Many Canadian's have the wrong idea about how they should buy a used car. Some car buyers believe that they should pursue the cheapest possible vehicle. Yet, while the allure and appeal of a very cheap car is obvious, it is usually not the best option for everyone.
Buying a Car is an Investment
You should look at your purchase of any car as an investment. It is an investment in mobility, but it is also an investment in safety and in your lifestyle. When you buy a used car, you want a car that will be durable and last you for at least a few years. Why? The simple truth is that you want to get the most of your money. If you purchase a car that is on its "last legs" this means that you will likely be back at the dealership sooner than you'd want to be. Nobody wants to have to return to a dealership to buy a car after only just buying a car in the years previous. No matter how great your car dealer may be at directing you to your best options, you will still have many decisions to make. You need to decide if getting a car loan is the best option, opting for a car lease, or if you have the money, paying in full for the car with cash.
Cheap Doesn't Always Mean Good Deal
It is vital to remember that cheap isn't always best. Of course, there are good deals out there, and part of being a savvy consumer is finding those bargains. However, don't want to let your desire to find the best deal possible interfere with achieving optimal results. When financing a car, you want to focus on your monthly payments instead of the price tag of the car.
There are many advantages of buying a used car:
- They've already gone through their most significant depreciation period
- They typically cost less, lowering your monthly payments
- You can easily research the long-term performance of a particular model
You can certainly find exceptional deals on high quality used cars. However, there are pitfalls associated with used cars as well:
- Used cars can cost more to service
- Used cars can be less reliable than new cars
- Unless you use a CarFax report, the car's history is unknown
Credit Score Chart
Try to keep in mind that with options such as zero money down car loans, you may very well be able to get behind the wheel of a newer and better car than you were planning. The following chart demonstrates the type of credit rating you will need to get approval on a loan.
Credit score below 550: You will need a bad credit auto loan.
Credit score below 680: This score puts you in the subprime category and you will be charged a higher APR.
Credit score around 680: Congratulations! You are a prime borrower and should get a low interest rate.
The real trick here is to work with your car dealer and learn more about what is possible for you within your budget. Quite often, drivers walk into a dealership with a list of preconceived notions regarding what is possible in terms of car financing. Don't let this keep you from taking advantage of all the ways that a car dealer could potentially help you. If you want to see what your estimated monthly payments will look like, fill out our car loan calculator!