Do you want to buy a new car? You will need to work out how you will pay for the car. Since the majority of Canadians are living paycheck to paycheck, we don’t have the ability to buy a new car with a lump sum payment, so we need to finance it.
The average car loan term is now over 72 months with a monthly payment of $500, so you will need to sharpen your pencil when going through your budget.
Important Things to Consider When You Budget for a New Car
Something you should take into consideration when drafting your new car budget is whether you are buying a gasoline-powered car or an EV.
If you are opting for an EV, you may pay slightly more per month for the car, but you are going to be saving more on the cost of fuel.
Gasoline prices are all over the place, and consumers need a sense of predictability when budgeting, especially with inflation running rampant.
Since electricity is regulated, you should consider opting for an EV if you are living in an area in Canada where it makes sense.
Refining Your Car-Buying Budget
It is a good habit to review your budget on a regular basis to look for potential savings. Are you paying too much for your cellphone service?
Are you paying for streaming services you seldom use now?
During the pandemic, everyone was forced to stay indoors, so watching streaming services was a means of survival, but now that we are allowed to resume our normal lives, it may be time to cut the cord and save money.
When buying a new car, you will need auto insurance to cover the vehicle; it’s the law.
Something you might consider looking into is whether there are insurance providers that offer discounts if you bundle your home, life, and auto insurance with the same provider. Some insurers also give discounts if you are an alumni from certain schools in Canada.
The purpose of the budget is not to deprive you of enjoyment but to help you understand where each and every hard-earned dollar is going.
How to Save Money on Your Car Loan
If you want to save money on your car loan, the single most important thing you can do is raise your credit score.
While you personally cannot raise the score, there are some things you can do that will create the conditions to boost your credit score.
- Reduce the total amount of debt you are carrying to less than 50% of your total available credit. This will help you save money on interest and qualify for a larger monthly car payment.
- Sign up for pre-authorized payments; missed payments are the primary reason Canadians have credit issues; by signing up for pre-authorized payments, you never have to worry about missing another payment.
By following these tips to budget for a new car and working with a local car dealership, you will be able to realize your goal of buying a new car.
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!