How to Buy Your First Car: All Your Questions Answered

How to Buy Your First Car: All Your Questions Answered

Posted on June 17, 2022

If you haven’t bought your first car in Hamilton (or first car ever), it may seem confusing at first but it’s a very straightforward process. As our team frequently deals with first time borrowers, we are well qualified to help. That’s what today’s post is all about.

Our auto loan team outlines how simple it is to buy your first car in Hamilton

Set your budget

The most important element of any credit application is budgeting. You need to make sure you can afford all repayments and that an auto loan won’t put you into financial difficulty.

We recommend setting up a simple household budget. Use Google Sheets or something else and create a budget with one column for income, one for outgoings and one for debts.

Make it as accurate as possible and include everything you spend money on in an average month.

Deduct your outgoings from your income and you have the average amount you have spare each month.

Use that to calculate how much you could afford to repay each month, which will tell you how much you can borrow.

Check your credit score

Auto loans use your credit score as part of the application process. So, the logical next step is to check your score. You’re entitled to one free check per year, per credit bureau so check with TransUnion or Equifax.

Credit scores are between 300 and 900, with higher being better.

Once you have your score, you have an idea whether you need to improve it or whether you could qualify for a loan. The higher your score, the easier you’ll find it to get an auto loan.

Save a down payment

Down payments are very useful in auto loans. They reduce the amount you have to borrow, reduces any potential negative equity for brand new cars and serve to reassures lenders.

If you’re putting your own money down, it tells the lender you’re taking this seriously. It also reassures them that they would potentially lose less money if you defaulted, which they like.

Compare auto loan rates

Contact our Hamilton auto loan team, use comparison websites, use lender websites or whatever you like. Check the market for the best auto loan deals and try to identify one that makes sense for your particular situation.

If the loan company offers prequalification, use it. Auto loan prequalification won’t harm your credit score. It’s like a quote. It tells you whether you’re likely to qualify for the loan and what interest rate you would pay.

Get your paperwork together

You’ll need proof of ID and address, proof of employment, proof of all income and proof of any debts. Bank statements can cover a lot of this but if you have salary statements, those work too.

Aim to have 3 months’ worth of paperwork to demonstrate you have a steady income and can afford the loan.

Apply for the Hamilton auto loan

Now you’re ready to get preapproved. This is like a soft application that uses a little more personal information than prequalification. It does leave a mark on your credit report, so try to only do this once.

If you pass and the rate looks good, you can apply for the loan.

You can do all these things yourself or our auto loan team can do it for you. Contact us when you’re ready to buy your first car in Hamilton!

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

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