Car Buying For Beginners: A Simple 2023 Guide

Car Buying For Beginners: A Simple 2023 Guide

Posted on October 18, 2022

If you recently graduated from university or trade school and just landed your first job you will want to buy a car. Buying a car after getting your first job is a rite of passage for many, but since this is your first time buying a car, you want to do it right. We asked our Port Credit auto loans team to share some tips towards car buying for beginners. Whether you’re financing it or not, these can help!

The way people buy cars has changed

When your parents bought a car, they would head over to the local bank, credit union or Caisse Populaire and apply for a car loan.

Once the bank approved their loan, they would then go to the car dealership and pick the car that was within their budget or they would take a loan from the local dealership.

In either scenario, there was a tremendous amount of work for your parents and not much comparison shopping.

Modern consumers now spend a good portion of their energy performing a cost-benefit analysis to determine who is going to give them a better offer.

Since car prices are rising, you would naturally want to find a lender who will give you a good interest rate. But what you need to do is protect yourself from spending so much time comparing that you end up suffering from analysis paralysis.

Credit score required for a low-interest auto loan

There are many variables that a lender will look at before approving a Port Credit car loan, but you will need to clear the first hurdle by having a credit score of 680 or higher. This is the make or break point when trying to secure a competitive auto loan in the Canadian market.

If you haven’t already checked your credit score, you can get it on apps like Mogo, so check your credit score now.

You can still access Port Credit auto loans with a lower score but you don’t get the best deals.

Verifiable income sources

How long have you been working in your current role? The practical minimum requirement is passing the 90-day probationary period at your workplace. We do know lenders that will lend after just 1 day in post, but those loans are quite specialized.

If your new role is professional, like a medical doctor then the lender may overlook the standard underwriting requirements because your job is considered a high-income job. You’ll still need to prove you have a job though!

How much debt are you carrying?

Since this is your first job after graduating you probably have student loans to pay back. These loans can directly impact how much money you can borrow for your new car purchase.

There are 3 things certain in life, death, taxes, and student loan repayments.

If you have not made payment arrangements with your student loan provider then you should and never miss a payment to keep your credit score high.

Getting help from the experts

You need to get expert help, so why not contact the local car dealership in your area. If you have never dealt with the dealership in the past, you can look at the reviews posted on Google and pick the dealership with the greatest number of positive comments.

Now that you've learned a little more about car buying for beginners, you should spend a little bit of time looking at the types of cars that are available. Are you going to get a sedan, SUV, crossover, or something else?  There is a car for every taste and budget so you should have no issues making the right selection!

If you're ready for a car loan in Southern Ontario, we'd love to help with that! simply fill in the form below to get started.