Canadian Auto Loans
All right! So you all set to begin your search for a car. You have selected the car of your dreams. The only thing left to do is to make yourself eligible for that auto loan. It is really a daunting task and itís a scary process. It is never easy to take out thousands of dollars, in fact it is nerve-racking. You have to be spot on about the dealer, rate of interest, lender etc. But do not get worked up, we will make it easy for you. Letís find out how to get yourselves for a Canada auto loan.
Checklist for you go for an auto financing in Canada
There are a few things that you should be aware of before you start with the official procedures of getting an auto loan. You need to evaluate your present financial situation and consider if it is the right time to make the purchase. You should also consider your current financial rating and your relations with the financial organizations. It is a pretty straightforward process if you want to assess your current financial standing. Take your earnings and your spouse, combine them and make a budget of 10-25% of the total earnings. This should be the amount that you are going to spend including the maintenance and insurance. However this amount as well as the percentage is variable according to various parameters like the amount you pay for your rents, credit card bills, house rents, mortgage payments etc. You may sometimes feel that you can afford the expense but it is better to avoid such situation. In fact finance expert say you should spend only 5-10% of your regular earnings.
1. Keep a check on your credit rating
A lot of people in Canada are not aware of their credit rating. The credit score is a vital factor for getting any Canadian auto finance. Millions of folks put there are completely unaware of their financial credibility and financial standing. There are different ways to check your credit. Let us say that you are verifying your own credit, thatís soft credit check; it will have no impact on your credit score. But when the loan agency checks your credit score- it is a hard credit check, it impacts your score. Avoid doing it too often, as it will decrease your rating. The credit score inquiries add up to about 10% of a credit score. So try to keep under a single hard check every year.
However there are other factors as well. Types of credit, the credit tenure, owed amount, payment frequencies etc. affect the credit scores. All these factors make it absolutely necessary to for you be aware of your score before you decide to get a Canadian auto loan. A score above 680 is a good score. A score under 600, and they will mark it under the risky category. However that does not mean that you will be outright rejected. You have the option of choosing a bad-credit car loan. These car loans come with much higher interest rates. However the good thing about these loans is that you can re-finance after sometime. You can use this auto finance system to rebuild your credit score.
2. Never forget to negotiate
It is a must, really. You have made all the necessary researches on your financial footing and you know the true market value of your dream vehicle even before you have visited the store. So basically you should have a good idea of the price range that can possibly be offered to you. No harm comes from asking for a better deal and negotiation actually open up surprisingly good deals. In case of a poor credit history, you may not have much choices and you may have a lot of terms to abide to. However you may end up paying for an amount that is way more flexible in terms or number than the actual price tag.
3. Be wary of the add-ons
Watch out for the services and extras that the dealer will surely offer before closing the sale. These services may look tempting but you will end up paying way more than your budget. These will increase the cost of your auto finance, so keeping in mind the credit footing you have, feel free to refuse any additional service that you do not need. Try to keep it to the minimum requirements and you will walk out with a better deal.
4. Do not sign in a hurry
If you have zeroed on a deal, do not rush to sign the dotted lines just yet. Read the contract fully and be aware of every penny that you are paying for. Once you sign then you are legally bound to comply with whatever it is written there. In case you find out that the dealer is too eager to getting you sign the document without clarifying your doubts, walk away. Do not sign anything that makes you feel uncomfortable.
5. Some tips to remember
After you have closed the deal and are ready to drive away with your coveted ride, just remember the following points:
1. Do not throw away the contract.
2. Make your payments in time. These will either make or break your credit score.
Now that you know how to deal with all the formalities out there and get an approved Canadian auto loan, just follow these steps and you are all set to drive that dream car of yours.