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How rising inflation impacts your car buying opportunities in Burford

How rising inflation impacts your car buying opportunities in Burford

Everywhere you look, people are talking about inflation, which was something that only economists discussed and is a topic of serious discussion in Canadian households from coast to coast.

The cost of gas, food, and pretty much anything you can think of has gone up dramatically.

Rising prices by itself is not the issue; the problem is that Canadian pay checks are not keeping pace.

Just last month, inflation was tracking over 7%, and unless something is done, we could end up like Argentina or Sri Lanka.

Rising interest rates to combat inflation

The Bank of Canada has one primary task, to keep inflation at 2% per year or lower; it goes without saying they dropped the ball on this one.

The bank is not entirely to blame; though the current Trudeau government was printing money like it was going out of style, when you have too much money chasing too few goods and services, inflation is the outcome.

To put the brakes on inflation, the Bank of Canada has recently started increasing interest rates and not by small amounts; just recently, the bank increased the prime lending rate by seventy-five basis points.

On paper, that doesn’t sound like a lot, but it impacts everyone who uses credit; lenders need to pay more to access capital to lend out.

These higher borrowing costs mean lenders have more risk and therefore are less likely to issue loans that could go into default.

How rising inflation and interest rates impact your car-buying options

Inflation is driving up (pun unintended); car manufacturers need to pay more for raw materials that go into the production of the vehicle, and they have to pay higher wages to retain workers.

These increased costs are passed on to you, the end user.

Along with higher production costs, these car makers need to borrow money to cover their day-to-day operations; these costs are impacted by higher interest rates.

What compounds the problem is the dealerships that have the cars on their lot are also paying interest to finance the cars on their lot until the vehicle is sold.

As you can see, all of these variables impact the final price that you pay as a consumer.

What can you do to avoid these higher costs

You have two options available, wait a few years until inflation is under control and prices start to stabilize, or you can move forward and buy a car ASAP.

With each passing month, the unit costs of a car will only increase, so you need to buy a vehicle soon.

To get the best possible deal on the new car, reach out to your local car dealership and work out a deal with them.

The dealership has access to wholesale financing and can negotiate terms you would never be able to secure on your own.

Contact Unique Chrysler for help, advice and competitive Burford car finance and leasing.

Categories: Auto Loan

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