How to Save Money on your Next Car in Guelph
How to Save Money on your Next Car in Guelph
Posted on September 28, 2021
The average person buys a car every 5 years. If you are getting a new car and don’t have the cash on hand to pay for it in full then you will need to an auto loan. Our Guelph auto loans team provides some practical advice on how you can save money on your next car. How much could you save?
Establishing your car buying budget
The initial step in the process after you have decided to buy a car, is to calculate what you can afford. This question is not cut and dry, there are many variables at play which we will cover.
Credit score
Credit scores range from 300-800 depending on which reporting agency (Equifax and Transunion). You could use services like Credit Karma which also gives you access to your credit score is not precise.
The higher your credit score, the more creditworthy you are which leads to lower interest rates, which then lets you save money on your next car.
How much debt are you carrying?
Having a high credit score is great, but if you are carrying too much debt then it limits your car buying options.
Most lenders will not go beyond the 35% debt to income ratio, so if you made $5,000 per month then your total debt including the car loan cannot exceed $1,800 ($5000*35%).
These numbers are not written in stone as each lender is free to set their underwriting guidelines.
If you are in a situation where you are carrying too much debt the lender may charge a higher interest rate or ask for a larger down payment.
What type of vehicle are you buying?
If you are thinking about buying a Tesla, not all lenders will finance the purchase of electric vehicles. We know a few that will though.
In the event you are buying a gas-powered vehicle then you could consider buying a used vehicle. If you are looking for a reference for new/used cars, Kijiji is very popular all around Guelph.
We also sell quality used cars so give us a try too!
New cars depreciate at an accelerated pace, especially when you buy new ones. Some new vehicles lose thousands of dollars in value the moment you drive them off the lot.
When you purchase a used vehicle, even if it is only 1 year old the rate of depreciation is lower, which can save you money.
The reason you need to keep tabs on depreciation is your car is being financed at a specific amount, say $20,000 but if the value of the car depreciates below $20,000 then you are in negative equity.
Negative equity just means that you owe more on the car than what it is worth. It’s nothing to worry about if you’re planning to keep the car.
Don’t forget insurance coverage
When budgeting for the purchase of a new car, buyers look at their auto loan payments but forget to factor in the insurance coverage.
Since the car is being financed, the finance company will be the beneficiary should the car be involved in an accident. The added cost of this premium insurance is something that you will need to bear in mind.
Sourcing the best auto loans in Guelph
It may be tempting to just rely on your websites for auto financing but that decision could end up costing you. A great strategy is to contact our team and we’ll provide quotes from a variety of different auto loan providers.
This approach is a great way to save time plus you will be able to pick the lender that is going to give you the best deal.
Getting auto financing can seem intimidating but if you stick with these tips, you are going to come out on top!
Contact Unique Chrysler for help, advice and competitive Guelph car finance and leasing.
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