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What you need to know about Waterloo car loans

What you need to know about Waterloo car loans

Just about every Canadian has a car loan. With car prices on the rise, unless you are financially independent you will need to borrow money to buy a car. The average car loan in Canada ranges between $400-$600, so this is something to bear in mind when pricing out car loans.

Not all car loans are created equal

You may think that your local bank or credit union will offer the most competitive car loan. With deregulation and the Internet, these local financial institutions no longer have a monopoly on the car financing niche they had a decade ago.

There is a huge number of companies that offer car loans in Waterloo, most of them advertise online that they have the best terms but that is not the case as we will see.

To secure the most competitive car loan, you must work with someone who originates a large number of car loans regularly, you need to work with a local car dealership.

While it may seem counterintuitive, the brick-and-mortar dealership down the road will have the ability to get you a better deal than anything you could find online.

Prime vs subprime car loans in Waterloo

Car loans in Waterloo broadly speaking can be categorized as either prime or subprime. Prime rates are offered to borrowers with a credit score over 680 and have income that can be verified.

Subprime car loans would go to borrowers who do not have a credit score over 680 or their income cannot be documented. With a significant number of Canadians becoming self-employed, they would fall under this category of not being able to verify their income.

The biggest drawback with a subprime auto loan is the higher interest rate that comes with it. With most prime car loans hovering around 5%, the subprime interest rates can easily go over 10% which can get rather expensive when the average price of a new car is $40,000 in Canada.

Rising car prices and how it impacts your car buying options

With car prices rising faster than inflation, if you are approved for a subprime car loan, it could limit which cars you can buy. Your best option is to qualify for a prime auto loan but to do that, you need to work on your credit score.

The easiest way to fix your credit is to ask your local car dealership for expert advice. What the dealership credit specialist will do is look over our credit report and show you where you can boost our credit score.

Simple items like fixing mistakes inside our credit report can help boost your score. If your credit score is just below the minimum cutoff then these tips will help turn a rejection into an approval.

The dealership will also give you midterm and long-term advice on how you can raise your credit score.

It could take 2 or more years before the new and used car shortage returns to pre-pandemic levels. You really should reach out for help from your local dealership as soon as possible, the sooner you get your Waterloo auto loan approved the more car-buying options you will have available.

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

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