When you are looking to take a car loan in Canada, it is essential you have an idea of the trends which drive the market. After all, when you understand the ups and downs of the credit industry, you can make financial decisions.
There is no decrease in the number of cars Canadians purchase on a regular basis, according to the latest data. Also, over half the citizens who are taking new car loans from lenders opt for longer tenures.
Change in loan tenure
A couple of years ago, the standard length of credit for consumers was five years or 60 months. These days, they are going for car loans with a tenure of seven years or 84 months. One reason why this is a trend is due to the lower rates of interest.
For example, if you take a car loan for $25,000 with an interest rate of 4% for five years, you have to pay $460.41 every month. If the tenure of credit increases to seven years, the monthly payments come down to $341.72.
However, the downside is, consumers are paying more for their car loans in the long run. In the above example, the total interest you pay during the duration of the loan is $2,624.78. When it increases to 84 months, the amount is $3,704.49.
Similarly, the likelihood of Canadians opting for long-term car loans is five times more than that of Americans. Due to the lower rates of interest, they have the luxury of selecting expensive vehicles. The monthly payments are affordable, making it easy to pay them off in the long run.
Electric automobile sales on the rise
Also, there is an increase in interest for electric vehicles among consumers, due to the numerous advantages that come with these types of automobiles. Until October 2018, dealerships sold more than 38,000 battery-electric and plug-in hybrid vehicles. If consumers continue to follow this trend, the country will experience larger sales in 2019.
If you want to take a car loan from a lender, make sure you conduct adequate amounts of research. Also, take your time to weigh your options before making any decision!