Should you buy a car in a recession in Canada?
Should you buy a car in a recession in Canada?
Posted on October 13, 2022
A recession is looming in Canada; chalk it up to the pandemic and poor government monetary policy.
The primary reason the Canadian economy is facing these challenges is due to runaway inflation which can be attributed to the Trudeau government spending money at unprecedented levels.
When the government “prints money,” inflation is a natural by-product that needs to be dealt with proactively before Canada ends up like Argentina or another Weimar republic.
This lack of fiscal restraint means the Bank of Canada will need to raise interest rates, and that will lead to a recession as the overall money supply is aggressively constricted.
Things to be aware of in a recession
The first thing you need to be aware of is that you can’t take anything for granted. If you are working a job, there could be reductions in overtime or even getting your 40 hours a week.
To mitigate that risk, if you don’t already have a side hustle, now may be the time to consider diversifying your income streams.
The side hustle doesn’t have to be a full-time job; it could be only a few hours a week, perhaps working as a grocery delivery person on Task Rabbit, there is no limit to the options that are available.
You need to start thinking about bringing in additional income streams, in case your current job no longer is an option you have alternatives available.
Get out of debt ASAP
As more and more Canadians are piling on debt to subsidize their quality of life, you should be doing the opposite.
Allocate every dollar you can from your budget and put it towards paying down your expensive consumer debt as quickly as possible.
The average Canadian is carrying $21,000 in non-mortgage debt! That is a massive amount, especially with interest rates rising; it will become more difficult to pay off these debts if you continue to only make the minimum monthly payments.
Another reason to pay down the excess debt you are carrying is it will lower your total debt-to-income ratio; this will make qualifying for a car loan easier. Your DTI (debt to income) ratio should be 40% or lower.
Making a case for buying a car sooner rather than later
When the recession comes into full effect, lenders are going to be even more reluctant to issue new loans. This is why we suggest contacting a local car dealership today and reviewing the currently available options.
The dealership will be able to shop around on your behalf and identify the lenders that are going to provide the most aggressive terms in the current economic climate.
We need a car to lead a normal life here in Canada, so the sooner you reach out to the dealership, the easier time you will have adjusting when the recession actually does start.
Contact Unique Chrysler for help, advice and competitive car finance and leasing.