How Will Rising Interest Rates Impact Car Buying? [2022]
How Will Rising Interest Rates Impact Car Buying? [2022]
Posted on April 13, 2022
If you are in the market for a new car or have been waiting for the right time, “now” would be that time. There are many factors at play and our Milton car loans tea are going to cover these reasons and why you need to take action before prices climb out of control.
Inflation is at an all-time high
You do not need a Ph.D. In Economics to know that inflation is running wild in Canada.
The pandemic was the initial catalyst with the Bank of Canada using quantitative easing to boost the money supply, but that is just one challenge.
With the conflict in Europe escalating, it has caused investors to look for safer havens, which means cash flowing into Canada and the USA.
While cash flowing in may seem like a good problem, there is too much cash in the economy and not enough products. This causes inflation in all markets, including the automobile and real estate. This means rising interest rates.
The only way the Bank of Canada is able to slow inflation is by raising interest rates, which drives up borrowing costs on all credit products.
As these rates increase, the average consumer is not going to borrow money, and that should slow down the money supply at the expense of economic growth.
Where things get complicated, most Canadians need a car loan to buy a car, and with interest rates rising, it means your borrowing costs will rise.
Getting a Milton car loan with average credit
Lenders are now under even more pressure to issue loans. Still, there is an added risk of default, the average Canadian lives paycheck-to-paycheck, so even a slight interest rate increase can lead to financial ruin.
Moreover, to get inflation under control, the Bank of Canada has to jack up rates to levels not seen since the 1970s.
If you have average credit, lenders may not be able to approve you for a large enough amount to cover the cost of a new car, so your only option may be purchasing a used car.
There is a shortage of used cars in the global market, and that number is dropping on a daily basis.
You will need to start exploring your options now before the availability of vehicles is reduced even further or you are totally priced out of the market.
Best place to find help
The best place to find a good car loan at a rate you can afford is with the help of your local car dealership.
When you go through a dealership, they can secure the most competitive rates and help give you actionable advice if you have credit issues. You will need to move fast, though.
The Bank of Canada could jack interest rates up without much notice, and that could spell financial hardship for you.
Now that you know what is happening in the Canadian economy, you have to take action, or you will surely miss out on a good car buying opportunity, so contact your local dealership today and start reviewing what loan options are available.
We’d love to help you find a fair-priced car loan during these unfortunate rising interest rates. 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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