Understanding Canadian Car Loans from A-Z

Written by Sean Cooper

Are you planning to purchase a vehicle? Unless you can afford to pay for it in cash, you’ll have to borrow the money. And there are a lot of factors to consider when choosing a car loan: should you finance or lease? What interest rate can you get? How long will you take to pay the loan back?

Everyone’s circumstance is different, and one car loan might be a perfect fit for your neighbour but not for you. Let’s take a look at the car loans Canada offers to see if we can simplify what might otherwise be an overwhelming landscape of info.

Car Loans – The Basics

A car loan is a personal loan in which a lender loans a borrower the funds needed to buy a car. In exchange, the borrower agrees to repay the lender the loan amount with interest, typically in monthly payments, until the loan is fully paid off. There are a few key concepts that are important to understand if you’re considering a car loan.

Principal

Principal is the total sale price of the car, and the amount you borrow. This includes any fees for the lender or dealership and any add-ons or options you may select.

Interest Rate

The interest rate is the percentage the lender charges the borrower on the money loaned. The rate given by a lender can depend on several factors, including: the lender’s prime rate; the borrower’s credit score; and the vehicle’s make and model. If you have an excellent credit score and earn a decent wage, you’ll typically qualify for the best (prime) interest rate on a car loan.

Term

The term is the period of time in which the car loan is to be repaid. Car loan lengths are typically between two and eight years. Longer car loans in Canada have the advantage of lower monthly payments, but can lead to the unfortunate situation where you have negative equity in your vehicle (you still owe money on the vehicle when it’s inoperable). For that reason, you might think twice before taking on a seven or eight-year car loan.

A general rule of thumb is to try to cap it at five years if your cash flow allows. (If you’re confident that you’ll have a steady source of income that you can budget a monthly payment from for the next five years.) If it doesn’t, consider buying a less expensive vehicle, or consider leasing.

Does It Make Sense to Lease, Finance or Buy a Car in Cash?

Why you might lease a car:

  • You prefer to drive a new vehicle: When you lease a vehicle, you’re essentially only renting it. The typical car lease lasts only two to four years. Once the lease is up, you can return the car and start the process all over again by leasing another new vehicle or you can buy out the lease from the dealership if you want to keep the vehicle.
  • Cash (flow) is king: The biggest advantage with leasing is cash flow. When you lease, your monthly payment will be lower than if you take out a car loan to purchase the same vehicle. Unlike a loan, where you borrow the full purchase price of the vehicle, with a lease you’re only borrowing the amount that the car will depreciate in value over the period of time of the lease. A vehicle that costs $600 a month with a car loan may only cost $350 a month with a lease.
  • You enjoy driving nice cars: The lower monthly car payment when you lease versus own means that you can afford a nicer make and model of car than you otherwise would be able to if you financed or bought the car.
  • You don’t drive very often: If you mostly use your vehicle for commuting short distances, leasing may make sense. You don’t have to worry about going over the distance limits on your lease and being forced to pay costly overage penalties. Most standard car leases come with a limit of 24,000 kilometres. As long as you stay within the limit, you should be fine.
  • Peace of mind: Since you’re always driving a newer vehicle, you’re less likely to incur costly car repairs since the vehicle is almost always under full warranted. Although note that if you do need car repairs, you may be required to get them done at the lease’s dealership, which may cost you more than taking your car to the neighbourhood auto mechanic.

Why you might finance (take out a loan) a car:

  • You drive long distances:When you finance (or own) a vehicle, you don’t need to worry how often you drive it. If you’re commuting long distances to work and planning to travel a lot, you won’t have to stress about facing penalties you’d incur when leasing. You’re generally better off financing instead of leasing if you plan to drive over 30,000 kilometres a year.
  • You’re in it for the long haul: Unlike a lease, once you pay off a car loan, the vehicle is yours. There are no more monthly payments to deal with. It’s an asset that can be used to make a stronger financial case, for instance, when applying for a mortgage. You can drive it into the ground or trade it in. It’s completely up to you.
  • Freedom of choice: If you’re a car enthusiast, chances are you’ll want to modify your vehicle. If you want to add a custom tailgate, you’re out of luck if you lease. Not so if you took out a car loan, in which you can customize your vehicle to your heart’s content.
  • Building your credit score: There are five factors that make up your credit score. Payment history is the most important factor, accounting for 35% of the score. By steadily paying your car loan over time, it can have an overall positive impact on your credit score.

