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How to buy a car in a recession

How to buy a car in a recession

Canadians need a car to live; there is no viable alternative aside from the select few who live in areas where there is adequate public transit.

With a recession on the horizon, you may feel a little anxious about taking on a new car payment, but if you stick with these tips from our Ancaster car loans team, you will be able to make a better-informed decision from a position of confidence.

Taking advantage of this unique car-buying opportunity

The auto industry in Canada is going through profound changes, starting with how the vehicles are powered.

Less than a decade ago, the vehicles were pretty much the same aside from the number of cylinders the engine has.

Flash forward to 2022, and you now have a choice between a hybrid or EV.

Gas prices are unsustainable right now for the average Canadian.

As the Trudeau carbon taxes continue to drive up the price of gas, Canadian drivers have to decide whether they can afford to pay these inflated gas prices or to make the switch to an EV.

Since carmakers want to gain market share in the EV marketplace. The economy is facing a potential recession, the carmakers are willing to make some sweetheart deals, but you need to be willing to seize those opportunities.

The credit market is tightening up

The credit market in Canada is tightening up; even though interest rates were at historic lows.

Now that the Bank of Canada has started to increase the costs of borrowing money, lenders are starting to be more selective about whom they issue loans.

Prior to Covid-19 and runaway inflation, lenders were offering decent Ancaster car loans to borrowers with a 600-credit score, and you could get a prime interest rate car loan with a 680-credit score.

Those days are long gone; you need a 650-credit score to get a respectable interest rate and a 720 now to get a prime interest rate loan.

As a part of good financial health, you should monitor your credit score on a monthly basis so you are never caught by surprise when you need to apply for any type of financing.

You can sign up for free credit monitoring with TransUnion and Equifax by going through their identification process.

If there are issues with your credit score and credit report, then you need to address them right away, as they will not go away by themselves.

The best place to secure a competitive car loan during a recession

There are websites that offer car loan quotes, but those websites do not have the clout or ability to negotiate a competitive deal.

Instead, what you should do is contact your local car dealership and discuss your options with them.

These local dealerships are able to get you approved even if you have credit issues, but you must pick up the phone and reach out to the dealership now.

If you need help or advice on anything to do with auto loans in Ancaster, contact Car Nation Canada today, we can help!

Categories: Car News