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Why Canadians should buy a new car ASAP

Why Canadians should buy a new car ASAP

If you live in Hamilton and are deliberating on whether you should buy a new car, the answer for the vast majority of people should be “yes”.

There is a shortage of new and used cars that may take years if not longer to sort itself out. The shortage has impacted the asking price for new and used cars, as prices rise you will need to borrow even more money if you want to have a reliable car.

Low-interest rates and tighter lending underwriting

The one saving grace of the pandemic was the historic low-interest rates that banks and other lenders would charge their prime customers. Those low-interest rates will soon become a thing of the past as the Bank of Canada raises rates to slow inflation.

With a limited number of cars to buy and rising interest rates, you need to be proactive if you want to buy a car. Lenders have become more conservative when underwriting car loans in Hamilton.

The economy is in a fragile state and lenders do not want to take on bad debts.

How to secure a low-interest rate car loan in Hamilton

To access the super-low interest rates, you will need a credit score well over 680. When was the last time you checked your credit score? Equifax and TransUnion will let you access your score for free.

If your score is under 680, you will need to understand what is weighing down your credit score. The likely culprit is not making your payments on time. Even missing one single payment can bring your score way down, so to avoid this problem going forward you can sign up for pre-authorized payments.

Having a reliable source of income

After you have cleaned up your credit, the next thing that prospective lenders want to know is whether you have enough income to repay your debts.

The current industry rule of thumb is to not allow a person to have more than 40% of their income allocated to debt repayment. If you are making $10,000 per month then the most you can afford is $4,000 for all of your debts including the new car loan.

Lenders will need to verify your income and the way you do that is by providing your salary slips if you are employed. With a growing number of Canadians working more than one job, you may need to bring your bank statements so the lender can see the big picture.

Best way to secure your new car financing

Most of us shop online and may try to get a car loan online. While in theory, it seems like a good idea, the best source of car loans in Canada is to work with a local car dealership.

The dealership already has a network of lenders they work with daily. Since the dealership has an existing relationship with these lenders, they can negotiate a better deal and help you save money.

Not only is the dealership able to get you approved for a car loan, but they can also help you with any credit issues you may have. By going through a dealership, you are going to get the help you need to make the right car buying decision.

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

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