Why you might buy a car in cash:

  • No monthly payments: If you have the cash, you might consider buying a vehicle outright. When you do, you don’t have any monthly car payments to worry about, which will reduce the mortgage amount you’ll qualify for if you’re planning to buy a home. You also won’t have to worry about going to a lender for financing.
  • Cash incentives: To entice you to pay in cash, the car dealership may offer you cash incentives (i.e. a discount on the car cost) as a sweetener.

How Does a Car Loan Work?

Applying for a Car Loan

You’ll need to complete the lender’s car loan application form, where you’ll provide your basic personal and financial information. You’ll also typically need to submit other documentation, including notices of assessments for two years, your monthly housing cost, the make and model of the vehicle you’re considering purchasing, and any monthly debt obligations you have. A lending specialist will then review your files and crunch the numbers to see if you qualify for the loan. Pre-qualification can be done to see if you can afford the car you want (this can help avoid dinging your credit score). Pre-qualification is just like applying for a car loan, but without pulling your credit report, and therefore avoiding the potential hit to your credit score.

When applying for car loans, you’ll want to limit the number of lenders you apply with, as applying with too many lenders in a short period of time can negatively impact your credit score.

Receiving a Car Loan

The process of receiving the car loan depends on whether your lender is a bank, online lender, or dealership. With a bank or online lender, a lump sum payment is typically deposited into your bank account. You can then use the funds to purchase the vehicle from the dealership. However, if you’re buying the car directly from the dealership, you won’t typically receive a deposit since you’re borrowing the money from the dealership who owns the vehicle. You’ll simply receive the vehicle and will be required to start making your car payments.

Repaying a Car Loan

Car loans have a set repayment schedule depending on the term of the car loan you choose. If you choose a shorter-term loan, your monthly payments will be higher, and if you stretch it out, your monthly payments will be lower (although you’ll pay more in interest over the life of the loan). To keep your credit in good standing, you’ll want to make your car payments on time.

The payments are typically withdrawn by way of preauthorized payment from your bank account. If you come into extra money (such as a tax refund, pay raise, inheritance or bonus at work), you can typically make extra payments above and beyond your regular/minimum car payments. This reduces the term of your car loan, thereby saving you money you would pay in interest.

Payment Terms

A car loan’s payment is usually fixed (stays the same) during the term of the loan. When you make a car payment, similar to a mortgage, a portion of it goes toward interest and a portion goes toward principal. Car loan payments are front-loaded and paid via amortization. As such, you’ll pay the most interest at the beginning of the loan.

How Interest Is Calculated

There are two types of interest calculations on car loans: simple interest and compound interest. With simple interest, interest is only charged on the original amount that you borrowed (the principal). With compound interest, interest is calculated on both the principal plus the interest accrued since the beginning of the loan.

When you sign up for a car loan, you should receive a financial disclosure, which expresses the interest rate as APR (Annual Percentage Rate). This takes into account the total cost of borrowing and includes compounding interest, fees and anything else you may be required to pay. This represents the true overall cost of the car loan.

Credit Score and Credit Report

It’s beneficial to have a high credit score when seeking out a car loan—the higher your credit score, the more likely you are to qualify for the lowest interest rate possible. So I recommend that you review your credit score and credit report before you apply for a loan.

You’ll want to request them from both the major credit reporting bureaus, Equifax and Transunion, since some lenders only report to one credit bureau. If you find that your credit score is on the low side, try to improve it by paying down your credit card balances and other outstanding debts. Keep an eye out for any inaccuracies on your credit report that negatively affect your score. If you see an error, take steps to correct it before applying for the loan.

Make and Model

Decide on the make and model of the vehicle you’d like to purchase. This will give your lender a purchase price so that they can come up with the terms of your loan.

Personal and Financial Information

Your lender will request personal information, such as your full legal name, date of birth and current address. They’ll also want to know about outstanding debts as well as rent or mortgage payments. If you’re putting money down on the vehicle, the lender may request to see proof of your down payment in the form of recent bank statements.

Driver’s License

Your lender may request that you provide photo ID in the form of a driver’s license. Having a driver’s license can help, since borrowers with a driver’s license are typically more likely to pay back car loans.

Employment History and Income

Lenders typically ask for your employment history for the last three years. To ensure you can afford the car loan, your lender will often ask for proof of income, in the form of notices of assessment for the last two years.

Banking Details

Your lender will request a void cheque and may request that you complete a preauthorized payment form to automatically withdraw the car loan payments from your bank account.

