In House Financing Car Dealerships: What It Means in Ontario
It depends on who the lender is. In-house financing can mean the dealership lends you the money itself, rather than arranging your loan with a separate lender.
So the one question that sorts it out is simple: ask who the lender is, the dealership itself or a separate lender your application is sent to.
Whatever the ad calls it, the financing terms in Ontario have to be in writing before you sign.
Are you in Almonte or Perth with credit that has taken a hit, wondering whether an in-house financing ad is your only way into a vehicle? Damaged credit does not by itself make a dealership's own financing your only route.
Key Takeaways
A financing ad may not tell you who is lending the money, so ask. Then read the terms, in writing, before anything is signed.
In Ontario, every dealer has to be registered with the province's vehicle sales regulator, whatever it calls its financing.
Ask which lenders your application was sent to, and if more than one approved you, ask for each one's terms.
Compare offers on the total cost of borrowing, the term and any fees, not on the payment alone.
Ontario has no cooling-off period on a vehicle contract.
Checking your own credit report does not affect your score; applying for a loan can mean a hard inquiry, which can affect it.
If you have a trade with a loan on it, get the payout figure from your lender first.
When you are ready, you can apply for financing with Carleton Place Ford before you come in, on approved credit (O.A.C.).
What Can In-House Financing Mean?
Financing at a dealership can follow two different setups. The dealership may lend you the money itself, or it may arrange your loan with a separate lender that decides whether to approve it and on what terms.
The Financial Consumer Agency of Canada describes the first as a dealer providing its own in-house financing.
It describes a buy-here-pay-here dealer as one that specializes in financing the used vehicles it sells to buyers with damaged credit.
So whatever an ad calls its financing, the useful question is who the lender is.
How Does Financing Arranged by a Dealer Work?
The dealer may send your application to one or more lenders, and each lender decides whether to approve it and on what terms. The federal consumer agency says most dealerships make car loan arrangements for you with a lender.
That lender can be the manufacturer's finance company, a bank or credit union, or an independent finance company.
OMVIC, the province's vehicle sales regulator, says that when a dealer sends your application to several lenders, you could be approved by more than one, potentially with different terms or interest rates.
It says having the dealer arrange financing often makes sense, because dealers often have access to numerous lenders that may provide terms or rates unavailable elsewhere. It adds that buyers should still "carefully consider what is being offered and take steps to ensure they are getting the best possible finance rate and terms."
You may also be able to get a car loan or line of credit from your own financial institution instead, and compare the two.
In House Financing Car Dealerships: The Two Setups Compared
If you are searching for in house financing car dealerships, the real question is who lends the money and who decides the terms.
An ad may not say which setup is behind it, so the table below sets the two side by side.
Question | When the Dealership Is the Lender | When the Dealership Arranges the Loan |
|---|---|---|
Who lends the money? | The dealership itself | A separate lender: the manufacturer's finance company, a bank or credit union, or an independent finance company |
Who decides approval and terms? | The dealership, as the lender | The lender your application is sent to |
What has to be in writing? | All financing charges and the annual interest rate, in the contract | The financing details, including the rate, payment, term and cost of borrowing, before you sign |
Is there a cooling-off period in Ontario? | No, not on a vehicle contract | No, not on a vehicle contract |
Either way, your agreement and your lender decide the rest.
What Does Ontario Require Before You Sign?
Whether you buy here in Carleton Place or elsewhere in the province, the same rules apply, whatever the dealer calls its financing.
When a dealer arranges financing, the vehicle sales regulator says you must be given the full cost in writing before you sign, including the annual percentage rate, the payment, the term, the cost of borrowing and the total of all payments.
A promise made out loud does not replace written disclosure, and the regulator's view is that the deal is not ready to sign until those details are on the bill of sale and clearly explained to you.
The Ontario government says the contract for any financing agreement with a business must show all financing charges and the annual interest rate, and explain how any extra charges would be calculated if you failed to make the payments.
Every dealer and salesperson in the province must be registered with the vehicle sales regulator, and so must the people who handle financing there.
The province also says there is no cooling-off period for motor vehicle contracts, so be sure of your decision before you sign.
Walk when a dealer will not provide the applicable written disclosures before you sign.
What Should You Ask About Where Your Application Went?
The vehicle sales regulator says buyers should know who their loan application was submitted to, and should ask about each lender's offered terms when it went to more than one.
It also says to ask to review the information on your application before the dealer submits it, and to request a copy.
Knowing where it went matters for your credit too, because the regulator notes that multiple credit applications can negatively affect a borrower's credit score.
What If Your Credit Has Taken a Hit?
A hit to your credit does not by itself mean a dealership's own financing is your only route. A dealer that arranges financing can send your application to lenders that work with damaged credit.
The vehicle sales regulator says the terms and rates available to you will be based largely on the vehicle you buy and your creditworthiness.
Because the vehicle is part of what a lender weighs, you can browse our inventory and have one in mind when you apply.
Checking your own credit report or score does not affect your credit rating, the federal consumer agency says. Applying for a loan is different: it can mean a hard inquiry, which can affect your score.
At Carleton Place Ford, we work with both prime and non-prime lenders, on approved credit (O.A.C.).
Apply for financing before you come in if you wish. With your consent, we can review options with participating lenders, on approved credit (O.A.C.).
Approval, rate, term and payment depend on the applicant, lender and vehicle, and a credit-bureau inquiry may be required. Bring a driver's licence and proof of income if requested; lender requirements vary.
If your real worry is what happens when you apply, our guide to what happens when you apply with bad credit covers that question.
