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What you need to know about financing a new car in Campbellville

What you need to know about financing a new car in Campbellville

There is a shortage of new and used cars available in Canada. This shortage is going to last for several years, so you should consider buying a new car now before the inventory goes even lower.

Our Campbellville car loans team shares a few things everyone needs to know when considering financing a new car.

Car prices are rising and so are interest rates

The Bank of Canada is trying to get ahead of inflation by raising interest rates. This drives up the cost of borrowing which should help slow inflation but it will not help the shortage of cars.

As car prices rise in parallel with interest rates, if you don’t act fast you will be priced out of the market.

Lenders are tightening up their car loan underwriting guidelines

The majority of lenders have already adjusted their interest rates based on the Bank of Canada announcement.

Along with raising their rates, these lenders are adjusting their underwriting requirements to make it more difficult to get a Campbellville car loan approved.

Before these changes, a credit score of 650+/- was enough to get a prime rate car loan but that is no longer an option.

To get a prime rate car loan now, lenders want a credit score of over 680.

You can access your credit score for free, so there is no reason why you cannot keep tabs on whether your credit score is where it needs to be.

If your credit score is under 680, there are some immediate things you can do to turn things around.

Are you making your payments on time or have you missed some payments?

Missed payments are the main reason your credit score would drop, so your first task is to pay all of your debts so everything is current. It will be practically impossible to get a Campbellville car loan approved if your current bills are not up to date.

Can you prove your income?

Another thing that you will need to look at is your income sources and whether you can provide proof to the prospective lender.

Lenders are very cautious so the only way you can prove your income is with bank statements and income tax assessments. Long gone are the days where you could get a loan without providing income documents.

Getting the best interest rate car loan in Campbellville

To get the best interest rate you will need to use an old-school approach and head over to your local car dealership. It may sound counterintuitive but the local dealership has access to lenders you would never be able to find online.

Not only is the dealership able to find lenders that will approve your loan at a competitive interest rate, but the dealership also has some great cars in their inventory for you to choose from.  Since there is a limited number of new and used cars in the market, having immediate access to the dealership inventory will make your car buying experience a very conducive one.

Now that you know all of the steps involved in financing a new car in Canada, you can book a test drive at your local dealership.

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

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