Types of Auto Loans

Banks and Credit Unions

When a Canadian bank or credit union approves an auto loan they typically deposit the loan amount directly into the borrower’s bank account. The borrower can then use the funds to pay the car dealership for the vehicle they’d like to purchase. This is often referred to as “direct lending,” since the car loan comes directly from a bank or credit union.

Dealership Financing

As the name implies, dealership financing is when the loan is administered by the dealership selling the vehicle. The biggest advantage of dealership financing is convenience: You can buy the vehicle and finance it at the same time and location. It doesn’t get any easier than that!

Just make sure you take the time to shop around, and be confident that you’re getting a car loan with a reasonable interest rate and favourable terms.

Online Lenders

Fintech (short for financial technology) has made it easier than ever to obtain a car loan. With an online lender, you can apply for a car loan from the comfort of your home. It’s a convenient approach to getting a car loan, as application forms are completed online. And it’s very easy to shop around for the best loan terms possible, which helps borrowers save more money.

Auto Loan Features You Should Pay Attention To

Before you start your search for the best car loan you can find, remember these key factors to keep an eye on:

  • Interest rate: The lower the interest rate on the loan, the less you’ll pay for the car in the long run.
  • Fixed/variable rates: Fixed-interest car loan rates in Canada remain the same for the term of the car loan, while variable rates can fluctuate with a change in the lender’s prime rate. Variable rates offered are typically lower than fixed rates, but you might nonetheless consider going with a fixed rate if your cash flow is tight or you’re risk averse.
  • Simple/compound interest: Simple interest is based on the principal amount of the car loan, while compound is based on the principal + the interest that accumulates during the compounding period.
  • Repayment schedule: If you’re looking to maximum monthly cash flow, you may go with a longer loan term, although the tradeoff is you’ll pay more interest over the life of your loan.
  • Payment frequency: Lenders often let you choose the payment frequency of car loans. Common payment frequencies include weekly, bi-weekly, semi-monthly or monthly payments. In terms of cash flow, it’s easiest if you choose a payment frequency that matches your pay schedule at work.

Can You Still Get a Car Loan After Bankruptcy?

Written by Jordann Brown

In the age of super high debt loads, with the average Canadian carrying over $22,000 in debt, bankruptcy remains one of the more misunderstood topics in Canadian personal finance. The confusion and myths surrounding bankruptcy in Canada remain in part because bankruptcy is still relatively rare. But that may be changing, as over 70% of members of the Canadian Association of Insolvency and Restructuring Professionals expect bankruptcy filings to rise over the next five years.

Whether you are going through bankruptcy now or considering it as a future course of action, it’s important to remember that people who experience bankruptcy aren’t consigned to financial ruin for life. Instead, bankruptcy is designed to help someone in financial trouble start fresh. Starting fresh means starting your life over, and for many Canadians, that could involve a post-bankruptcy car loan.

How Long to Wait Before Applying for a Post-Bankruptcy Car Loan

While bankruptcy will stay on your credit report for six years, you don’t have to wait that long before applying for new credit. In fact, during those six years, it’s important that you rebuild your credit by applying for and faithfully paying back credit of some kind (including loans). It’s unlikely that you’ll be approved for a car loan during bankruptcy without a significant asset to secure your loan, but after bankruptcy proceedings conclude, getting approved for a car loan is possible.

Finding Potential Lenders for a Car Loan After Bankruptcy

Finding the best car loan rates after bankruptcy is a little complicated. First, traditional lenders like banks may not be interested in lending you money for a car loan, or they may only do so at exorbitant interest rates. You can apply for a car loan through in-house financing from a dealership, but again, be prepared for higher interest rates.

While many dealerships will work with you to secure financing, especially if you can demonstrate that your income will support the payments, the amount they are willing to lend you may be less. For this reason, you should expect to finance a car valued at closer to $10,000 than, say, $50,000.

An alternative to in-house financing from a car dealership is working with a lending company that specializes in customers who are recovering from bankruptcy. These companies look beyond your credit score and do a deep dive into your financial situation. They weigh your income, recent payment history, credit score, down payment, and reasons for bankruptcy, and then offer you financing based on that information.

How to Increase Your Chances of Car Loan Approval after Bankruptcy

The first step to increase your chances of getting approved for a car loan is to increase your credit score. While your bankruptcy will remain on your credit report for six years, taking steps to build your credit score after bankruptcy does not go unnoticed. Here are some concrete steps you can take:

  • Apply for a secured credit card, use it regularly, and diligently pay off the balance every month
  • Never miss a payment on your utility bills
  • Keep your credit utilization rate to less than 35% of your overall credit limit
  • Avoid applying for several new sources of credit at once, which can temporarily decrease your credit score

On top of that, you should work to save up a decent down payment for your car loan. A large down payment demonstrates to your potential lenders that you have extra space in your budget for savings and car payments.

