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What Canadian entrepreneurs need to know when buying a new car

What Canadian entrepreneurs need to know when buying a new car

Canadian entrepreneurs wanting to buy a new car have to move quickly before this unique window of opportunity closes.

Since 2008 we have been living in an artificially low-interest environment, but it seems those days are numbered; the Bank of Canada just raised the prime rate by 100 basis points.

This bold move is a signal that the Bank is willing to do anything to stop inflation.

Lenders throughout Canada were expecting a 75-basis point increase, so this caught everyone off guard.

While car loan providers are flush with cheap money they borrowed earlier this month, next month, going forward whenever they need to raise capital for new car loans.

They must factor in these higher borrowing costs, which are passed on to you.

Rising interest rates are a double whammy for Canadian entrepreneurs

While the average consumer is feeling the pain caused by these rising interest rates, as a business owner, you are being hit twice, once as a consumer and another time as a business owner.

Most businesses are carrying some type of debt that needs to be financed.

Even if you are not carrying any debt, your suppliers and employees are, and they will need to charge more for their services to help alleviate the pain caused by the interest rate hike.

Budgeting for a rainy day

Something that all entrepreneurs need to have in place is a rainy-day fund.

While most entrepreneurs are starving for capital to grow their business, having a rainy-day fund will help give you breathing room in case your clients are slow to pay their invoices.

Since you are working on your budget, you should also take this opportunity to print up your latest bank account statements for the last 6-12 months and your income tax assessment from the CRA.

These are documents prospective lenders need to see.

Boosting your credit score

Your credit score will make or break your car-buying goals. Lenders are more squeamish than ever about issuing subprime car loans.

If your credit score is 620 or higher, you can get a competitive car loan, but anything under 620 will be a tough deal to underwrite if you want competitive rates.

The simplest way to boost your credit score is to pay down the total debt you carry.

Credit utilization (total amount of debt you are carrying compared to your total amount of available credit) is a significant variable that goes into the calculation of a credit score.

The source for the best car loans in Oakville

When sourcing for a car loan, your best option isn’t online but a local brick-and-mortar dealership in your area.

The local dealership has access to lenders throughout Canada, so you will have complete peace of mind knowing you are getting the best deal.

In addition, these dealerships have access to lenders that only work with dealerships so that you can get approved for a car loan even though everyone else said no.

You should contact your local dealership today and begin reviewing all of the options that you have available.

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

Categories: Car Loan

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