Canadian car financing in 2022 has gone through quite the change, due primarily to the pandemic. There is a shortage of cars, and consumers are all looking to buy a car driving up prices.
As car prices rise, so too does the cost to service the debt that comes with a car loan. We are going to explain Canadian Car Financing in 2022 and what you can do to save money in the process.
What type of car are you buying?
If you are purchasing an EV, there are incentives from the Government that can help offset the upfront costs.
However, since these cars cost more on average than their internal combustion counterparts, you will need to finance a larger amount. Never forget, the more your finance, the more it will cost you in the long run.
You need to figure out what is the ballpark figure of the car you want to buy, so you can determine whether it will work for your budget.
Working the numbers
How much money do you have left in your budget each month for discretionary spending?
A good rule of thumb is to have a minimum of $1,000 to play around with. The average car loan is around $400-$600 depending on your source, but you also need to include running costs like insurance and fuel.
You can still buy a car if you don’t have $1,000 left in your budget, but you may need to trim some fat or adjust your car buying expectations.
Give yourself some credit
Prospective lenders will carefully scrutinize your credit score and report; if you haven’t reviewed your report in some time, it would be smart to do it now.
You need a score that is over 720 to access the most competitive auto loans. If your score is above 620, you will be able to get a decent car loan, and anything below 600 would be in subprime territory.
You do not want to get a subprime car loan unless you have absolutely no choice. Interest rates are at all-time lows, so why on earth would anyone want to pay subprime rates which are 20+ %, unless they were desperate!
If you have some credit challenges, there are lenders who will give you a fair shake; we will tell you how to find them in a bit.
How to access the most competitive auto loans in Canada
In our experience, which is quite extensive, the only way to access the most competitive auto loans in Canada is by going through a neighborhood car dealership.
The dealership will have relationships with all of the lenders in Canada, so they can cherry-pick the best car loan for your situation.
Another benefit of going through the dealership is they have a full range of new and used cars you can pick.
The dealership has professional credit experts on staff that can show you what steps must be taken to get your credit score in the highly coveted 750 range; this gives you access to the most competitive car loans in all of Canada.
As you can see, there are many moving parts when buying a car in Canada, but you now know what to expect.
Click here to get approved for your next car loan online today! we have a team of credit specialists ready to help you with buying a car with poor credit score, and will work with you no matter your credit score.
For any questions or concerns, please don’t hesitate to contact us here!