Finally, work to increase your income as much as possible. A good income will demonstrate to lenders that you can afford your monthly payments.

Be Wary of Predatory Loan Terms

Unfortunately, applying for any type of credit after bankruptcy is more complicated, and you may be turned down by several lenders. Due to the difficulty in obtaining credit, Canadians who have been through bankruptcy are a target for predatory lenders, and you need to be on the lookout for these companies that claim to offer good interest rates to those with bad credit, but don’t follow through. When evaluating a company as a potential lender, make sure to do your research and read online reviews and complaints carefully.

If you are offered car loan financing from a company that specializes in lending to Canadians who have been through bankruptcy, make sure to read through the fine print, every last bit of it. In particular, be on the lookout for high interest rates. While someone with stellar credit may qualify for a car loan rate from 0.00% to 6.00%, Loanconnect.ca reports that anyone with bad credit should expect to pay a rate as high as 30% to 60%. That may seem high, but payday lenders routinely lend money to customers with interest rates in the triple digits. Stay far away from loans with rates like these.

Other Factors to Consider When Applying for a Car Loan After Bankruptcy

Reading the Fine Print

Once you know the interest rate you may qualify for, pay special attention to the loan terms, especially payment frequency and whether you can refinance or pay off your loan early. It’s important to evaluate whether you can afford this loan, and the payment frequency will play a big role in determining this. Double check whether the payment for this loan is monthly, not biweekly or weekly, and that you can afford it at that frequency.

Refinancing and Early Payoff

On the same note, make sure that you can refinance this loan or pay it down ahead of schedule, because in a year or two, your credit rating may have improved enough that you can qualify for a much more competitive interest rate.

Credit Reporting

Finally, make sure that the car loan is reported to at least one of Canada’s credit reporting agencies, Equifax and Transunion. Not all dealerships report their financed loans to these credit agencies, but if you are making faithful payments on your car loan every month, you absolutely want that reported to the agencies so that you can improve your credit score as much as possible.

Finally, keep in mind that applying for a car loan after bankruptcy is difficult, but that difficulty is temporary. While you may have to downgrade your expectations now to afford your monthly payments with their hefty interest charges, if you continue to make your monthly payments faithfully, eventually your credit score will improve, and you’ll be on your way to a better financial situation.

Article reference: 
https://www.greedyrates.ca/blog/bankruptcy-car-loan/

GET YOUR FIRST CAR REGARDLESS OF A LOW CREDIT SCORE

You may have studied hard and practiced for weeks before taking the test to get your driver’s license. Now that you have a license and can drive around to different places, such as work, school and even the grocery store, you may want to make sure you have your own vehicle to get around. It is certainly not fun relying on other people and waiting around for them to drive you to the different places you would like to visit. However, you may think it is impossible to get a car at this moment.

Is your credit score low? When reviewing your credit report, you may have noticed that your score is not so good for a number of different reasons. For example, you may have a lot of debt and inquiries. Even if you are making payments on your credit cards in a timely manner, your score could still be low if you have too many inquiries and way too much debt compared to available credit. Even so, that does not mean you should be denied the opportunity to get a car that you want and need for different reasons.

If you are worried about getting denied, you can visit our car dealership. We offer bad credit car loans for those with less than perfect credit scores. We realize that things happen and not everyone will have the perfect score, but we believe in offering an opportunity to those who are in need of a vehicle. Our dealership offers a large selection of different cars to choose from, too. If you want to stop depending on others for a ride and be able to drive around on your own as often as you would like, consider coming down to our dealership to complete the application process for a loan. The process is simple and fair. Before you know it, you could be driving away in your first car.

Myths About Car Loans

Car loans are a great way of establishing a good credit history. But many people are intimidated because they hear false information about car loans. There are many misconceptions about getting a car loan that people need to be aware of.

Myth #1: You need credit before you can get a car loan. This is the biggest myth that often intimates people from trying to purchase a car. The truth is that almost anyone of legal age can get a car loan with a valid driver’s license and proof of income. Each of these is essential in making sure that you are a good credit risk. We work with quality lenders to make sure you get a rate that you can afford, which will in turn help you to establish credit.

