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The Evolution of Car Buying in Canada

The Evolution of Car Buying in Canada

The automobile has been around for over 100 years but the way we buy cars in Canada has changed dramatically since the advent of online shopping.

 

The evolution of car buying is significant. We have come a long way since the Model T first rolled off the assembly line at Henry Ford’s factory but the process is essentially the same, you want to buy the car you want at an affordable price.

 

Our Ayr auto loans team explains the evolution of car buying and how modern purchases now work.

 

Too many cars to choose from

 

In the past, there were only a few makes and models of cars to choose from which made the buying experience relatively simple.

 

Now you have to decide between hybrid, electric vehicles and whether you need an SUV, truck, or sedan. The vast number of choices can make some people feel overwhelmed so it helps to have a general idea of what you need and work from there.

 

Sticker shock

 

There is no way to sugarcoat it, the price of cars has gone up dramatically and the pandemic has exacerbated this trend. Since new and used car prices have gone up, you will need to adjust your expectations so the car you do pick does not put you in financial hardship.

 

The average new Ayr car loan can last up to 7 years and in some cases longer. These loans are spread out over many years to keep the monthly costs down otherwise consumers would not be able to purchase these cars.

 

A downside of these long-term loans is by the time you pay it off you will need to buy another car.

 

Protecting your wallet

 

You have to shop around to find the most competitive auto loans. The Bank of Canada has kept interest rates at all-time lows. Since loan providers can access money at super low rates, you have to compare multiple quotes to figure out which lender is going to help you save money.

 

Lenders are very concerned about their clients defaulting on loans so they are excising a considerable amount of caution when underwriting the auto loan.

 

  • Your credit score has to be in the high 600’s to qualify for a prime auto loan. Prime is the most competitive rate offered to creditworthy clients. Any person who falls below 680 will have a challenging time securing a car loan at the most competitive rates.
  • Are you self-employed or employed? Underwriting processes vary depending on how you earn your income. If you are employed, then providing a copy of your latest payslip should be sufficient provided you have been in the same job for more than a year. Self employed people have a little more paperwork to provide.

 

Qualifying for prime interest rates

 

The Bank of Canada has set the prime rate at just 2.45% which is great news for any person that needs to finance the purchase of a car. This rate is what banks need to pay to secure funds from the Bank of Canada to originate loans.

 

You will not be able to get prime rates that the banks get, banks pay wholesale interest while consumers like us pay retail interest rates. The major banks are currently offering auto loans at 3.9% for their most creditworthy clients.

 

To qualify for these great rates, your credit score should be over 680 and your income needs to be from verifiable sources. If you meet the underwriting requirements, then you will be able to buy a car at very low rates.

 

We will use all our skill and experience to deliver the lowest possible Ayr auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

 

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Categories: Auto Loan

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