3 Reasons to Buy a Used Car

If you’ve ever turned on a TV — and chances are you have — you were probably inundated with commercials for shiny new cars for only a single paycheck per month! When your family is in the market for a new car, a used cars service could offer you something just as beautiful as what you see in on the new lot. That’s not the only benefit, either.

Used Cars Are Cheap

It might seem obvious, but used cars are cheaper, and it goes beyond a simple price tag. Perhaps you prefer luxury cars, but could never afford one right off the lot. For what you’d spend on a brand new Toyota, you might be able to find the luxury car of your dreams. Even if you prefer something family-friendly over a sports car, you could save up to 50 percent by purchasing something used.

It Might Be Safer

It seems like a different car recall is in the news every day. Purchasing a new car leaves you vulnerable to undiscovered mechanical issues. If you opt to buy one that is a few years old instead, it’s more likely that any problems were already discovered and fixed, leaving you with peace of mind.

You Don’t Have to Skip the Warranty

Many people worry they’ll end up purchasing a used car that doesn’t run for long, but most dealerships offer certified pre-owned cars. Certified used cars are usually slightly more expensive than traditional used cars, but the certification means the car was professionally inspected and, if it had any problems, was professionally repaired. Certified used cars come with a warranty that ensures you can drive the car for a set amount of years, at least.

If you’ve been trying to decide between purchasing a brand new vehicle or buying a used one, our used cars service could be just what you’re looking for. Whether you need something for the whole family or something to impress your friends on the weekends, we provide a range of vehicles for a wide variety of budgets.

5 Benefits of Used Cars

When you set out to look for your dream car, you want one that has all the right features but doesn’t break the bank. Used car dealerships offer you myriad car choices, and they are your best bet for finding that perfect car. Here are five of the benefits of buying used cars.

The first and perhaps most obvious benefit of a used car is the lower price sticker. The steepest depreciation in value comes in the first two or three years of a car’s life. When you buy used, you profit from that depreciation, whereas an original car owner inevitably takes a serious financial hit on trade-in.

Used cars tend to come with lower down payments as well as lower prices. Furthermore, insurance and taxes on your used car will be less expensive, which means you have more money in your wallet at the end of the month.

If you want a car loaded with all the hottest tech, the latest safety features or the cleanest engine developments, you have plenty of options to choose from among cars made in the last two to four years. You can get a thoroughly modern car without the sticker shock or the drastic depreciation.

If you are operating on a tight budget, cars older than four years are probably the ones in your sights. Although buying an older used car may not leave you with Bluetooth compatibility, you will still have access to plenty of safety features in cars that date as far back as early 2000.

Last but not least, if your passion is classic cars, you have only one option. Used is the only way to go. There are plenty of other benefits to buying used cars.

These cars give you the greatest bang for your buck and offer you the widest purchasing variety.

How to Save With Dealer-approved Car Loans

People want to save money on products they buy, and this is most true of products that cost more. Cars are one key example. People certainly are inclined to make any effort to save money on car loans when the overall price can represent such a large sum. Car dealers have access and industry insight that can save people money in the long run. Working with one can potentially save anyone looking for a car a reasonable amount of money.

Preferred Lenders

Dealerships often negotiate car loans through a bank. Because these companies have so much business, they often qualify for special rates at a number of financial institutions. This can be advantageous for many customers looking for a good deal. The connections a dealer has can lead to a better price for consumers. It is important to check with a dealership to find out what sort of options it can provide.

Less Down

People looking for car loans through a dealership could also qualify for less down on competitive rates. It could benefit a person looking for such loan to pay less in the beginning and enjoy good rates such as those that a dealership can provide. Even if the dealership cannot guarantee better rates for less down, it still can offer competitive rates for a potentially smaller amount of money. Working with a dealership can be important for anyone who wants more personalization with his or her car loan.

More Options

Another opportunity a dealership can provide is more options. Dealerships have been selling cars for years, and they can leverage their industry knowledge to create a better end result. A person in such a situation should consider reaching out to the professional service with particular requests.

Anyone looking for car loans should explore his or her options and see how a dealership might be an essential part of owning a new car.

