Are you looking to buy a new car or want to find out what options are available to you? There has never been a better time to be in the Canadian car market.
While the headlines talk about a shortage of cars, don’t let that worry you; there are some great deals out there, but you need to see the big picture in order to seize the opportunity.
New and used car prices are at historic highs
While this may seem like bad news, if you already have a car, then you are going to get massive trade-in value for your used car.
When you are negotiating a great new car loan in Canada, your existing vehicle will be able to command a premium, if you are wondering what the trade-in value is for your vehicle, check out websites like Kelly Blue Book for a ballpark figure.
If you go with a reputable local car dealership, you will get top dollar trade-in value for your used car.
Interest rates are rising, which makes borrowing more expensive
While technically, it is true that interest rates are rising, and that makes everything more expensive. We need to remember that rates were kept artificially low as the Bank of Canada tried to keep the economy alive during the pandemic.
The fact that rates are rising is an indication that we are going to enter a period of “normal economic activity” whatever that new normal may be is to be determined.
You do have the unique opportunity of locking in a competitive interest rate car loan before rates start to increase.
What you will need to get the best terms on a great new car loan
While we are focusing on new car loans, these suggestions will also work for used cars.
- Your credit score needs to be 680 or higher if you want to qualify for the best interest rates. Lenders are reluctant to take on additional risk, so they are only approving loans for borrowers with the best credit scores; a safer bet is having a credit score of 720+ (keep tabs on your credit score by signing up with Credit Karma)
- Debt-to-income ratio: your total debt is less than forty percent of your gross monthly income. This number varies depending on how much verifiable income you are earning, but the forty percent ratio is the maximum that the majority of lenders will approve.
Suppose your credit score does not meet the thresholds we mentioned. In that case, you can still get a car loan with a slightly higher interest rate, but you need to start exploring your loan options before rates begin to creep higher.
The Bank of Canada has to nip inflation in the bud, so expect increases every ninety days for the rest of the year and into 2023.
How to Find a Great New Car Loan in Canada
You could try finding the best loan terms online, but that would be an epic waste of your valuable time. Instead, the best way to get amazing car loans and cars in Canada is by going through a local dealership in your area.
These dealerships already know all the lenders in Canada, so they can cherry-pick the best deals for you, but you need to make the first move by contacting them.
Click here to get approved for your next great new car loan in Canada online today! we have a team of credit specialists ready to help you find a car suited to your needs and will work with you no matter your credit score.
For any questions or concerns, please don’t hesitate to contact us here!