Understanding the impact inflation is having on the average Canadian car buyer

Understanding the impact inflation is having on the average Canadian car buyer

Posted on August 30, 2022

If people in Canada want to get a car loan with a competitive interest rate, they will have to work hard.

The prices of both new and used cars have gone up because of inflation, so if you were thinking about buying a used car to save money, you might not save that much.

Inflation can be traced back to the Covid-19 pandemic, when the Canadian government told everyone to stay home except for those who provided essential services.

The economy stopped in its tracks when there was a string of lockdowns.

Canadians who were told to stay home had to go through a lot of trouble, so the government made initiatives like the CERB, which helped most Canadians keep food on the table.

Because of this spending, which added up to hundreds of billions, inflation is now over 8.0% per month.

You may have noticed inflation at the gas pump or grocery store, where everything is getting more expensive.

Bringing down inflation by raising interest rates

The Bank of Canada has the hard job of trying to bring inflation back to the target rate of 2% per year.

To reach this goal, the Bank of Canada is aggressively raising the prime interest rate it charges banks when they want to borrow money for loans.

When the prime interest rate goes up, it makes everything more expensive to borrow, even Guelph car loans.

Even if you have good credit, you have to pay more for a car because the interest rates are higher.

Since it costs more to pay off your car loan, you have less money to put toward the principle. You can either pay a higher monthly payment or make the loan last longer. Either way, you'll have to dig deeper into your pocket.

Choosing a car that will resell well in the future

Since you'll be paying more for a new car, you should choose one that you can sell for a good price when you're ready to switch.

You will need to do your own research, but look for brands that have been around for a long time, like Jeep.

You don't want to waste your hard-earned money on a brand that hasn't held up over time.

Finding the lender who will give you the best car loan rates is important

Whether your credit is good or bad, you should buy a car from a local dealer. The dealership has access to lenders that people can't get to on their own.

There are credit consultants at the dealership who can tell you what you need to do to improve your credit score.

When you work with a local dealership, you can choose from the cars they already have in stock. This will save you a lot of time and still help you find a car that fits your needs and your budget.

The year 2022 will be hard, but if you follow this advice, you can get a good deal on a new car. Timing is everything, so call the dealership right now.

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

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