What Preapproval Means for Car Loans

Car loans can be expensive over the life of your vehicle if you do not plan ahead. High interest rates and long terms will add to the cost of your car over the years. It may be tempting to go straight to the dealer and test drive some vehicles when shopping for a car. Before doing this, consider becoming preapproved for a loan. Shopping for a loan before shopping for a car will give you a better understanding of your buying power and the overall cost of your potential vehicle.

Preapproval is a preliminary loan application. A potential lender will review your credit, your income, and possibly several other factors. They will then tell you how much they are willing to lend you, what the interest rate on the loan will be, how long you will be expected to make payments on the loan, and if any down payment will be required.

As the borrower, you do not have to commit to accepting the loan at that time. Banks, credit unions, and dealers offer preapproval, so there are several financing options to choose from. Preapproval allows you to shop at all these locations before committing to a loan.

With a good credit score and a large down payment, you may be preapproved for a very large loan. While this may make it tempting to purchase a more expensive vehicle, be careful to not overextend yourself and exceed your monthly budget.

If you are not approved for a large enough loan, preapproval allows you enough time to prepare to compensate for the difference. Consider a larger down payment, a cosigner, or a longer term loan to make your car loan offers more agreeable.

Preapproval helps you know how much car you can purchase, how long it will take you to pay for that vehicle, and what the long-term costs of the loan will be. Car loans can be intimidating, but preapproval may make the borrowing process easier to understand.

How to Finance a Used Car in Canada

If you’ve found the new-to-you car of your dreams but don’t have the cash to pay for it in full, financing is the solution. In this post we’ll go over everything you need to know so you can secure the right kind of auto financing for your vehicle and your bottom line.

How car financing works

Taking out a car loan eliminates the stress of coming up with a large sum of money all at once. However, it also adds another monthly payment to your budget, so it’s important to understand the ins-and-outs of car financing before looking at the different lending options.
Your monthly car loan payments are calculated using three elements: principal, term and interest rate. 
Principal is the total cost of the vehicle, including any fees the lender or dealership may have for the car loan and any add-ons you choose.
Term is the length of time that payments will be made on the loan — typical terms range from 36 months to 72 months.
Interest rate is the percentage the lender is charging you to borrow money. 
Fixed rate loans offer predictability because the interest rate stays the same throughout the term of the loan. If you’re less concerned with fluctuations and want to benefit from times when interest rates are lower, you can opt for a variable rate loan.

Borrowing for new and used cars

New and used cars get treated differently by lenders for a few reasons. For starters, new cars have a higher sticker price than pre-owned cars. While this usually means buyers can cash-in on incentives like rebates or 0% financing for a certain period, it also means loan payment terms will be longer and monthly premiums will be higher. Also, new cars are usually more expensive to insure. 
Used cars, on the other hand, cost less to purchase. They do, however, require more upkeep than new cars and interest rates on pre-owned vehicles are usually higher — especially if you don’t have much for a down payment or have less than stellar credit. 
Check out our post for things to consider when deciding whether to buy a new or used car.

METHOD 1: BANK FINANCING

Ways to finance a used car

There are two main ways to secure a car loan in Canada: through a financial institution or directly through a dealership. Each route has its advantages and it’s a good idea to shop around to ensure you’re making the best decision for your financial situation. 
Before applying for any loan, it’s a good idea to check your credit rating and determine your budget. Whether high or low, your credit rating will dictate the interest rate on your loan; knowing your budget will help you figure out how much you can afford for monthly payments. If your monthly payments are more than your budget allows, you run the risk of defaulting on your loan and damaging your credit rating.
Figuring out your budget can also help you decide how much you’re able to put forward as a down payment —  a larger down payment often translates to lower rates because you’ll be borrowing less.
Now, let’s get into the differences between bank financing and dealership, or in-house, financing.

