What higher interest rates mean to new car buyers in Burlington
What higher interest rates mean to new car buyers in Burlington
Posted on September 20, 2022
The Bank of Canada will be increasing the prime interest rate this month (September). If you need to buy a car, whether used or new, the interest rate you end up paying will be directly impacted by this upcoming interest rate change.
Why is the Bank of Canada increasing interest rates
It all comes down to one word, inflation, it is approaching runaway territory so the only way the Bank of Canada hopes to slow inflation is by increasing interest rates to the point that it weighs down the economy.
This should encourage people to stop borrowing and spending.
The net effect of this tactic is a recession which is a painful way to deal with inflation but sadly the only tangible option.
What you can do to protect yourself from upcoming interest rate increases
There is no escaping the upcoming interest rate hikes, but there are some things you can do to help reduce the impact it will have on your income.
- Start by working on your credit score, you want to boost your score by paying down any accounts that are near their total available credit limit. Accounts that are nearly maxed out can actually bring down your credit score.
- Reducing the total amount of debt you are carrying will help you qualify for a larger car loan. Lenders use a formula that looks at your total debt in relation to your total gross income. This is called your debt-to-income ratio or DTI for short. If your total debt exceeds forty percent of your gross income, no lender will approve a car loan.
- Taking action now is by far the best advice we can give you. With each passing day, the chances of auto loan providers increasing their rates grow exponentially, so you need to follow our tips and start sourcing for competitive car loans.
Identifying the best sources of competitive car loans in Ontario
While online shopping has become popular thanks to the pandemic, when shopping for a competitive car loan, you need to think local.
There are websites that offer car loan quotes in a matter of seconds, but these quotes are nothing more than bait to try and lure you in.
If you read the fine print of the loan terms, there is a tremendous amount of grey area in the underwriting criteria.
What you need to do is go through a local car dealership, one that has a reputation for helping drivers from all walks of life get approved for a car loan. These local dealerships will be able to get you a firm offer at the most competitive terms, even if your credit isn’t good.
If you are serious about saving money and need to buy a car, then contact your local dealership right away, this will be the best call you made all month.
If you need help or advice on anything to do with auto loans in Burlington, contact Car Nation Canada today, we can help!