We've seen huge fluctuations in the market, and nearly every industry has been impacted, leading us to be more intentional with our purchases. Everything can be purchased online nowadays, and there are more options than ever for getting the goods you need. This has turned the table on supply and demand, especially in the auto industry. Gone are the days of waiting for an industry professional, aka sleazeball sales guy, to make you an offer based on factors you don't understand. Consumers have more power and more access to information than ever before; talk about a market disruptor!
While it's fairly non-committal to gamble with an online clothing purchase, you can always return one size if it's not right, and throwing out the mouldy lemons from your grocery delivery isn't going to ruin your month. It's extremely difficult to imagine translating that same buying behaviour into more significant purchases, like a new car or your next home. The internet might be where you start to research those big purchases, but consumers still largely prefer to see these goods before they commit to them. Ultimately, that is what buying a car comes down to. Are you prepared to commit not only to the vehicle itself but also to the financing plan that comes with it?
Financing a Car: Right Or Wrong For You?
You might pay cash for your next vehicle if you have been slowly saving up and have exactly as much as you'd like to spend on a vehicle without impacting your emergency savings or existing debts. Or you might be independently wealthy and rolling in the dollar bills. If you've gotten a sudden windfall of cash, have all other debts paid off, and want to own a vehicle free and clear, you might pay cash for your next vehicle. If this is you, still consider that you are committing to however long it might take to rebound that lump sum of money and carefully consider whether or not you might turn that cash into more money by earning interest in a protected account. Deciding whether or not to pay cash is really only a problem if you have the cash to spend, but getting prequalified for potential financing rates at no impact on your credit will help you understand where that money will work the hardest for you. Certain dealerships may offer cash discounts, and it's certainly a good tool for negotiating. Auto financing will ultimately serve to bolster your credit with on-time payments, which could help you get into the house of your dreams sooner rather than later. Don't forget, a large down payment will offset your monthly payments and might result in a lower interest rate, while the remainder of the sum you've saved could earn interest in a protected account.
Most of us won't fall into these categories or have other financial goals on the horizon, including rebuilding bad credit or bolstering your credit score, in which case a car loan is very appealing. Multiple car financing options are available through dealerships or your bank, and now online! Some reasons you might think to finance would include:
- You want to drive a new vehicle or an electric or hybrid vehicle and would be unable to save up enough cash in a reasonable amount of time.
- You want to enhance your credit history.
- The regular monthly payment to an auto loan won't add stress to your current or upcoming budget and will allow you to free up spending or save in other areas.
- The interest rate is lower than the APR you could earn in a protected account or is less than the interest you pay on existing debts.
Decide first whether or not financing is the road you'd like to travel down, and let's hit the gas. There are three key ways to secure your next auto loan. You could go through your local dealership, extend a line of credit through your bank, or work with an online lender to secure your loan terms. Each financial institution will pretty much break down your loan application in three simple steps:
- Complete the loan application form, providing all necessary personal and financial information to establish identity and run a credit report which will return loan options. *Or! Protect that information and get started using just your phone number, address, and stated income using FFUN Cars’ proprietary algorithm for approval.
- Submit any required information the loan provider may need. This includes proof of income and identity, supporting documents regarding any existing debt, and the make and model of the vehicle you hope to purchase. *Pro-tip! The make and model of your vehicle of choice will impact your interest rate. Older and luxury vehicles typically garner higher loan rates and vehicles without a warranty remaining. Beware of offers for 0% interest, which will only apply to those with the best of the best credit history, and do not apply to used cars.
- Wait for approval! Depending on the provider, this can take as little as a day and up to a few weeks. The financial institution you choose will want to pull your credit report to instill confidence in the loan. A history of late loan payments or collections could severely impact that confidence, translating to higher interest rates and greater monthly payments. Pro tip! Biweekly payments will pay your loan down faster, and you'll pay less interest because you will be making more payments over the year.
Because applying for a loan, purchasing your next car, and ordering your vegetables for delivery are not nearly on the same level of commitment, it's natural to be hesitant about applying for a loan over the internet. FFUN Cars takes that hesitation out of it by offering upfront prequalified rates with no impact on your credit score and no commitment. We're big on freedom of information and confident that we'll still be the best car buying platform in Canada, especially when you have all of the information!
Ultimately, the choice on how to finance will come down to how you like to be interacted with. In this post-pandemic world, it can feel comforting to have everything accessible at your fingertips, on your timeline, without having to see anyone. Some people will always prefer face-to-face interaction, but we're a little biased towards accessibility and convenience. No matter your preference, the best loan for you will come down to the loan that best fits your needs. Whether that be low interest or multiple payment options, a prime rate, or the monthly payment you can afford, they're not always the same, and you have the opportunity to choose the financial institution that will work best for you.
Bank vs. Dealership vs. Online
Dealership Pros
- One-stop experience
- Face-to-face application process
- Salespersons can show you a variety of vehicles that might work for you before you even start talking finances
Dealership Cons
- Lack of transparency regarding the rates and pricing breakdown
- Hours spent at the dealership cultivating the one-on-one relationship
- Hard credit enquiries mean you only want to apply once!
Bank Pros
- Face-to-face application process
- Any pre-existing relationship with the financial institution could lead to lower interest rates or more favourable terms
Bank Cons
- The lengthy application process could take up to two weeks, depending on your credit rating
- Typically, no prequalification process, which means getting a glimpse of your terms impacts your credit report.
Online Pros
- Quick and convenient pre qualification so you can understand what kind of monthly payment each vehicle of interest might yield.
- Prequalification approval with no impact on your credit score!
- Faster loan approval and disbursement
- Extra! FFUN Cars’ intuitive and easy-to-use website makes it easy to switch out any options. Look at the pricing breakdown with and without your trade-in, with and without financing, to get the clearest picture for moving forward.
Online Cons
- Fully online loan applications and approval require that consumers be comfortable submitting forms and financial information online.
- Lack of interpersonal interface (let us prove this wrong!) FFUN Cars trains each Customer Experience Specialist with care, so they are equipped to help pull together each piece of your puzzle and offer specialized attention without any pressure to buy.
Understanding that this is a lot of information to digest, we're all looking for a friendly voice to let us know we're headed in the right direction, especially when making a big commitment like a vehicle purchase. No matter where your car buying journey is leading you, hopefully into the best car for your lifestyle and the best financial package for your budget, FFUN Cars is here to help you decipher all of the information, so you have a clear understanding of what you're looking for and asking for. Not only do we make it easy to access your information at your convenience, so you can get qualified with the best rate while waiting to pick up your daughter from school, but we believe in boosting your confidence throughout the process. A satisfying car buying process leads to a satisfying car-owning experience! No games, hassles, or tricks. Give us a shot without impacting your personal financial information by evaluating your current vehicle for a trade-in offer or filling out our two-minute questionnaire for applicable financing rates without leaving your chair and with zero commitment. Until and unless you're ready to push the Let's Do It button, there's no pressure from us! What could you lose? Honestly, we'll make it even sweeter with a 24-hour test drive and a 30-day money-back guarantee.
