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How to Buy your First Car in Mississauga - 2022 Guide

How to Buy your First Car in Mississauga - 2022 Guide

Buying your first car is a very major milestone. If you are planning on buying a new or new to you car, you will most likely need to get financing. The retail prices of used and new cars have never been higher, and the majority of us do not have $30k-$40k sitting inside our bank account. We want to make your experience perfect when you buy your first car, as it should be an exciting time for all! Enjoy out tips on how to make the experience quick and stress free.


Not all Mississauga car loan providers are created equal


A common misconception you may have when you buy your first car, is that if a lender rejects your car loan application, then no one will offer you a car loan!


Nothing could be further from the truth. Each lender has a particular type of customer they want to focus on.


Some lenders focus on borrowers with fantastic credit scores and stable income, these “prime” borrowers are targeted by lenders who have access to the Bank of Canada and can borrow at the national prime interest rate.


On the opposite end of the spectrum is lenders that target borrowers who have credit challenges. These sub-prime borrowers are good people but do not fully understand how credit works.


The lenders who target sub-prime borrowers have to charge a higher interest rate because of the increased risk.


These lenders cannot access the Bank of Canada and need to raise capital through alternative markets. To raise the capital, investors want a more aggressive return on investment which is why you are charged a higher interest rate.


Prime or sub-prime: where do you stand?


Your credit score for the most part dictates weather you are prime or sub-prime, minimum score required for prime interest rates is 680, that is the bare minimum so it would be wise to aim higher.


There is a middle ground between prime and sub-prime, that is people with a credit score of 650-679. If you were in that category, you would get a competitive interest rate but you would not be able to get a prime rate.


Credit score influencers


We going to give you a crash course in credit scoring. There are a few things that greatly impact your credit score, the most important factor that impacts your credit score is whether you pay your bills on time, all of the time.


If you miss even one payment, no matter how trivial it may seem, it will put significant downward pressure on your credit score.  Never miss a payment, if you are the type of person who forgets paying bills on time, sign up for pre-authorized payments.


How much debt are you carrying? After paying your debts on time, the next influencer that has a material impact on your credit score is the total amount of debt that you carry?


As a rule, try not to carry more than 30% debt of your total available credit, if you are carrying too much debt, it will negatively impact your credit score.


Where to find great cars and competitive car loans


When looking around to buy your first car, you may feel unsure where to go for help. The best place to find great cars and competitive car loans is by going to your local car dealership, so why not book a test drive at your local dealership and start exploring your options.


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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