Ontario Auto Financing

Auto financing is something that many people need to do at some point. Auto finance requires knowledge of money, budgets, and even long-term planning. Nearly everyone can afford to finance the purchase of a car, but not everyone can finance the purchase of the same car. Therefore, be aware of your constraints and requirements before you begin the process of auto financing.

Here are three easy steps that will help you with your auto financing needs:

1.      Know your financial limits. It is essential that you are aware of your financial limits and constraints when you go in to finance the purchase of a car. Remember that just because you see people purchasing expensive cars doesn’t mean that it is financially feasible for you to purchase an expensive car.

Therefore, work out a budget for what you can actually pay for a car before you even start looking. If you have money to make a down payment, keep in mind that you will not have that money to make repairs after you make the down payment. Also, your financial obligation will continue for several years after you buy a car. Do you have the income to support a sizeable loan?

2.      Pick your car. Remember that bigger is not always better when it comes to buying a car. In fact, bigger can also mean more expensive. Therefore, make a list of all of the essential things that you will need from your new car, such as reliability, room enough for your family, and low maintenance costs. From there, look for cars that match your budget and your needs.

3.      Pick your lender. Every lender will offer you a different rate, loan amount, and terms of the loan. Therefore, go into each negotiation with lenders keeping in mind the fact that what one lender offers may be better or worse than what another lender can offer. Keep looking for a lender that will give you the loan that you need at the rate that you require.

Buying a car through auto financing may be tricky as you learn to balance your budget with your wants and your needs. There is an opportunity cost to each car buying choice that you make as well. Just keep in mind that in order to afford a car, you need to be realistic about what ou can get and expect from your budget. Don’t overwhelm yourself by buying too much car with too little cash!

How to Buy a Used Car; 3 Important Steps

In Ontario,buying a used car can take some skill, some luck, and plenty of knowledge. No matter what type of used car you are looking to buy, there are some things that you should definitely look for before making your next used car purchase. Use these three simple steps on how to buy a used car to help you make the best used car purchase possible.

1.      Research. The most important thing you can do when purchasing a used car is to know the market and know the type of car you are trying to buy. Knowledge of these important factors will make a huge difference when it comes time to buy your car.

For example, if you research car models, you will know what type of car you are looking for. If you know how much you should expect to pay for a car, then you will know whether or not the car is within an appropriate price range. Being aware of the car market is the best thing you can do in order to get the right car at the right price.

2.      Plan your payment. Know how you’re going to pay for your car before you walk into a dealership. Do you have enough money to make a full payment? How about a substantial down payment? Will you be working out financing through the dealer or through a bank? If so, then what is the maximum monthly amount you can pay?        

3.      Find you car. Once you know what type of car you are looking for and how much money you are willing to pay for the car, all you need to do is find the right dealership from which to purchase the car. Even if a dealership does not have the car of your dreams in stock, chances are good that they can find one for you through a partnering dealership. Also, sometimes finding the right car simply requires patience, as you have to wait for the right car to come on the market at the right time.

When it comes time for you to buy your next used car, use these used car buying tips to get the best car for the least amount of money. Remember: start with your research and your budget and prepare to be patient as you wait for your used car to become available!

Buying a car is exciting. Even if your budget is limited, there are lots of models and add ons to choose from. You can spend days and even weeks having fun while deciding what you want to buy. Once you have made this decision, most people then start to look at the auto finance options. This can be a confusing and frustrating process. Folks usually choose what they consider the cheapest. But auto finance is a complex issue with a lot of variables to consider. Let’s look at the pros and cons of the first choice you have to make – buying or leasing a car.

• OWNERSHIP: When you take a loan and buy a car, it becomes your property, subject to the installments being paid on schedule. You can use the car how and as much as you want. The installments you pay cover the full cost of the car as well and the interest being charged on the loan. When the loan is finally paid off, your relationship with the leader ends and you can do what you like with your car. Leasing does not confer these rights on you. You get the use of  the car for the pre defined period of the lease. You are only paying for the use of the car (which includes a projected monthly mileage) and the depreciation the car will attract during the period of the lease, plus some usage charges.  At the end of the lease period you have the option of returning the car to the leasing company or paying the residual value and keeping the car. Leasing is often a popular form of auto finance with professionals who can get some tax write off on the lease payments or for those that like to change their vehicles often.
• INSTALLMENTS: When buying a car your monthly installment covers the complete cost of the car, interest charges. When leasing, your monthly payments (installments is not the right word here, although it is commonly used) are lower than when you buy the car because you are not purchasing a car, only paying for the right to use it plus rent and taxes. Also, your projected monthly usage affects the monthly payment. The more you use the car, the more you will have to pay. At the end of the lease period you are left without a car, unless you decide to buy it.
• INITIAL COSTS: Buying a car entails making a down payment, taxes, registration and other fees that the auto finance company may charge. In the case of leasing, what you pay is the first month’s payment in advance, a security deposit which is refundable after adjustment for damages, excess uses etc., a capitalized cost reduction charge to cover the depreciation, and registration and taxes.

 Though many people may opt for a traditional loan in the name of ownership, leasing can be a great alternative. Leasing offers lower monthly costs and allows you to try out your car for a number of years before deciding to either purchase it or return it. In either case, you are best to consult a financial specialist and determine which option is right for you.

As most of you know, interest rates on car loans are in large part determined by your credit score. The lower the credit score, the higher the risk, and the higher the risk, the higher the interest rate. Simple right?

What most people may not know is that there is no one credit score. In Canada we have two major credit reporting agencies – Equifax and TransUnion – and each has a slightly different way of computing your credit score.

This means that whichever lenders you apply to will most likely retrieve you credit score from 1 of the 2 agencies, and based on slightly different scores you could be offered slightly different rates. And as if that wasn’t enough, there are even different scoring models for different credit application situations.

But enough about that.

The following are some general guidelines that are used to compute your credit score – and how you can improve their impact.

1. Balance versus Limit – do you max out your credit? Or do you simply not use it at all? Neither is ideal; you want to use your credit, but also pay it off.

1. Number of Times Applied – Have you applied to 46 different credit offers over the last 9 months? If so your score will be lowered. The good news is that most redundant activity isn’t counted – like shopping around for a car loan over a 30 day period. It’s obvious you were just comparing rates.

1. Length of Credit History – fairly obvious – the more history they have, they better they can assess you.

1. Number of Open Lines of Credit – You want more rather than fewer, but up to a limit. Not less than a couple, and not more than ten. And it goes without saying that all should be in good standing.

1. Payment History – Up to date, with no major delinquencies.

Think about you’re your personal credit situation…what can you do to improve your credit score a couple months down the road?

An immediate fix isn’t possible, for just as bad credit takes a little while to develop, it also takes a little while to remediate. Following these steps will ensure that when you apply for credit down the road, you get the best possible rate you can.