If you have a good credit rating securing a used car loan through a bank or credit union might be the right choice for you. Getting a loan through your current financial institution can be a convenient option since all of your finances are in one spot. If you’re an established customer, your bank might even offer you a discount on interest rates or fees and most banks are open to negotiating the terms of your payment period.
However, because of their stricter rules and regulations, banks will only grant loans to customers with favourable credit — even for pre-owned vehicles. So, if you have a low credit rating you might not get approved. 
Some banks are wary of granting loans for used cars because they depreciate in value quickly. It’s a good idea to ask about the financing options for the specific make and model of the car you’re interested in.
It can also take longer to get approved through the bank, so you might be stuck waiting several business days to find out if your loan application has been accepted.

METHOD 2: IN-HOUSE (DEALER) FINANCING

The second option is to get financing directly from the dealership you’re buying a car from. The main advantages of in-house financing are speed and flexibility. 
Because the application and approval process is a lot quicker, many dealerships are able to offer same-day financing. That means you can take a test drive in the morning and drive your new (or new-to-you) car off the lot by the afternoon. This way you won’t have to worry about someone else snatching up the used car you fell in love with while you’re waiting for financing to come through. 
Dealerships offer significantly more flexibility for borrowers with less-than-stellar or non-existent credit (as is the case with students or new Canadians). If you have poor credit or have gone through a bankruptcy, shopping for a vehicle can be frustrating and disappointing. In-house financing can help get you into the car you want, even if you’ve been previously turned down for a loan through your bank. 
At Birchwood Credit Solutions, we look beyond our customers’ credit rating. Once you apply for financing, our team will review your whole financial situation and work with you to pick an appropriate budget and payment options. We can even offer you help and advice on how to repair your credit rating.
Learn more about Birchwood Credit Solutions’ Bad Credit Car Loans and quick, hassle-free application process. You can also contact us to talk directly to a car financing expert.

Buying a Used Car: How to Choose a Payment Option

When the time comes to buy a used car, there are many financial factors to consider. Perhaps your budget will narrow your used car choices, or you may not be aware of the payment options available. We are ready to show you some ways you can pay for your vehicle and to show you that the make and model you desire most may well be within your reach if you plan carefully.

Consider the Time Frame

As you consider payment options, one of the first factors you might want to think about is how long you will be paying for your car. Whether you secure a loan through the bank or choose in-house financing with us and depending on your credit, your loan could be as brief as two or three years or as long as five. It is important to understand the exact terms of the length of your loan before you sign off on a vehicle.

Give Yourself Time

Even if you find yourself needing a new vehicle for your commute to work or school, you should avoid jumping into a deal right away. Take the time to consider your options, as this may help you avoid hefty payments that might be hard to handle later on. For example, ask yourself whether your current car is a valid trade in or if you can secure a down payment that may help lower the cost of a vehicle.

Review Your Budget

One mistake many people make when they shop for used cars is to miscalculate how much they can afford to pay monthly. To avoid this error, you will need to factor more than just the car payment into your auto ownership budget. The cost of insurance, gas and other taxes and fees that will need to be paid when you purchase a vehicle should all be included in your budget to ensure you do not overextend it.

Buying a used car can be a challenge, especially if you are unsure of your payment options. However, being prepared and asking the right questions can help you get the car you want at an affordable payment.

Tips to Pay Your Used Car Off Faster

When you are checking out used cars, one of the biggest advantages is the cost. These will almost always be less than the same make and model that is new. When you are paying less for a vehicle, you can pay it off faster. However, there are a few tips to make it easier to get the loan paid off so that you can eliminate your monthly payments.

Put More Money Down

Even if you put an extra $500 to $1,000 down, this is less money you have to pay back with interest. This allows you to pay your vehicle off faster and it can also save you money overall. Consider your timeline for paying off the vehicle and do the math to determine the down payment amount that fits into your plans.

Pay More With Every Payment

Add to your payment every month to make each payment larger. You can choose any amount that you can afford during that given month. For example, add an extra $50 to your payment in August and September, but when the holidays come up and money is tight, plan to pay an extra $25. Every dollar counts and works to get the loan satisfied faster.

Make an Extra Payment Every Four Months

This is relatively easy and most people are able to afford this. This cuts off three months of payment per year. If you have a two-year loan, you will pay your vehicle off in 18 months instead of the full 24. Simply divide your monthly payment by four, put this much aside and once four months is up, make the extra payment.