Myth #2: You can’t get a car with bad credit. This is absolutely not true. In fact, many people use car loans as a way to re-establish credit. The lenders we work with assess credit risk and worthiness based on income. Making regular on-time payments on your car loan can help to rebuild faulty credit.

Myth #3: You need to have a down payment to get a loan. The third of the myths is also not true. Most people can walk into a dealership with nothing but their driver’s license and pay stubs to prove that they can pay an installment loan and can ride out of the dealership in a car. We work with a variety of lenders who will finance your car with no money down.

Now that you know that many myths you believed about getting a car loan are false, why not venture out and get one for yourself? A car is not only means of getting from one place to another on wheels, but also a way to get to another place financially. Visit us for a vast array of cars and financing options.

Three Things to Remember When Buying a Used Car

Investing in a vehicle is quite the combination of excitement and stress. For many buyers, the stress stems from wanting to find the perfect car that is accommodating to their lifestyle and fits within their budget. The excitement is a result of having independence, a vehicle to call their own, and having something that is complementary to their style and tastes. As you begin to search among used cars for your perfect match, we hope to help you by providing three things to remember along the way.

Have an Open Mind

It can be easy to step onto a dealership and already have an unwavering idea of what you will drive away with. These notions could be based off of your strong style preferences, a firm budget, or a critical need. However, you may find other selections along the way that are a better fit, will provide more benefits, or are simply a better use of your money. Keeping an open mind will enable you to make a decision that is the result of rational thinking.

Bring a Friend

Looking at used cars is certainly something you can do by yourself, but it sure doesn’t hurt to bring someone along. You could consider inviting your friend, a family member, or even a trusted coworker. Having a second opinion may help make your decision a bit easier as you will have additional insight along the way.

Take Your Time

Car-buying is never a process that should be rushed. Each step should be thoroughly thought out and enjoyed. From the minute you begin researching to the moment you finalize financing, take your time and take notes along the way. Doing so will help you avoid making irrational decisions or feeling rushed into buying a car you aren’t totally happy with.

Looking at used cars is something to be excited about! Make your experience effective by going with an open mind, bringing a friend, and taking your time.

How Bad Credit Affects Car Loans

If you have bad credit, it can seem like a daunting task to have to search for financing. Bad credit car loans are different than car loans for people who have a higher credit score, but that doesn’t mean you can’t get financing. The important thing is to understand how bad credit affects your ability to get a car loan, so that you can be prepared when it’s time to approach lenders.

Understand Your Credit Score

Perhaps you’ve been told you have bad credit, but without actually consulting your credit report, you won’t know the specifics. Before you shop for a car loan, get a copy of your credit report so you know your actual credit score. Your score is how lenders judge risk and thus affects the interest rate you’ll be offered. By knowing where you stand, you can make sure you are being offered a rate that corresponds with your particular situation.

Research Interest Rates

That being said, before you apply for a car loan you can research what rates are being offered in your credit score’s bracket. Monthly payments are higher for people whose credit scores are lower. If you know what interest rates you’re most likely to be offered, you can shop as an informed consumer and also have a general idea of what monthly payments you’ll need to budget for.

Aim to Fix Issues or Mistakes

If you spot any mistakes on your credit report, try to get them corrected before you begin applying for car loans. Correcting mistakes can help improve your credit score. Once you secure financing, making your monthly loan payments on time will also help improve your credit rating.

Getting bad credit car loans isn’t impossible, it just takes a bit of knowledge about how your credit will affect your financing. By understanding how your credit score affects a car loan, you’ll be better equipped to find the best deal for your car loan.

Advantages of Prepaid Maintenance Plans

If you’re thinking about getting a used car, you should also think ahead about the maintenance your car will inevitably need, which will probably need to be done sooner than it would with a brand new car. The dealership you buy your car from might offer what’s known as a prepaid maintenance plan. Do yourself and your finances a favor and understand just what you have to gain from such a plan.

 

Save Money

 

Prepaid maintenance plans are advantageous for the dealerships that sell used cars as well as those who drive them. Because you’re paying in advance for the maintenance your car will require, you’ll have an easier time structuring your budget. And from a dealership perspective, those used car drivers will come to them for their maintenance rather than anyone else.

 

Make Your Life Easier

 

If you live a busy life, having a prepaid maintenance plan makes your life easier because there’s one less task for you to take care of. Even if the dealership doesn’t send you a reminder of when you need to have service done, you can easily hop online and schedule an oil change or what have you at a time that’s convenient for you. You don’t have to worry about taking a risk with an unknown mechanic because you need maintenance ASAP.

