Interest rates have been low for what seems like forever but the days of super-low car loans are going away at a rapid pace.
Our Copetown auto loans team explains why buying a car in Canada now is a great idea. Act fast before rates increase!
What is causing the rate increase?
Inflation is one of the main reasons that buying a car in Canada is increasingly expensive. interest rates are on the rise but it is not the only reason. If we look at the housing market, the big 5 lenders in Canada are already starting to increase their interest rates.
You may be wondering why we should care about mortgage rates when we are talking about cars. Aside from housing, a car represents the biggest financial commitment you can make.
If the big banks are raising rates on homes, it will not be long before we see the trickle-down effect on Copetown auto loans.
Car prices are on the rise
We mentioned inflation which is driving up the cost of raw materials that go into the manufacturing of your new car. Along with these raw materials, the cost of labour is experiencing massive upward pressure.
The good news is that the current inventory of cars that is for sale does not have these inflationary pressures factored into it, but it is just a matter of time before the prices do change.
Seizing the opportunity
This is arguably a once-in-a-generation opportunity, but you will need to take action to benefit from it. The first step is determining whether your credit score is high enough to qualify for the prime interest rates that are being offered.
You can go to Equifax and sign up for their free service to access your credit score.
Your credit score will need to be over 680 to meet the minimum underwriting requirements for the cheapest loans. In the past, you could get these prime rates with a credit score of 650 but lenders have tightened up their requirements to reduce risk.
If your credit score does not meet the threshold, you can still get financing but you will need to seek out the expert advice of a local dealership. The dealership has the financial expertise to advise you on what steps you must take to raise your credit score.
Along, with these tips, you will also be able to find the perfect car for your unique needs.
Benefits of working with a local car dealership
The dealership can help you access lenders who provide loans to buyers who have less than fantastic credit. These leaders may not be able to offer you prime interest rates but they will be competitive and you have peace of mind knowing the dealership has already vetted the lender.
Inflation is here to stay and the sooner you take action and buy a new car, the more money you will be saving. So now is the time to take action. Just remember to only work with a reputable local dealership and everything will go smoothly.
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 with buying a car in Canada today!
For any questions or concerns, please don’t hesitate to contact us here!