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Why Canadians need to buy a car now or end up being priced out of the market

Why Canadians need to buy a car now or end up being priced out of the market

We are not trying to sensationalize a title in order to catch your attention, but we need to highlight that the car buying marketplace in Canada has and is going through some profound changes.

That’s what our St. Catharines car loans team is going to do now. You need to move fast before you’re priced out of the market.

Chronic and systemic shortage of new and used cars

The first and arguably most important thing to highlight is the lack of new and used cars to choose from.

Prior to the pandemic, you could walk down to your local car dealership and drive home in the car of your dreams, there was ample inventory and even if you wanted a very specific set of features, you would be able to find it quickly.

Thanks to a chip shortage and reduced production capacity at all of the major car manufacturers and we have a perfect storm.

There are some people who have to wait weeks if not months for a new car. If you were thinking you could just buy a used car, the inventory is even lower and people are holding on to their cars longer so the quality of used cars is also impacted.

Interest rates are on the rise

With inflation at all-time highs in Canada and around the world, the Bank of Canada is trying to rein things in by raising interest rates.

This makes the cost of borrowing more expensive and since the price of the average car in Canada is north of $40,000, you will need to pay more just to get a car.

Lenders have already raised their rates and increased the minimum credit score needed to get their prime rates. Right now, you need a credit score of 680 just to make it to the next phase in the St. Catharines car loan underwriting process.

These lenders are facing a double whammy, they are flush with cash to lend but at the same time, they cannot give loans to borrowers that may not be able to repay it.

To mitigate the risk, aside from having good credit, borrowers also need to proof their income by providing documentation. In the past, all you needed was a 650 credit score and a payslip to get a car loan but those days are past us.

How to buy a car ASAP with subpar credit in St. Catharines

Now that you have a better understanding of the situation, you should try to buy a car ASAP even if you have subpar credit.

While most prime lenders have tightened up their underwriting, there are lenders who will work with borrowers that have subpar credit but you must go through a local car dealership to access these lenders.

The lender is going to charge a higher interest rate but at least you will be able to get a car today. The dealership is going to show you how to repair your credit score over the long term, so you can refinance the car loan to a lower rate.

This shortage is going to last years, so you need to move fast or you could end up not having a car for a few years.

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

Categories: Auto Loan

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