Car prices are on the rise in Canada and with inflation at record levels, you need to follow these strategies if you want to get a bargain.
Our auto loans team shares some useful strategies to help you save money and buy a car in Oakville.
What is your budget?
The preliminary step when trying to buy a car in Oakville is to figure out what you can afford. What most people do is go to their local dealership, fall in love with a car that costs more than what they (the buyer) can afford.
Some websites offer auto financing quotes and you can get quotes from each of them based on your unique profile. The industry rule is that buyers with a debt-to-income ratio of 35% or lower are ideal.
The way you calculate this, take your total income and divide it by 35%, so if you made $5,000 per month, then the maximum you could afford is $2,000. This amount is the total amount of debt you currently have including the car loan for the new car.
The 35% rule is fairly common but the interest rate you are being charged will directly impact what type of car you could afford.
Understanding credit scores
Start by reaching out to credit reporting firms TransUnion, and Equifax to find out your credit score. There are apps available that will give you access to these scores. Your score ranges from 300-900 and good credit is anything above 650.
If your credit score is above 720, you will have no issues getting a very competitive interest rate from a large number of lenders.
While having a great credit score will help you qualify for low-interest rates, you also need to show proof of income.
Documenting your income
Lenders want to make sure you can repay your Oakville auto loan as promised throughout the loan. If you work a traditional job, the lender will want a copy of your latest pay slip.
To make the loan underwriting process even simpler, you could provide a copy of your income notice of assessment. The notice of assessment will show how much money you made throughout the entire year.
Picking the right dealership
Now that you have a great credit score and verifiable income, you can start looking for dealerships that sell the make and model car you want to buy. After you have the dealerships listed, you need to read over the reviews posted by other people who bought from the dealership in the past.
Give focus to dealerships that have a great customer satisfaction track record. Buying a new car is a major financial decision and you want someone in your corner that can help you throughout the entire experience.
You are not under any obligation to use the in-house financing that is being offered by the car dealership you choose, but you should consider giving them your business.
The dealerships get the bulk of their income from underwriting auto loans and while the interest rate may be a little higher than what you would pay elsewhere, the service you receive will be well worth the cost.
The golden rule when it comes to buying cars in Canada is to make sure your credit is in good shape and you find the right dealership to help you along the way.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!