The Harsh Truth About 0% Interest Car Financing in Canada

More and more Canadians are interested in buying a car with a zero percent financing option, while zero percent is great, it isn't for everyone.

 

Our auto loans team is going to cover what you need to know about getting the best possible terms on a new car loan.

 

Your Credit Rating Could be Impacted

Before approving your loan, some zero percent programs claim that they just minimally check your credit.

 

However, if you choose one of their three- to five-year repayment options, they will report to TransUnion and Equifax.

 

Your credit score will initially be impacted by this "hard inquiry".  You are creating a new account, after all.

 

This new feature will also have an impact on how much money you have available each month to pay down your new auto loan.

 

Budgeting Essentials for Buying a Car

Even if there is no interest charged on the loan, you must still determine how much you can afford to pay each month.

 

The largest debt-to-income ratio that lenders will tolerate is 30%. Lenders rely on this ratio, which is called "debt-to-income."

 

Let's say your monthly salary is $10,000.

 

The most debt you are permitted to have in this situation is $3,000, which includes both your current monthly payments and any additional auto loans you may be applying for.

 

Keep an eye on those alluring 0% deals so you don't end up with more debt than you need, considering the average auto payment is easily over $600 and rent is rising.

 

There are easy ways to increase the enjoyment of automobile shopping

 

• There are a few things you can do to improve the enjoyment of the car-buying process.
• Work on improving your credit score so that it is higher than 700.
• For the best interest rates on a vehicle loan, mortgage, or any other sort of credit facility, use this magic number.
• You only need to reduce your debt in order to improve your credit score.
• Try to pay more on your debts than you have in order to achieve this.

 

The next step, which could be the simplest, is to always pay your debts when they are due, regardless of how much total debt you have.

 

You can raise your credit score with the help of these straightforward suggestions, which will make it much simpler for you to obtain loans in the future.

 

Where to Find the Best Deals on New Cars

Everyone enjoys a good deal, so regardless of your credit score, you should visit a nearby auto dealership if you want to obtain the best offer on a new car.

 

The dealership will have access to loans from Canadian lenders with the best conditions.

 

The same dealership can advise you on how to raise your credit rating. You shouldn't take out too many of these 0% instalment loans until you've bought your new car, even if they can help you make larger purchases more affordable.

 

Start exploring your finance alternatives by getting in touch with your neighborhood dealership right away.

 

When you’re ready for a car lease or loan, get in touch with the auto loan experts at Northway Ford for great deals on auto finance.