Buying a Car When Retired: What You Need to Know

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Buying a Car When Retired: What You Need to Know

Posted on February 3, 2023

A common desire among the many retirees we encounter while working here is to hit the road and travel across Canada. It's a big country, and most of us only get to see a small portion of it while we're working. Which raises the question of whether purchasing a car after retiring differs significantly from doing so while working.

 

Our auto loans team was asked to provide an overview of the car-purchasing process for retirees. Nothing prevents you from purchasing a new car if your current one is insufficient for exploring Canada.

 

Buying a Car When Retired

 

The good news is that you may still get a new car and take out a loan to help pay for it even though you are retired.

 

You should be fine as long as your pension is enough to meet both the payments and your normal expenses.

 

Lenders are much more concerned with the consistency of revenue than the source of that income. Lenders don't really care where anything comes from as long as it's legal; they only care that it's adequate for the job at hand and consistent enough to pay back the loan.

 

Applying for Your Car Loan as a Retiree

 

If you have ever applied for a car loan before, the process hasn’t changed much and will likely be exactly the same as you remember.

 

The only difference will be loan terms. Lenders are reluctant to offer the longest loan terms to retires or older borrowers for obvious reasons. While the entire market is open to you, it may be that you are only offered 3-5 year car loans rather than 7-8.

 

 

Other than that, the Entire Market is Yours to Explore

 

Proof of income is required since retirees are treated exactly the same as younger borrowers. You must provide evidence of your income as well as proof that you can repay the loan, including supporting documents.

 

The biggest distinction is where that income comes from. It is more likely to come through investments, pensions, IRAs, or social security than from a salary.

 

You should have no trouble being approved for a car loan as long as you have the documentation to prove your income.

 

Make a down payment collectively - Save money for a down payment or save aside enough money to put between 10 and 20 percent of the car's value down. By doing this, you increase your chances of getting the loan and lower the amount you have to borrow.

 

As long as you have the paperwork to demonstrate your income, you should have no issue qualifying for a car loan.

 

Make a down payment collectively: Save money for a down payment or save aside enough money to put between 10 and 20 percent of the car's value down. By doing this, you increase your chances of getting the loan and lower the amount you have to borrow.

 

Check your credit score: Credit ratings are crucial throughout your life, so make sure yours is still high enough for you to be able to borrow the money you require.

 

 

Utilize an auto loan calculator:  They are widely available online. Calculate how much you could borrow and easily afford to repay using the numbers.

 

Visit us: We can assist you with purchasing a car when you are retired after you know how much you can afford, how much you want to borrow, and how much you have to put down.

 

The procedure is quite simple. Depending on what we discover, we check your situation and proceed with prequalification or preapproval. These are test runs to determine more precisely how much and at what rate you could borrow.

 

Then, armed with this knowledge, we can decide for ourselves whether to borrow money, how long to borrow it for, and other important aspects.

 

For those of you who know that you have a challenging credit situation, please visit Car Nation Canada where we have a team of credit specialists ready to help you get approved for a car loan today!