What Canadian entrepreneurs need to know about financing a car in 2022

Posted by on Aug 15, 2022 - Archived under Bad Credit Car Loan Tips

Canadian entrepreneurs who need to buy a new car in 2022 must overcome some distinct challenges.

Our intention is to give you the information you need to find the best financing terms possible for your new car, so please stick around with us until the end of the conversation.

Possible recession on the horizon

Even with the Great Resignation taking place in Canada, there is a fear of a recession on the horizon.

This recession is likely to be caused by rising gar prices and compounded by the Bank of Canada increasing the prime lending rate.

Everything in Canada requires fuel to ship and produce; we derive a considerable amount of our energy from fossil fuels, and carbon taxes and global supply chain issues have caused gas prices to skyrocket.

These higher fuel prices are passed on to you, the consumer; whether you drive a car or not, whenever you buy something, you are being hit by rising energy costs.

When consumers are forced to pay more for fuel, they have less money to spend in the economy, which causes a slowdown.

Inflation is making things even more complicated

Canadian consumers are able to deal with rising gas prices, but what makes the situation in 2022 distinct is how everything in the economy is being impacted by inflation, especially in the housing market.

With inflation the highest it’s been in four decades, the Bank of Canada has initiated a series of aggressive interest rate increases.

As these prime interest rates climb, it makes borrowing more expensive, which forces Canadians to dig even deeper in their pockets to service their existing debts.

This reduced availability of disposable income means Canadian entrepreneurs must fight even harder to generate sales for their companies.

Self-employed car loan underwriting: What you need to know

Self-employed Canadians have to overcome a unique series of challenges when trying to get a car loan that the average borrower does not face.

The first thing is their credit score is under even greater scrutiny; before the pandemic, a borrower could get a loan with a 620 credit score, but that is no longer the case.

If you want to get a decent car loan, your credit score will need to be over 650; if you aren’t sure what your credit score is, you can sign up for a free credit report and scoring service with Credit Karma.

The income verification process for self-employed car loans is also more complex. In the past, you could just provide a bank account statement and a tax return notification.

Those days are long gone; now, if you want to get a self-employed car loan, you need to provide bank account statements for the last six months and your income tax assessments for the last couple of years to be safe.

Securing the best terms on a self-employed car loan in Canada

As an entrepreneur, you like to do things by yourself; it is a part of your makeup as a person.

While you may be able to run your business by yourself, when trying to secure the best terms on a self-employed car loan in Canada, turn to the professionals in your area and work with a local car dealership.

The dealership will be able to get you the best terms on a self-employed car loan.

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!

Let’s get in touch! 

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