How Much Should I Spend on a Car? How to Know your Budget

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How Much Should I Spend on a Car? How to Know your Budget

Posted on May 17, 2022

If you have been deliberating whether now is the right time to buy a car, our Burford auto loans team are going to pose a few questions. Based on your response, it will become very clear which path is the right one and how much you should spend on a car to stay within your budget.

 

What is the current condition of your existing vehicle?

 

The first thing you need to assess is whether your current vehicle is able to meet your needs now and into the future; this is only a question you can answer.

 

If your vehicle has high mileage or is starting to require extensive maintenance, then you should consider swapping it for a new car.

 

While your existing vehicle may have high mileage, you will be able to get top-dollar as a trade-in with the used car market experiencing unprecedented growth.

 

Do you have room in your budget for a new vehicle?

 

This question will have a material impact on what type of vehicle you are able to buy.

 

 

Most Canadians have a car loan of around $500 per month, but it varies; you need to take a closer look at how much you'll be able to spend on a car to see what works for you.

 

While reviewing your budget, be sure to factor in rising prices for everything caused by inflation. This would be an ideal time to try and trim any excess spending from your budget so you have additional cash for your car-buying budget.

 

Potential lenders will also look at your income versus total debts when trying to determine whether to move forward with issuing a loan. The maximum debt-to-income most lenders will tolerate is 40%, but that can vary.

 

Do you have a good credit score?

 

This is of particular importance, especially with interest rates increasing at a breakneck pace.

 

If you do not know what your current credit score is, you can access it with free apps like Koho.

 

Your credit score needs to be higher than 680 if you want prime interest rate car loans in Burford, but even if your credit score is under that mark, you should still try to get a car loan.

 

 

The Bank of Canada is ratcheting up interest rates as a way to curb inflation; whether it will work, only time will tell.

 

But as interest rates increase, it drives up the borrowing costs for all Canadians; if you lock in a low-rate car loan now, you will benefit from savings throughout the life of the car loan.

 

Where to find the absolute best deal on a new car in Burford

 

 

The Internet may seem like a viable option, but it is not. When it comes to getting the best auto loan terms, you should go to a local car dealership.

 

These dealerships have an existing inventory of cars that you could drive home today; most of the vehicles you see online are no longer available.

 

These dealerships also know all of the lenders in Canada, so they will be able to get you approved for a car loan, even if your credit is bad! But the onus is on you to head over to the dealership today and get the process going.

 

The economy in Canada is going to be experiencing massive interest rate hikes, so you need to lock in a car loan as soon as possible.

 

We’d love to help you find a new car loan. 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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