Of the many retired people we get to meet doing this job, a very popular ambition is to hit the road and explore Canada. It’s a vast country and most of us usually only see a tiny percentage of it during our working life. This begs the question, is buying a car when retired much different than buying a car with a job?
We asked our auto loans team to outline how you might go about buying a car when retired. If you want to explore Canada and your current car isn’t enough, there’s nothing to stop you from getting another.
Buying a Car When Retired in Canada
The good news is that being retired does not prevent you from buying a new car or from borrowing some money to help pay for it.
As long as your pension is sufficient to cover the payments as well as your regular outgoings, you should be fine.
Lenders are far more interested in the regularity of income than where it actually comes from. As long as it is legal, lenders don’t concern themselves much with where it comes from, only that it’s sufficient for the task and regular enough to repay the loan.
Applying for Your Car Loan as a Retiree
If you have ever applied for a car loan before, the process hasn’t changed much and will likely be exactly the same as you remember.
The only difference will be loan terms. Lenders are reluctant to offer the longest loan terms to those buying a car when retired for obvious reasons. While the entire market is open to you, it may be that you are only offered 3-5 year car loans rather than 7-8.
Tips for getting approved
Prove your income: Retirees are regarded in exactly the same way as younger borrowers. You have to prove your income, demonstrate you can afford the loan, and have documentation to prove it.
The main difference is the source of that income. Rather than a salary, it is likely to come from social security, IRAs, pensions, or investments.
As long as you have the paperwork to demonstrate your income, you should have no issue qualifying for a car loan in Canada when retired.
Get a down payment together: Save for a down payment or allocate enough to pay 10-20% of the car’s value as a down payment. This improves your chances of being accepted for the loan and reduces the amount you have to borrow.
Check your credit score: Credit scores are incredibly important throughout your life so check yours to make sure you still have a good score sufficient to borrow what you need.
Use a car loan calculator: There are lots of them online. Work with the numbers to assess how much you could borrow and comfortably afford to repay.
Come see us: Once you know how much you can afford, how much you want to borrow, and how much you have to put down, we can help you with buying a car when retired.
The process is relatively straightforward. We check your position and go through prequalification or pre-approval depending on what we find. These are test runs to get a more accurate idea of how much you could borrow and at what rate.
We can then use this information to make informed decisions about whether to borrow, how long to borrow for and all the details.
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!