Buying a Car With Low Income in Canada: Everything to Know

Car prices are on the rise. Whether you are looking for a new or previously owned, you will need to dig much deeper into your pocket this time around. There are a few driving forces behind these higher prices but the pandemic is mostly to blame. Especially in today's market it can seem impossible to buy a car with low income in Canada. We're going to try and help by providing some useful tips.

Supply chains around the world are strained, and there are not enough microchips needed to meet the demand for new cars.

The shortage of new cars has forced some buyers to turn to the secondary markets and buy used cars.

An obvious drawback to this approach is the limited number of used cars for sale; the remaining cars will cost more, so you are stuck between a proverbial rock and a hard place.

Getting the Best Value for Your Money

There are fantastic used cars out there, but there is no guarantee they will meet your needs.

The average Guelph car loan can last up to 5 years or longer, so you need something that will grow with your needs over the long term.

You need to bear that in mind when you buy a car with low income in Canada, but you also need to give some thought to the anticipated maintenance costs associated with the vehicle.

There are some makes and models that cost more to maintain than others; it is worth doing some research to make sure you do not select a lemon.

How Credit Score Impacts Your Ability to Finance a Car Loan

Your credit score is something that impacts your car buying options, and quite frankly, it is the first thing that prospective lenders are going to focus on.

Credit scores range from 300 up to 900; if your score is over 660, you are considered to have “good credit,” but to be safe, if you want the lowest interest rates on a car loan, then aim for a credit score of 720 or higher.

In the past, you would need to pay to access your credit score and report, but that is no longer the case.

You can access your credit score for free by visiting Equifax and TransUnion and signing up.

How is Your Maximum Loan Amount Calculated?

Meet the minimum credit score requirements. The lenders are going to review your income to calculate what is the maximum loan you can safely finance.

Based on our research, the maximum debt-income ratio is 40% at most. Take your budget, look at your total income, and then add all of your debts and how much money do you have left over?

You need at least $500 to cover the car payment, and that doesn’t include the cost of operating the vehicle.

Finding an Affordable Car Loan With Low Income

To secure the most competitive car loans, you should not try to get the loans on your own. If you want the best terms, you have to go through a local car dealership.

The dealership is going to provide you with access to the best car loans throughout all of Canada.

Another benefit of the dealership is they can get you behind a car today and on the road. With the car shortage, you may have a tough time finding a vehicle, so the dealership is truly your best option.

Since the car shortage is not going away any time soon, you should reach out to a dealership even if your credit is bad; they will help you get approved for a car loan today.

If you're ready for a car loan, we'd love to help with that! simply fill in the form below to get started.