Mistakes you need to avoid when buying a new car in Ontario
Mistakes you need to avoid when buying a new car in Ontario
Posted on July 21, 2022
Our Port Colburn car loans team are going to cover the mistakes you need to avoid when buying a new car in Ontario.
While some of these suggestions may seem like common sense, some of these suggestions will really open your eyes to the money you could be saving.
Your local bank/credit union doesn’t have the best deal
There is no denying the convenience of getting an auto loan from your local credit union or bank but is the convenience worth the thousands of dollars in extra interest you will be paying?
Your local bank does not specialize in issuing car loans; in fact, that is just one small piece of their income-generating business model.
Where these financial institutions excel is by raising money by selling investments and issuing mortgages.
The more money the bank issues per deal, the more interest they generate, plus the cost to originate the deal is lower.
If the bank had $1 million to lend (for example, only), they could issue one mortgage for a house in the GTA, or they would need to create 20 car loans at $50k a piece; it is much easier to do one deal than 20.
Online lenders do not have the best deals
Everyone is shopping online, and with BNPL in Canada, it is very tempting to try and get a car loan online.
These websites look appealing, but they cannot access the wholesale auto loan marketplace; if you go through these websites, you are going to get retail interest rates, and that is only if you have great credit.
How your credit score impacts your car-buying options
Do you know what your credit score is? Everyone in Ontario relies on credit to survive, so you should keep tabs on your credit score by signing up for free credit monitoring with Equifax and TransUnion.
To access the best car loans in Ontario, your credit score needs to be over 700; if your score is at least 600, you can still get approved for a loan.
Something that you should be aware of is the subprime car market in Canada is experiencing a slowdown, so you need to work hard to get your credit score over 600.
Who provides the best car loan deals in Ontario?
This may seem like a rhetorical question, but the answer may surprise you.
While everyone has started shopping online, and there are many benefits to shopping online, when dealing with car loans, the best source is through your local car dealership.
These local dealerships have access to the wholesale car loans that we mentioned earlier, and they can show you how to improve your credit score.
Another perk of going through the local dealership is they have a fleet of vehicles that you can test drive today and drive home today.
If you avoid the mistake of buying a car online, you should come out on top, so contact your local dealership right now.
When you’re ready for a car lease or loan, get in touch with the Port Colburn auto loan experts at Northway Ford for great deals on auto finance.