Bank of Canada Lowers Interest Rates – will this help me afford a car?
If buying a new car has been high on your list of priorities lately, then knowing if you can afford to buy one is a key component of making this plan a reality. Looking at the current economic situation can give you even more insight into whether this pur
Despite many signs pointing to the Bank of Canada raising interest rates, the last week of January was actually met with the Bank of Canada deciding to cut interest rate instead. While the decline in interest may have caught many people off guard, after the fact many experts believe that this is a greater indication that the economy is struggling. In this case, the Bank linked this interest cuts as a reaction to dropping oil prices and the implications this has on Canada’s economy.
Generally, lower rates are to encourage individuals to borrow more – in this case financial experts have alluded to the fact that this should actually be a cause for concern and that borrowers should not take out any additional loans that they cannot manage. With the Bank of Canada cutting its rates by a quarter point down from 1% to 0.75%, this rate will impact a variety of loans, including personal loans, mortgages, and of course car loans.
While ultimately, this rate drop will affect loans across many commercial banks and lenders, there may perhaps be some noticeable differences, depending on the type of loan. As mentioned, lower interest rates are to encourage Canadians to borrow and invest however with an uncertain economy it may not be as clear cut as that.
With current rates their lowest since September 2010, previously borrowers may have thought this was an invitation to borrow as much as they could before the interest rate went up. This has perhaps even been a contributing factor to why at this point in time many individuals have extremely high debt levels. Nonetheless, there is often still a need for borrowing the reality is that people will still require mortgages, personal loans, and car loans. If you already have high volumes of debt then it may prove to be difficult to get the loans you need, even with a lower interest rate trend sticking around.
If you are looking to buy a car, here are some pieces of information that may impact your current decision as it relates to the recent interest rate drop. For those who have current car loans, they may not notice a huge difference in interest right away. This is because typically, many car loans are based on a fixed interest rate, where the interest remains the same for a specific period of time.
On the other hand, if you are poised to buy a new car, you may notice lower rates in the near future, as auto financing generally involves highly competitive interest conditions. Some experts believe that of those drivers who are looking to purchase a car in the upcoming months, they may benefit more from the timing, with the onset of the spring car selling season and the lower rates.
One area where potential car owners may notice a difference is if they are saving some money for a down payment or to put towards some of their car purchase/ownership needs. This relates to the fact that the amount of interest that traditional savings accounts will generate to help earn some additional income will take a bit of a hit. Ultimately, this move by the Bank of Canada will help borrowers in some respects, yet for those who are gearing up to save money towards certain purchases – this could be a potential downside.
All in all, what does this mean for the driver that wants to buy a car, yet does not currently maintain the most stable credit history?
In this case, individuals with poor credit may need to look to alternative lenders to obtain the financing they need. The bright light in all of these negative economic developments is that there are companies that offer you the car loan you are searching for.
Canada Drives specializes in helping to connect borrowers with lenders – whether you have struggled with credit or not. We understand as well the importance of owning a car. By contacting Canada Drives, you may be able to find a lender that can help you to take advantage of the lower interest rates, while learning about how to manage your car loan and how you can rebuild your credit. Get in touch with Canada Drives & let us offer you support and understanding you deserve as you search for a suitable car loan that will best match your personal needs.
