How are long-term loans fueling Canadian Car Sales?
One popular thing which doesn’t seem like dying down any moment soon is car loans in Canada. As most of the Canadians don't have the resources to purchase vehicles in cash, they go the credit route.
Off late, Canadians are taking long-term car loans to pick up all types of automobiles. Studies show that the average credit length in the country has gone up from 60 months (five years) to 84 months (seven years).
When you take a long-term car loan, the advantage is that consumers get lower rates of interest. As a result, the monthly payments come down, which avoids straining their budget. With greater short-term savings, they can use the extra resources for personal use. For example, by bringing down your payment by $100 - $150 every month, you can invest in home improvements or pick up the latest smartphone.
Also, with long-term loans, Canadians can afford to pick up expensive and high-end vehicles, as the monthly payments tend to go below $500. When you have a top-notch car from a reputable manufacturer, you can expect it to last for several months.
At the same time, once you finish making the monthly payments for the vehicle, you can sell it and use the additional cash for the downpayment for a new auto loan.
With long-term car loans, you never have to worry about failing to make the payments on time. It will increase your credit score, which helps in bringing down the interest rates for new lines of credit in the future.
Things to keep in mind when taking a long-term car loan
If you are going down this route, make sure you get pre-approved from a lender, so that it becomes easier to shop. Once you find the right vehicle, you can talk to the dealership and purchase it on the same day.
Even though long-term car loans make monthly payments affordable, you should make a budget before approaching a lender. You should take into account all the bills and expenses every month. Also, you should keep a portion of your budget aside, so that you can deal with emergencies if they arise!