Unlike other countries, specifically in Asia, where cities are dense and compact, the public transport system is the lifeline of the way people get around. However, In the great truth north, where the country reaches from the eastern and western sea, it’s pretty difficult to get across the country without some sort of vehicle. Public and private transport can only do so much, and with the relatively tiny population, there are few options with many stops to get across or even go north or south in Canada making a vehicle purchase necessary. Even in the bustling cities, cars crowd the streets with the many, many commuters from the suburbs.
0% Financing Canada – Is It Worth It?
But with the high market pricing on everything from public and private transportation fees, the housing market, and the car-buying landscape, it gets more and more difficult to purchase a car if your credit is not exceptional. Zero percent financing in Canada sounds appealing and is one of the many consumer incentives, no interest on your payments! But in order to take full advantage of it, you must read all of the fine print and do all the math before you take the deal. Although that sounds like a lot of work, in the long run, you’ll thank yourself for saving money.
How 0% Financing Works
Before you jump ahead and marvel at a great deal, dealers usually offer 0% financing to those with excellent credit – usually over 700. Those of you with average credit scores won’t be so lucky to get that deal and are usually offered a higher rate on their car loan. If you do qualify, you can only buy a new vehicle that is already on the lot and prices vary by model. This means that if you wanted to add any or take away optional features, you can’t. Also, with 0% financing, as it is one of the many vehicle promotions, there is no negotiation or rebates, which in some cases does not save you any money in the long run.
What You Need To Consider
Always consider the cost of borrowing how much you will spend in the long run with whatever deal with you choose. According to credit professionals, you should never spend over 20% of your income on your debt payments. With this in mind, run the numbers to see what you can afford and how much money you will save. Professionals also advise to choose monthly car payments over biweekly payments as again, in the long run, it will save you money. With the 0% financing, it is likely that the cost you save has been hidden in the price of the auto loan. This inflation could make or break your decision when choosing to purchase your car and receive an auto loan.
Why It Gets Tricky
Car dealerships in Canada have been pulling away from 0% financing deals as inflation rates go up since it takes away profit from the manufacturer. Since manufacturers take loans from banks, there is also interest on their loan all the while they are still trying to make a profit. Car dealerships have a suggested retail price from the manufacturers and can raise its prices or lower its price. This means that you can leave the dealership with a negotiated price. A true 0% financing deal can be a rare find Car loan periods are also getting longer – up to 7 years, meaning that the worth of the car will be worth far less than its purchase price.
Like any other large life purchase, it is important to put a lot of thought into receiving a loan for a car purchase and how it will affect your budget. Be mindful of 0% financing deals and make sure you qualify and get the best deal!