880 Walkers Line, Burlington, ON, L7N 2G2
My Garage

Do 0% Interest Car Loans Still Exist in Canada? Here's The Truth

Do 0% Interest Car Loans Still Exist in Canada? Here's The Truth

Do you remember not that long ago, you could buy a car with a zero percent car loan in Canada?

 

It seems like a lifetime ago, but the car market in Canada has changed in a profound way, thanks primarily to the pandemic and how it turned life upside down for most of us. Which brings us to the question if 0% car loans in Canada are even possible anymore.

 

The Car Buying Cycle Has Changed

 

When the pandemic started, the lockdowns were supposed to last two weeks, giving us time to “flatten the curve” it took the better part of two years before we started to go back to life without lockdowns.

 

Car makers were producing cars that no one was buying, so they had to curtail production; this meant laying off workers and shutting down production.

 

The companies that made the components that go into the manufacturing of the vehicles were also forced to shut down. This had a domino effect on the economy.

 

Canada Inflation over the years

 

The Car Market Took off Thanks to Quantitative Easing

 

While the total number of new cars was reduced, central governments around the globe were printing money to try and keep the economy going.

 

We had people getting government money and looking for assets to buy; this is how the money started to flow into the used and new car market.

 

People who could not get a car loan in the past were able to get a low-interest rate car loan and ended up buying more car than they could afford.

 

The car companies could not keep up with demand and got rid of incentives like zero percent financing; they had an ample supply of willing buyers who were flush with cash

 

Are 0% Car Loans Still Possible in Canada?

 

We touched on why you don’t see zero percent financing much these days.

 

Now that inflation is impacting car manufacturers in North America, we are seeing the retail prices for new car rise while the price for used cars has leveled off.

 

The reason for this is the Bank of Canada has started to raise its key lending rate. This makes it more expensive for lenders to secure cash to offer as loans to consumers.

 

Bank of Canada lending rate

Bank of Canada lending rate

Since there are fewer people who qualify for loans, demand goes down, and so do prices.

 

How to Get a Good Deal on a New Car in This New Normal

 

While you may not be able to get a zero percent car loan right now, you should not let that dissuade you from applying for a car loan.

 

You can still get a good deal, but you will need to lock in the deal soon before the Bank of Canada increases interest rates again, making it harder for you to get an affordable car loan; just make sure your credit score is above 650, and you should have no problems.

 

If you need help or advice on anything to do with electric vehicles, contact Car Nation Canada to get pre-approved online today, we can help!

Categories: News

Tags: ,