With vehicles sales soaring, our love for cars doesn’t seem to be waning off any time soon. But this love came at the cost of debt—a whole lot of debt!
Unfortunately, we’ve been taking too long to pay off our car loans, and it has started to creep up on us. While repayment periods of five to three years made financial sense, things began to turn awry when dealerships started offering car loans for periods of up to 96 months— 96 months doesn’t sound too long, does it?
That’s eight years actually—a very bad idea that successfully lured many Canadians to sign up. Add to that, our uncontrollable urge to get our hands on the latest trims and models without paying off the old ones.
So if you have been scouring for ways to save on your car loan before you actually apply for one, you’re doing the right thing. Here’s what you can do:
The first step to save on a car loan is to figure out what you can practically afford. Sure, those sweet deals may have you drooling at the prospects of owning your dream supercar, but you don’t want to go down that road.
Laying out a budget will also help you narrow down your choices, enabling you to make informed decisions. A simple rule is— if you can pay off the loan easily within three to five years, you can afford it. Choosing a car that is beyond your financial means can suck your cash flow dry—proceed wisely.
In most of Canada, car sales surge at the beginning of May and gradually decline, towards the end of the year. If you can hold off on that car you’ve been eyeing till December, you might get a great discount.
Dealership signs that say “99% approval guarantees” are scams, just to reel you in. In reality, dealerships don’t approve car loans, banks do. Therefore, when you apply for a car loan with a dealership, it forwards your application to the bank it has partnered with and there begins the unnerving, waiting period-you don’t know how long you’ll be waiting before you get approve and you don’t know if you’ll be approved in the first place. All you know if you’ll be paying a whole lot of money!
That’s the exact opposite of how we do things at My Ride! We work with 15 car loan lenders and if none of them approve your application, we approve you with our money— you read that right!
What’s more is that if you make your payments on time, we give back to you by lowering your interest rates without putting you in a new vehicle. So let’s say you start your loan term at 25%—if you make your payments on time—we can lower your interest the next year, and the year after. We’ve had clients go down to as low as 0%!