Take Advantage of Low Interest Rates Before It’s Too Late

Why You Should Trade-in Your Car Now

Global interest rates on new money, like car or home loans, have been at historic lows for a long time—especially over the last two years to help keep economies afloat during the pandemic. However, a Jan. 26 article from Reuters said that the Bank of Canada will start to raise interest rates in the very near future. If you’ve been on the fence about buying a new car and using your current vehicle as a trade-in, now is the time to act. Higher interest rates mean it will be more expensive to finance a new vehicle, which also means that your trade-in will have a lower impact. Let’s take a look at a few things you might need to know.

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How Do Interest Rates Affect Buying a Car?

There are myriad reasons why the Bank of Canada would raise interest rates. The country’s central bank is raising interest rates because dropping them was a measure to stimulate our economy while we handled the pandemic. Lower interest rates make borrowing money very cheap, which is good if you’re taking out a loan for just about anything. The flip side of that is so much new money floating around an economy can drive up inflation, which is what we are seeing now. 

Additionally, the automotive industry is still smoothing out some rough edges of supply chain issues. Combining those problems with increased demand for new vehicles and the laws of supply and demand become abundantly clear. Basically, rising interest rates mean that, in the near term, it will be more expensive to finance, or lease a new vehicle.

How Much More Expensive Will Car Financing Be?

Finch Chrysler customers should be making an appointment with one of our product experts as soon as possible. It doesn’t appear like the rate hikes will be huge at first. The previously mentioned Reuters article mentioned that the Bank of Canada will take a stepped approach to raise interest rates, going up to near five percent by the end of March 2022. 

Considering how low the interest rates are now, even the gradual shift up to the five percent interest rate will add hundreds, if not thousands, of dollars to a car loan—depending on the length of the loan.

Finch Chrysler is able to offer buyers one of the most diverse inventories of new vehicles in the area. Make an appointment with one of our product experts today to take advantage of low financing rates while they last.