are there charges I need to watch out for?
You can pay off your RBC Royal Bank car loan any time you like, usually with no early repayment penalties.
Other questions?
Ask an RBC Royal Bank credit specialist for answers.
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