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Should you Buy a Car During Tax Season in Hamilton?

Should you Buy a Car During Tax Season in Hamilton?

There are two certainties in life, death and taxes, and while no one knows when they will die, in Canada, the tax reckoning takes place on April 30. So should you buy a car during tax season?


If you owe a substantial amount of money to the CRA and have not made arrangements to settle it, buying a car could be more difficult than it needs to be, as our Hamilton auto loans team explains.


Special powers of the CRA


The CRA is a unique creditor; it does not have to go through the channels that other creditors need to when trying to collect on a debt.


If a taxpayer is being evasive in not cooperating with the CRA, they can freeze your bank account, seize your assets, and make your financial life a living hell.


The CRA will make reasonable efforts to contact you about your outstanding debt and will work out a payment plan, but individuals who are using the “ignore it and it will go away approach” will soon realize the Government does not forget.


How owing the CRA impacts your car buying options


When you apply for a car loan in Hamilton, prospective lenders will ask to see your income documents and look at your credit score.


If you have a good credit score, that is only half of the battle; the lender needs to review your income.


One of the documents the lender will request is your latest income tax notice of assessment; on the assessment, there is a section that indicates whether you owe money or not.


If you owe a substantial amount, the lender is going to add that to your debt-to-income ratio, which could make it harder to qualify for a car loan.


Another issue aside from the tax debt impacting the maximum amount you can borrow for a car, some lenders will not issue a loan if you owe the CRA.


As mentioned, the CRA can seize assets to settle the debt; they (the CRA) take a super-priority position on all debts.


Lenders do not want to fight with the Government of Canada, so they avoid the problem entirely by not offering these loans.


You really should do yourself a favor and work out some type of payment arrangement or take out a loan to settle the debt; in either case, the sooner you pay off the CRA, the happier you will be.


Where to buy a car during tax season in Hamilton


There are lenders who will still issue a car loan if you owe the CRA, but these lenders do not actively market their loans online; you will not find them on your own.


The only way you can interact with these lenders is by working with a dealership in your community.


The dealership will have a list of lenders that specialize in this type of financing, and the dealership will also let you know how to effectively deal with this CRA issue so you never have to face it again.


Therefore, you should contact your local dealership right now and begin looking at the available car financing options.


We’d love to help you buy a car in Hamilton Ontario. 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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