Compare the Total Cost, Not the Payment
Compare offers on the total cost of borrowing, the amount financed, the term and any fees, not on the payment alone. The federal consumer agency's advice is to look at the total cost and not just the payments or interest rate.
A lower payment usually means a longer term, the agency says, and a longer car loan makes the total cost of the vehicle higher.
The vehicle sales regulator's advice is to look at the big picture: the monthly payments, the selling price of the vehicle and the cost of borrowing.
If the ad that caught your eye was a zero-percent offer on a new vehicle, our guide to how zero-percent offers work explains what that ad has to show.
What If You Still Owe Money on Your Trade?
Start with the payout, the amount still owing on your loan, and set it beside what the vehicle is worth. The vehicle sales regulator's advice is to call your lender for that figure.
It also says dealers are required to remove liens on trade-ins as soon as possible.
At Carleton Place Ford, we put our appraisal of your trade in writing. With your permission, we get the payout from your lender and show it beside our appraisal.
Value your trade online first if you want a starting point.
Owing more than the vehicle is worth is called negative equity. The federal consumer agency's advice is to "avoid trading in your car if you're in negative equity."
If you owe more than the vehicle is worth, the shortfall may be added to the amount financed, increasing the amount borrowed and potentially the total cost of borrowing. Financing is subject to lender approval (O.A.C.).
Your Next Step: Questions to Ask Before You Sign
Take these questions with you, and get the financing answers in writing before you sign.
They work the same way whether the dealership is the lender or arranges the loan, because the question that comes first is who the lender is.
Who is the lender? The dealership itself, or a separate lender it sends your application to.
Which lenders was my application sent to, and what did each offer? If more than one approved you, ask for each lender's terms.
Can I review my application before it is sent, and keep a copy?
What are the annual percentage rate, the term, the payment, the total cost of borrowing and the total of all payments? Get them in writing.
What fees are included, and what is the total amount financed?
If I have a trade with a loan on it, what is the payout, and how is any shortfall handled? You can value your trade online with Carleton Place Ford for a starting point.
Frequently Asked Questions
What Does In-House Financing Mean at a Car Dealership?
It can mean the dealership lends you the money itself, rather than arranging your loan with a separate lender that decides whether to approve it and on what terms. To know which setup you are dealing with, ask who the lender is.
Is In-House Financing the Same as Buy-Here-Pay-Here?
Not necessarily. A buy-here-pay-here dealer is one that specializes in financing the used vehicles it sells to buyers with damaged credit, while in-house financing more broadly describes a dealer providing its own financing.
Is a Dealership's Own Financing My Only Option With Bad Credit?
Not automatically. A dealer that arranges financing can send your application to lenders that work with damaged credit, and at Carleton Place Ford we work with both prime and non-prime lenders, on approved credit (O.A.C.).
What Must Be in Writing Before I Sign a Financing Deal in Ontario?
Ontario's vehicle sales regulator says that when a dealer arranges financing, you must be given details including the annual percentage rate, the payment, the term, the cost of borrowing and the total of all payments in writing before you sign. A promise made out loud does not replace that.
Does Checking My Own Credit Report Affect My Score?
No, checking your own credit report or score does not affect your credit rating, and you can get your report free from Canada's two main credit bureaus. Applying for a loan is different, because it can mean a hard inquiry, which can affect your score.
Is There a Cooling-Off Period When You Finance a Vehicle in Ontario?
No, Ontario says there is no cooling-off period for motor vehicle contracts, so be sure of your decision before you sign. Read the financing terms, and ask about anything unclear.
What Is the Honest Answer?
Financing at a dealership can follow either setup, and an ad may not tell you which. Ask who the lender is, then read the terms in writing before you sign.
If your credit has taken a hit, that does not by itself narrow you to one kind of financing, and checking your own report first costs your score nothing.
If you are still deciding whether to lease or finance, the Carleton Place Ford lease vs finance guide explains how the two differ.
Visit us at 10441 Hwy 7, Carleton Place, ON K7C 0T6
Browse inventory, value your trade, apply for financing (on approved credit), book service, or contact the team.
Sales: (888)-910-3538 Parts: (888)-876-1102 Service: (877)-866-8810 Local: 613-257-3988
About the Author:
Kerry Irven is the Vice President of New and Used Automotive Operations for Heighton Automotive Group, a family-owned and operated automotive group serving communities across Eastern Ontario. Kerry began his automotive career in new-car sales, building his experience on the showroom floor and working his way through multi-store dealership operations.
With over 25 years in the automotive industry, Kerry has helped grow automotive businesses from one location with 40 to 50 vehicles in stock to more than 500 vehicles across 10 rooftops. His hands-on background in both new and used-vehicle operations gives him a practical understanding of what customers look for when shopping for their next vehicle.
Throughout his career, Kerry has always been actively involved in staff coaching and in understanding customer wants and needs, helping ensure the businesses he works with continue to adapt to what customers are truly looking for.
One of the most exciting chapters of his career has been the shift into modern automotive marketing, embracing new technology, transparent pricing, customer-first inventory strategies, and new ways to create a better vehicle-shopping experience.
Kerry has completed extensive automotive training, including certification through the Ontario Motor Vehicle Industry Council, involvement with the Used Car Dealers Association of Ontario, Canadian automotive dealer training, and multiple customer service courses.
Born and raised on a farm, Kerry has always valued family, hard work, and a practical, down-to-earth approach. Joining Heighton Automotive Group and working alongside Thomas Heighton and family, along with managing partners Kyle Lothian and Martin Gougeon, has allowed him to bring those same values into the car business. It has also allowed Kerry to continue following a simple philosophy: treat every customer exactly the way he would want to be treated.
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