As the economy in British Columbia continues to grow and thrive, it is driving a wealth effect that has spurred Canadians to purchase expensive vehicles. Recent statistics prepared by automotive news analysts reveal that sales of vehicles with a sticker price over $90,000 have increased by more than 35 percent during the past three years. The number may actually be higher. The figures do not include models with slightly lower manufacturer suggested retail prices whose costs rise above that threshold with the addition of high-end options like advanced infotainment systems and self-driving functions. Personalizing a car with optional features can easily increase the price by as much as 50 percent. The upper end now makes up more than 1 percent of the overall car market. This statistic is well above the rate seen in previous business cycles. Recent sales figures from luxury brands, such as Audi, BMW and Mercedes-Benz, confirm this trend. Rising wealth has enabled more Canadians to shift into the entry and higher levels of the luxury car segment.
In addition to a healthy economy, the wealth effect is also the result of British Columbia baby boomers experiencing an increase in the value of assets like their homes. This increases the likelihood that they will spend more money on luxury goods, including vehicles. Homes have seen significant price appreciation over the same period covered by this study. If Canadians were purchasing these fancy cars with cash on hand, the downside would be limited. The problem arises when buyers are using ultra-long term loans as many are using at the lower end of the car buying market. If you need to use this type of loan, you are buying too much car for your budget. Automotive news analysts believe that car owners who use these loans may face financial difficulty if the economy turns lower.
Whether in good times or in bad, you should follow a few simple steps to finance a luxury vehicle. You do not want to get in over your head by buying too much car. One financing option is to use the equity in your home. While this may result in lower overall financing costs, it can put your home at risk if you later find yourself in a less advantageous financial situation. Another option is to secure financing at the dealership. Automotive news stories show that loan terms offered by a dealership’s financing arm may not be the best that are available for your credit and employment situation. Leasing is another way to drive a luxury vehicle. Although you must turn the vehicle in at the end of the agreement, a lease may enable you to save money overall on a luxury vehicle. You should also consider the advantages and disadvantages of purchasing a low mileage, late model used luxury vehicle.
Your best alternative for financing a luxury vehicle may be to utilize the services of an auto loan specialist that offers a variety of funding options. These companies will help you objectively review your current and future financial situations as well as the best loan options for your individual circumstances. This will help you decide which new or used luxury vehicle is right for you. It also ensures that you can afford the monthly payments even if you have less than perfect credit.