There has been a dramatic increase in the sheer number of companies that offer auto loans in Canada. These lenders are all trying to gain market share, so they are willing to offer competitive terms that let you save money buying car.
This article will outline the easiest way you can save money buying a car in Canada, so you can rest easy knowing you made a great decision!
Timing Your Car Purchase
There are specific times during the year when buying a car in makes the most sense. One of the best times in the last couple of days of a calendar month or quarter.
The dealerships and reps want to hit their sales goals, since the reps and dealerships are motivated to sell you can use that to your advantage when trying to negotiate a deal.
Buying Last Years Model
Near the end of the year, the carmakers will launch their newest models and the dealerships within that network will need to clear the old inventory.
The car is not used, it is just one year older than the latest model. By buying a car in that is only one year older you could save thousands of dollars so it is something worth considering.
Picking a Car With Great Resale Value
You should research the cars you like and pick the one with the greatest resale value. There is no denying that cars depreciate but you can protect yourself by selecting cars that hold their value over time.
After a few years, your situation may change and you want to buy a new car but you first need to trade in the current car you have. If you are not sure which cars have the best trade-in value, you could ask the sales rep at your local dealership for their expert opinion.
Vehicle Fair Market Value
The lender is going to provide an auto loan based on the current fair market value of the vehicle you want to buy. If you are buying a new car, then the MSRP is what the lender will use but if you are buying a used car, some variables come into play when determining the fair market value.
Some websites specialize in providing the current market price of used vehicles but the lender is not obligated to use those valuations. Your local used car dealership would be able to give you a professional opinion on what the used car is worth.
Qualify for a Competitively Priced Auto Loan
Each lender specializes in a particular type of client, some focus on customers with pristine credit by offering the lowest interest rates. These customers typically go with one of the big 5 banks in Canada.
Some lenders target customers with slightly below prime credit (credit score 679 and below). If you fall into this category, you will be able to get rates that are still competitive. If you are not sure what your current credit score is, you can get that information online for free.
Lenders also want to know how much income the borrower receives on a monthly and yearly basis. A growing number of borrowers work more than one job or have sideline gigs. The way you verify this income is by showing bank statements that record all of the deposits from your various jobs.
Ability to Service the Loan
You may have great credit and income that can be verified but are you generating enough income to service the auto loan? Each lender will set its limits but the majority of mainstream lenders will not lend more than 40% of total debt to income.
Benefits of Using a Car Dealership
A local car dealership can help you with saving money buying a car. They usually have a vast network of lenders who will provide you with financing. In theory, you could look online and may be able to find the lender but you will never be able to get the terms that your dealership can negotiate.
Every local dealership will claim to be the best, and each has its own particular set of strengths. The only effective way of assessing the suitability of these car dealerships is to perform your due diligence.
Start by looking at the comments that were left by people who dealt with the dealership in the past. Google reviews are great for gaining some insight into the overall customer service experience. Once you have located the car dealership that has the best reputation and cars you want to buy, it is time to schedule a test drive.
By sticking with the suggestions that were provided, you will be able to buy a car without the risk of paying more than necessary.
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 save money finance a car today!