Car buying tips for Canadians on a tight budget
Car buying tips for Canadians on a tight budget
Posted on May 10, 2022
If you want to buy a new car but have a tight budget, there are options available, but you need to move quickly, as our Flamborough car loans team explains.
The first thing you need to be aware of is how inflation is driving up the costs of everything, from food to energy and everything in between.
Prior to moving forward with any major financial decision, you should adjust your budget to the new economic reality being faced by Canadians from coast, to coast, to coast.
What is the trade-in value of your current vehicle?
After you have revamped your budget, it is time to do some preliminary legwork. One of the upsides of inflation is the resale value of your current vehicle has preserved a considerable amount of its resale value.
Even if your current vehicle has high mileage or is older, it could still represent a considerable amount of trade-in value.
For insight into what you may be able to get for your current vehicle, websites like Kelly Blue Book may give you a ballpark figure. (We will show you how to find the most accurate trade-in value in a bit).
How solid is your credit?
One of the best things you can have when shopping for a new car on a tight budget is a high credit score. Lenders want to know how much money you receive and how responsible you are with that money.
Since you are on a tight budget and may not have a substantial amount of discretionary income, your credit score will demonstrate you are prudent with the money you do make.
To access the most competitive interest rates, you need a credit score of 720; you can easily check your credit score for free; TransUnion and Equifax both have free services.
If your score is 600 and over, you can get a decent car loan; however, if your score is under 600, you will be charged a high-interest rate, so you might consider taking proactive measures to raise your credit score.
One way to boost your credit score is by reducing the total amount of debt you are carrying.
By lowering your total amount of debt, it raises your credit utilization rate and nudges your credit score higher. It may take a few months for your credit score to improve, but it will go up.
Where to get the best deals on a new car
Your local dealership is the best source of great deals on new cars and car loans. Dealerships specialize in car financing, so they have access to wholesale lenders that the public cannot access.
The dealership is also willing to pay top dollar for your trade-in vehicle; remember we mentioned how to get the most cash for your current vehicle; by working with a local dealership, you will get a great car and a loan that works for your budget.
You should move fast, though, the Bank of Canada is going to increase interest rates again, and that will make buying a car even more expensive; the sooner you move forward and faster you can drive home in a new car.
Contact Unique Chrysler for help, advice and competitive Flamborough car finance and leasing.