How to Buy a Car During the Chip Shortage in 2022

How to Buy a Car During the Chip Shortage in 2022

Posted on March 31, 2022

Canadians that want to buy a car during the chip shortage we are going through have some essential things they need to be aware of, or they could end up making a bad decision. First, are you going to be purchasing a gas-powered or electric vehicle?

Most people were reluctant to buy an EV because of the high upfront costs that come with ownership, but the sentiment is changing and changing fast.

The driving force behind this change is high fuel prices; Canadians are being hit hard at the pumps.

Right now, gas is just around two dollars a litre, but that price is going higher, especially with Russian oil no longer available for export due to economic sanctions.

Vehicle shortages are driving up prices

There is a shortage of new cars in Canada; whether you are looking for a new gas-powered or electric vehicle, you will need to stretch your budget further to realize your goal of owning a vehicle.

With the average car payment well over $500, you will need to sharpen your pencil.

When was the last time you prepared a budget?

Inflation in Canada has exceeded 5% monthly, and that does not take into consideration the shock that is going to be felt at the gas pumps once the removal of Russian oil has been factored into the global oil supply chain.

Credit markets are facing tough choices

The economic sanctions on Russia are impacting the oil markets, but the credit markets are at risk. Institutional lenders have invested a large amount of money into the Russian economy; a debt payment is coming due that is denominated in US dollars.

As a matter of principle, Putin has indicated that the debt will be repaid with Roubles which are practically worthless due to the pandemic.

When Russia defaults on the debt, lenders are going to start reassessing their lending, and the days of cheap money will have come to an end.

Central banks are increasing their prime rates to combat inflation, and the Bank of Canada has already taken the lead with its recent increase.

All of these changes are going to impact the total amount of money you spend on a new car, from the asking price to the borrowing costs.

How to find a good deal on a new car

When you have decided on what type of vehicle you want to buy, the next thing you will need to do is start shopping for a competitive car loan, even if you have credit challenges.

Your best option is to work with a local dealership.

The dealership will have access to lenders that you could not access on your own.

The dealership would be able to get you approved for a loan even when other lenders said “no.”

You need to contact the dealership soon and begin reviewing what car buying options are available; as time passes, you may not be able to get approved for a car loan or be priced entirely out of the car-buying market.

Now that you know what is happening in the economy, you are able to make a better-informed buying decision.

We’d love to help you buy a car during the chip shortage. Simply fill in the form below and we’ll get back to you ASAP or see our selection of new and used cars at our Burlington dealership. 

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