 

Drive Your Car Like You Want To

 

Maybe you’re someone who likes joyriding around town, but realize that every mile you drive brings you closer to an oil change, which takes the joy out of your ride. With a prepaid maintenance plan, you have the peace of mind that comes with knowing you can afford more frequent oil changes. Just make sure you get those joyrides in before your plan ends.

 

Be sure you ask about prepaid maintenance plans if you’re in the market for a quality used vehicle. It could be the perfect investment for you and your driving style.

How to Get the Best Auto Loan

You may be in the market for a new car, but realize that you will need a little extra financing to help pay for the vehicle. Trying to figure out which auto loans are the most beneficial for your particular situation can be challenging. Here are some easy ways you can make sure you find a car loan that is best for you.

 

Do Your Research

 

If you plan on purchasing a car soon, then you should spend some time researching what kind of loan you will need to have. Unless you plan on paying cash for your car, then you will need to have a car loan or some type of financing to supplement your purchase.

 

Shop Around

 

One of the most important things you can do when you are looking for car loans is to expand your search. Try not to just focus on one particular lender. By having several options, you will be able to figure out which lender will offer you the most advantageous deal.

 

Know Your Credit Score

 

It is equally important to know your credit score when you are shopping for a car loan. Knowing your credit score can help you determine your eligibility for certain loan offers. If you have a higher score, then you will likely be able to get a better interest rate on car loans. Your credit score is important because it is what lenders use to evaluate whether or not you will be able to make your loan payments on time.

 

As you can see, these are just a few tips that can make your search for a car loan a little easier. Just remember to take your time finding a car loan. There is no need to rush into the first deal you are offered. This can lead to you getting stuck into a bad car loan deal.

Get the Money You Need to Drive Away Today

Money is what makes the world go around. We need it for food, shelter, and transportation. The latter is where our dealership comes into play, a place of business dedicated to helping you purchase the car or truck of your dreams. Our expert salesmen will guide you through our vast selection of automobiles, honing your sights to the perfect match for your budget and taste. Furthermore, our lenders can help you afford the perfect car by offering a plethora of car loans and loan options, one of which will fit even the toughest of customers with the worst of credit scores.

 

Credit and lending are hallmarks in the auto industry, and a car loan has let many a would-be-buyer afford vehicles that are integral in their lives. There is not a dealership known to me that doesn’t accept money from a buyer that is funded through a car loan. Not only are they important to the industry, but also to the overall economy, as the vehicles they afford people facilitate their movement between home and work and to the commerce centers that fuel the monetary society that we all live in and enjoy.

 

Canada is a great place to drive. Vast wilderness and bustling city-centers allure even the most homebody-centric people to the open road. Getting a car loan can the be the best thing that has ever happened to you. You will enjoy the freedom of the open road and the ability to travel here and there as you see fit. There is no better feeling than driving away in a vehicle that makes you grin just sitting in it. At our dealership you’re sure to find the perfect car or truck for your taste. Whether it be a sporty new roadster or a burly four-wheel drive truck, we have what your need. Get yourself a car loan and come on down to our dealership and we are sure not to disappoint.

3 Reasons To Buy a Used Car

No one sets out to buy a vehicle hoping to get a car that’s just decent. You want something that meets your needs and looks good, while having features you enjoy. Often times, these factors cause people to overlook used cars, when a preowned vehicle can actually check all the boxes if you know where to look. Before you buy something brand new, consider these three reasons to shop used.

 

  1. Less Pressure

 

People don’t always think clearly under duress. The pressure to buy the perfect vehicle might cause you to give too much value to a certain feature, such as fuel economy, while overlooking something equally important, like safety rating. When shopping for used cars, the reduced price tag usually reduces some of the pressure as well, helping you focus on the things that are most important without becoming overwhelmed.

 

  1. Certification

 

Chances are, a new car off the lot will work well. However, new vehicles don’t have a driving history you can look at. Meanwhile, a certified used vehicle offers a proven track record and a clean bill of health signed by a trustworthy mechanic. While the car has been driven previously and maybe has undergone some maintenance, you go into the purchase knowing exactly what work was done and why it was needed. In many ways, preowned cars offer assurance you can’t get from a brand new model.

 

  1. Cost

 

If you aren’t exactly sure what kind of car you want, it’s not worth taking on a big loan or spending all your savings. Buying something used will save you money and enable you to figure out what kind of vehicle suits you without breaking the bank.

 

The most important matter when car shopping is getting a vehicle that works for you and your situation. More often than not, used cars will fit drivers’ needs as well as any other option.