What rising fuel prices mean to the Canadian auto industry

What rising fuel prices mean to the Canadian auto industry

Posted on November 8, 2021

If you noticed a dramatic increase in the price of gas, you are not alone. Gas prices across Canada and in fact around the world have skyrocketed and will not go down any time soon. With prices reaching nearly $2.00/litre, the auto industry in Canada is pivoting to focus on more fuel-efficient vehicles.

Our Smithville auto loans team has been keeping an eye on gas prices and how they might impact the auto industry and your next purchase.

Why now is the time to buy a new car

The price of fuel is only going to rise and there is currently a shortage of new and used cars available in the market.

This lack of inventory is only going to get worse as more Canadians try to replace their gas-guzzling vehicles with something easier on the wallet.

Interest rates are starting to trend upward

During the pandemic, interest rates were kept at artificially low levels as the Bank of Canada pumped money into the economy. Now that the worse of the pandemic seems to be over, the government is allowing market forces to take effect.

We have established that gas prices and interest rates are rising and there is a limited supply of cars available to buy, for those reasons alone you really should start looking for a car.

Getting a competitive interest rate on your new car purchase

Dealerships are all fighting tooth and nail to get customers and have come up with some really attractive offers. Numerous websites offer car loan quotes but you do not have time trying to find the best deal and let the dealership do all the work for you.

Your dealership can offer you a very competitive interest rate and still generate a profit for their business, it is the proverbial “win-win” scenario.

You may be wondering how the dealership can still generate revenue when the interest rates are low. The secret is volume, the dealerships write a large number of deals daily and have access to wholesale Smithville auto loan quotes.

To benefit from these low-interest rates, you will need to qualify as a prime customer.  The first thing all lenders will look at is your credit score, if you don’t know what your current credit score is, you can access it by going to Credit Karma or Mogo.

The scoring systems used by lenders vary since some use Equifax, others use TransUnion and some use both. A good rule of thumb is to have a credit score over 680 if you want access to the most preferential interest rates.

Having a great credit score does open many opportunities for you but your income is another important variable. You must have income that can be verified by the lender before they will approve an auto loan. The pandemic has forced a significant portion of the Canadian economy out of work so lenders are being extra vigilant.

If your credit score is under 680, all is not lost provided you are working with a great dealership. The dealership can give you advice that will help improve your credit score but also help you lock down the most competitive interest rates based on your credit.

The dealerships have access to lenders all across Canada so you will be able to get a new car and save money on both interest and gas going forward.

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