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Everything to Know when you Buy a Car in Brantford

Everything to Know when you Buy a Car in Brantford

There has never been a better time to buy a car in Brantford. The current inventory of new and used cars is very limited which has forced dealerships to get creative with their auto financing.


To take advantage of this opportunity it would be prudent to brush up on the dos and don’ts of auto financing.


We asked our auto loans team to outline the key things you need to know when you buy a car in Brantford.


Check your credit score


Your credit score is the first thing that a lender will look at when they are deciding on 1) whether they will offer you an auto loan. 2) what interest rate they will charge.


There are free services like Credit Karma that can give your current credit score.


Debt to income ratio


Another variable that prospective auto loan providers will look at is your income. Your total debt to income should not be higher than 45% for mortgages and 35% for auto loans.


The lender will need to look at all your obligations including rent/mortgage, credit cards, and utilities.


If your monthly income was $3,000 then your total debt including car payments cannot exceed $3000*0.42= $1260.


Other financial odds and ends


The current industry standard is to have been working for at least 6 months if you are full-time (some lenders only require 90 days). If you are self-employed then you should target a minimum of 1 year of being self-employed. The lender will want to see your latest payslip if you are employed and for self-employed your income tax notice of assessment and banking statement for the last 90 days.


Where to get the best auto loan


In the past, your only option for an auto loan was at the dealership itself. Something that may surprise you is that car dealerships in Canada make the bulk of their income from underwriting auto loans.


The margins on auto loans can generate massive amounts of revenue for the dealership. (Have you ever wondered why some dealerships sell cars below the MSRP? They make up the difference with the loan underwriting).


A great strategy is to shop around at your local bank and online to get quotes, so you have a range of options available.


After you have identified the lender that will give you the most preferential terms, then it would be a good idea to start visiting local car dealerships. Competition is fierce and so long as you have decent credit you will get a great deal.


Watch out for 0% promotions


There are some automakers that are offering 0% interest auto loans to qualified buyers. That sounds like a great deal, 0% means there is no interest.


While there is no interest, you will still end up paying.


The sticker price for the vehicle will be higher than what you would pay if you are taking out an auto loan (remember the dealership needs to make money if it can’t on underwriting the loan they will charge more for the car).


Another angle they use is the 0% is to get people into the showroom. The dealership knows that if you pick a car and go through the process of filling out the paperwork, even if you are declined for the 0% promotion but are quoted a slightly higher interest rate you will take it.


Now that you understand all of the variables that go into financing a car, you can enjoy the experience of picking out the vehicle of your dreams.


Contact Unique Chrysler for help, advice and competitive Port Colburn car finance and leasing.


For any questions, concerns, or inquiries. Please don’t hesitate to contact us here!


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Categories: Auto Loan

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