COVId-19 is still impacting our daily lives. With social distancing and remote working in full effect, it can present a unique set of challenges when buying a car during the pandemic.
Buying a Car During the Pandemic
Life must go on, and something we all need to do is buy a car. It is not a matter of “if” but “when.” This pandemic has been going for over two years, so the whole “flattening the curve” must be a work in progress.
One of the primary challenges that come with a pandemic is uncertainty. It is challenging to plan five years from now when we don’t know tomorrow if we’ll have a job!
You will need to take out a loan to buy the car, but lenders are cautious about issuing new loans. What makes this situation even more perplexing is the ultra-low interest rates. Lenders are under immense pressure to give loans to generate revenue for the business but can’t because the borrowers do not meet the underwriting requirements.
How to qualify for a prime-interest rate car loan
We mentioned that lenders are very conservative. You will need a credit score over 660 to qualify for prime interest rates. To be safe, you should have a score over 700, which is considered the very safe range.
Your credit score will get you through the door, but your income is what will seal the deal. The maximum debt-to-income ratio that lenders will accept is 35%, so if you are carrying a lot of debt or your income has shrunk during the pandemic, getting your car loan approved will be tough.
Lenders have become very strict when it comes to income verification. They will not take you at your word, so you should get copies of your latest payslip and bank account statements.
If you work in sectors that are vulnerable to the pandemic, like retail and hospitality, the lender will be even more cautious.
Self-employed Canadians experience the most significant amount of scrutiny when going through the income verification process. It may seem like discrimination, but you need to look at it from the lender’s viewpoint. If they issue too many bad loans, they go out of business!
If your income is stable and your credit score is good, buying a car during the pandemic should be easy, but you must know where to look.
Finding the best car lenders in Canada
This is something you won’t find on Google or any other search engine. The only way to find fantastic car loans is by working with a car dealership. You want to go to a dealership that sells a large number of cars.
Dealerships that sell a substantial number of cars will have negotiating power and get you the most competitive car loans.
This pandemic isn’t going anywhere, and you have places to go (pun intended), so reach out to the dealership in your area and start comparing loan quotes. You will be happy you made an effort.
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!