How Does The Car Buying Process Work in Canada?

How Does The Car Buying Process Work in Canada?

Posted on February 22, 2023

Have you ever wondered how celebrities and rich people buy cars? You may have a vision of someone walking into a car dealership, dropping large stacks of cash, and driving off with the new car. While that is something you will see in Hollywood movies, most celebrities buy cars just like us by using auto loans.

However, the price of these vehicles is substantially higher.

Celebrities may earn substantial incomes, but instead of allocating large sums to buy a car outright, it makes better sense to invest their money and use the returns of those investments to service the new car payments.

Credit scores still play a pivotal role in the Car Buying Process

Lenders want to control risk whenever possible, even when dealing with a high-profile individual. This means running credit reports on prospective borrowers to assess how responsible they are with their money.

To access the most competitive car loan interest rates, your credit score must be in the 700 range. The current subprime loan range is below 620, so we recommend keeping track of your credit score with free credit scoring from Equifax and TransUnion.

Income trumps credit score in some instances

There will be certain situations where a high income is all prospective lenders will focus on when applying for a new car loan in Woodstock.

If your credit is spotty, but you have a substantial income that can be verified, most lenders will look the other way. You may be charged a higher interest rate; however, the loan will be approved.

To satisfy the income verification process, the lender will need to review your bank account statements and income tax assessments. If you are classified as self-employed, bring along your tax assessments for the last 2-3 years to be on the safe side.

What type of vehicle are you buying?

The microchip shortage has led to a shortage of new cars being manufactured. This is due to the pandemic and bottlenecks in the global supply chain. With a reduced number of new cars being produced, there is a reduced number of used cars to buy as well.

This scarcity has forced some new car buyers to wait for weeks or even months before they can get their new car. If you need a car right away or just don’t want to wait, your best option may be purchasing a used car.

When buying a used car anywhere in Canada, the interest rate on these loans is going to be considerably higher than a new car. This has nothing to do with your credit score; the industry just charges a higher interest rate because these loans tend to have a shorter-term and be for a lower dollar amount.

Where to find a great car loan in Woodstock

To find the best cars loans in Canada, you just need to drive down to a local car dealership.

There are people who think they can get a better deal by shopping around online; while online shopping is great when making price comparisons, only a local dealership is able to negotiate the best terms for you.

This negotiating power is especially helpful when you are having credit challenges.

We’d love to help you through the car buying process. Simply fill in the form below and we’ll get back to you ASAP! 

Thanks for reading. Be sure to connect with us on Facebook, Twitter, Instagram, or LinkedIn to stay up to date on our latest great articles!