The Best Time to Buy a Car
There are some purchases which are so significant in our lives that they deserve to be considered milestones. A few examples of these include the first time you rent an apartment, the first time you rent a home, and even the first time you actually put enough money down on a property to buy it and call it your own house.
Perhaps an even more obvious example of this kind of purchase is buying a car. Automobiles are basically a necessity for a lot of us. Not only are they the most tangible representation of freedom and liberty you can possibly buy, many people need cars to be able to get to and from work, as well as to be able to build up more of a professional life as time passes.
Car loans in Toronto are going to be a major aspect of any car purchase you’re trying to make, but it can be difficult to figure out when the perfect time to buy a car is. In order to figure out which factors can make the decision more difficult (as well as figuring out when you might want to make the purchase to be of the most financial benefit to yourself) we need to briefly discuss what it is that makes buying a home or a car such a huge deal compared to other things you might go for.
A large part of what makes these purchases such a big deal is that because they require large sums of money, there are a lot of external factors you’ll need to take into consideration when preparing for them. Because you won’t be able to simply save up enough cash to buy the things up front (at least, that’s the reality for the vast majority of ordinary, working people), all kinds of things are going to affect the sort of deal you wind up with. In the following article we’ll briefly discuss the main factors that are going to affect the kind of car loan in Toronto you’ll be able to secure, as well as why now is probably the best time to consider actually buying a car, given the state of the market.
As we mentioned above, cash upfront isn’t a workable reality for a lot of us, and so we’re going to need to consider making use of some kind of car loan in Toronto in order to arrange financing for the vehicle. But what actually goes into deciding which kind of car loan deal in Toronto you’ll be able to secure for yourself? And how does the current market help you out when it comes to trying to buy a car for yourself in the near future?
The single most important thing to understand is the role credit plays in these kinds of purchases. A credit score is something we all have — in truth, we all have dozens upon dozens of credit scores we never learn about, but more on that in a moment — and it’s probably the main influencing factor that will affect what kind of financing agreement you’ll be able to secure. Credit, at its most basic, is a mathematical way of representing to the person loaning you the car exactly how likely you are to pay the debt back in full and on time. After all, somebody lending you money to buy a car needs something a little stronger than your word to guarantee that they’re not making a bad business decision.
While there are three main credit bureaus (Equifax, TransUnion, and Experian), the most commonly used credit score is still your FICO score. Even though the exact workings of FICO’s algorithm are secret, it’s still possible to draw a few basic conclusions about best-practice techniques you might want to adopt to help you buy a car in the current climate.
Credit is going to affect the car loan deal in Toronto you ultimately wind up with in two major ways. The first of these is interest rates; the second has to do with the length of the loan term. We’ll talk briefly about each of these now before moving on to why the current automobile environment makes buying a car such a good idea at the moment.
The important thing to realize about interest rates is that money paid in interest doesn’t go towards the value of the car. Rather, it’s a straightforward way to offset the risk the dealer is taking on by lending you money in the first place. Accordingly, the higher your credit score, the lower the interest rates you’ll be offered are. This is in keeping with the fact that a higher credit score means you have a better credit history, which in turn means that you’re less likely (mathematically speaking) to default on the loan in any sense.
As such, the dealers don’t need to charge you too much on your car loan in Toronto — they’ll be financially protected in pretty much all instances, so there’s no point in ratcheting up the interest rates. The rates you’ll be offered vary hugely depending on your credit score (from the 3%-6% range all the way up to a staggering 19%-20%), so if you’re thinking about getting a car loan in Toronto now, it’s best to keep your score as good as it can be.
Loan terms refer to how long the car loan in Toronto has to be paid back. The longer the loan term, the smaller the monthly payments, and vice versa. This comes into why you should buy a car now because you’re more likely to get a shorter-term loan as we approach the end of the year.
There’ll be more on that below, but for now all you need to keep in mind is that the shorter you have to pay off a car loan in Toronto, the quicker you’ll be able to actually own the car, which means the less money you’ll have to pay to the dealership on an item that isn’t even yours yet.
The Best Time
Now we’ll move on to why now is actually the best time for you to secure a car loan in Toronto and actually buy a vehicle for yourself in 2019. We’ll be focusing on a few main factors that play into this decision, each of which you’d be well-advised to take into account when you’re working your way up to that first car loan in Toronto you’ve been aiming for.
Salespeople have quotas they need to hit. A big part of their job is ensuring that they’re selling enough cars to remain competitive within the sales force of that particular company. These quotas are usually measured in a few different timeframes — monthly, quarterly, and yearly goals are standard metrics for judging how well somebody is performing at selling car loans in Toronto.
Keeping this in mind, it makes sense to buy a car towards the end of the year as much as possible. Ideally, the best time is actually to buy in the very last week of the year, since that’ll be right towards the end of all three quota timescales, and the salespeople will be the most incentivised to sell you a car as quickly as possible.
But that doesn’t mean you need to wait until December 31st in order to snag yourself a car loan in Toronto. The main idea to seep in mind is that the later you go, the more worried the salespeople will be about hitting their quotas, and so the better the deal you’ll eventually be offered is going to be. By coming late to the party, you’ll be dropping in at exactly the right time for salespeople to slash the interest rates they’ll be offering customers in a bed to just get the car out of the lot and into somebody else’s hands.
If you can’t wait until New Year’s Eve, don’t panic — It doesn’t mean you’ve missed your chance completely. You could also consider going at the end of any given month (for example, at the end of October, which is coming up fast), or at the end of a quarter. Granted, we don’t all think in quarters, especially if we’re not working day-in, day-out in the financial industry. Therefore it’s good to have a rough idea of when they’re actually coming.
The last days of the four financial annual quarters are March 31st, June & September 30th, and December 31st. These dates essentially make up the framework for how the year is structured in terms of running a business, and if you’re able to turn up as close to one of those dates as possible, you’ll be giving yourself a really great chance to get an awesome deal on a car loan in Toronto.
Weekday Vs. Weekend
We can also get slightly more specific. The average savings on the market price of a car are different from day to day, with the weekdays being generally about half a percent less favourable to the buyer than the weekends. Half of a percentage point may sound insignificant in the grand scheme of things, but as those payments pile up and time goes on you’ll be glad you did that little bit extra. It’s basically giving yourself free savings — why pass it up?
As we’re coming up to the later stages of 2019, the time has never been better to take advantage of the salespeoples’ own quotas and use it to your benefit. With quarterly, monthly, and yearly quota deadlines all looming, employees across the board will be desperate to finish up a few last-minute sales as best they can (don’t forget that bonuses are often paid for performance, meaning they’re still more incentivized to help you out), making now the perfect time for you to get talking with a few of them and start comparing your options.
Even if you’re not in a position to make a purchase right now, it’s good to understand how the market works so that when the next great time to buy comes up you’ll be ready to take it by the horns. Securing approval for a car loan in Toronto can be tough at the best of times, but if you’re got a solid timeline in your head of when it’s a good moment, you’ll be saving yourself a lot of bother.
By the way, if you’re struggling to get a car loan in Toronto because of a subpar credit score, why not give us a call here at autoloans.ca? We’d love to figure out how we can help you through this tricky set of circumstances.