You can use all of these tips together so that your loan is paid off before you know it. Just talk to the dealership and see if they have any rules about paying off a loan before it is set to be complete.

Who You Should Bring Along When Shopping for Used Cars

Shopping for used cars can be a daunting experience. With so many makes and models to choose from and with so many ways to finance your vehicle, going it alone can make you feel less confident than you normally might. To make your experience more pleasant, we have some tips about who you might bring along as you shop and take test drives, as this may help you make a more confident purchasing decision.

Your Spouse

Having your spouse along with you as you shop for a used car might make you feel comfortable in terms of helping you decide what kind of car best suits your needs as a couple or a family. You can also bring them to help you keep track of your paperwork and for moral support as well, especially if this is your first time buying a used car on your own.

Your Mechanic

If you have a good friend who is a mechanic, they can be an invaluable individual to have along when you’re browsing used cars. You can ask them questions about which models have the best track record when it comes to safety and reliability. Taking them on test drives might also help you understand and identify any unfamiliar noises you might hear.

Your Adult Children

Having your adult children accompany you on your used car shopping trips can be extremely helpful, especially if you have not purchased a vehicle in some time and are now a senior. They can help you make decisions about which finance option is best for your budget and assist with filling out paperwork if you find yourself running low on energy. If you are not familiar with today’s technology, your kids can help a dealer explain features such as GPS, Bluetooth capability and more.

Shopping for used cars can sometimes feel overwhelming if you go it alone. Bringing along a spouse or a loved one can help you feel more confident that you are getting the most for your money.

Advice for Buying a Used Car

Through the years we’ve seen a lot of people come through our used car lots looking for a good deal on used cars. Based on this experience, we have some advice for consumers, whether you are a first-time buyer or an experienced car buyer. Most importantly, relax and have fun. Pay attention to these few simple tips and there’s no reason you can’t drive off the lot with a great car at a great price.

Prepare a Budget

It’s smart to come into the dealership knowing how much you want to spend. You can do this as a total price. If you plan to finance the car, it may make more sense to calculate a monthly fee that fits into your budget. When you pay more than you wanted for a car, it can cause unnecessary stress. If you scrimp too much you could deprive yourself of the vehicle you really wanted.

Do Some Research

A number of industry publications give insight into each model and make of vehicle you are interested in. You can find out the estimated value of each vehicle depending upon how old it is, how much mileage is on it and its condition. You can also find out estimated ownership costs for such things as gas mileage, expected maintenance costs and anticipated insurance premiums. The more research you do the more likely you will buy a car that is perfect for your lifestyle and budget.

Must-Have Features for New Cars

Car technology has most certainly come a long way over the centuries. As you’re exploring which new car is the right fit for you, you might feel overwhelmed by the sheer number of features and technology you have to choose from. As you’re preparing your finances for car loans, make some time to see which features are true must-haves for your next car.

Height-Adjustable Lumbar Support and Power Driver’s Seat

You want to be as comfortable as possible while behind the wheel, for your own sake as well as everyone else’s on the road. Your car seat should have height-adjustable lumbar support so you can sit easily and comfortably. When you’ve thrown your back out of whack and are driving to the chiropractor, you’ll be glad your seat can change positions to accommodate you and your needs.

Automatic Emergency Braking

Because there’s no accounting for everyone’s driving ability and habits, you should drive a vehicle that has automatic emergency braking. This particular feature can sense a potential collision and brake for you if you don’t do so in time yourself. Not only is automatic emergency braking good for your safety, it’s a feature that can save on the cost of insurance as well.

Forward-Collision Warning

Paired with automatic emergency braking, a car with forward-collision warning can go quite a long way in keeping your car structurally intact. A combination of lasers and cameras is what allows this particular feature to work. Rather than automatic braking, you’ll receive an audible warning to take action before an accident occurs.

Backup Camera

Get a better view of everything behind you while in reverse with a backup camera. This can come in handy while parallel parking, and it can keep you from running over an object behind your car that you might otherwise be unaware of.

These are just a few must-have features for your next car. Use them as a jumping off point to explore more and find the car that’s perfect for you and your driving needs.