It is that time. You realize you need to buy a car, and if you are like most Canadians, just the thought of going through the process fills you with fear and loathing. In particular, if you are a woman, you can add intimidation to the list. Suddenly a trip to the dentist for a root canal looks more appealing.
However, it does not have to be this way. You can ensure your vehicle buying experience is a positive one if you take the time to prepare and educate yourself about your purchase before you set foot in the showroom.
Yet, why should we have to do homework just to buy a car? Simple, after the purchase of a home, a car is the second largest acquisition most people make. We spend weeks, often months, money and considerable effort looking for our
ideal habitat. It makes sense to invest more than a weekend searching for the right vehicle to meet our needs, fit our budget and do it all with style.
If you buy smart this time around, it will be easier the next time; in addition, you will achieve greater satisfaction with your acquisition.
Everyone remembers the thrill of driving away his or her first car, whether new or pre-owned. The feelings of elation and freedom are difficult to replicate.
If you are about to embark on your maiden vehicle purchase, you should savour every moment and the following tips will help you get there.
Alternatively, if you are replacing an existing vehicle, you probably have a preferred make and model. Moreover, it was probably about eight years or so since you last went through the buying cycle, so you may benefit from a refresher.
Before you head out to the dealership:
• Examine your lifestyle to assess your needs and wants, which differ from individual to individual. To
differentiate between a need and a want, consider: a need is requirement, an option or an item that is imperative for you to maximize the functionality of your car. For example, if you constantly carry passengers in the back seat, then four doors become a need. A want is something that you desire or may be a luxury item, like extra bass speakers for your car’s audio system — probably not imperative for most drivers. One should never sacrifice something we need to get something we want. You will not be very popular if you return home in a sports coupe as the family’s main vehicle should you have another adult, three kids and a lot of cargo to transport daily.
• Estimate the number of kilometres you will drive annually. Mainly city or highway? A lot of kilometres will make fuel economy a concern. Do you prefer automatic or manual transmission? Selecting a manual trans-
mission may save you around $1,000, depending on the make, on the list price of a new car. Alternatively, an automatic transmission, adds to the resale value.
• Determine a price range for a new and used car.
There are excellent oneand two-year-old vehicles out there, many with the manufacturer’s warranty. Why not allow someone else to pay the depreciation for the first two years of a new vehicle? The price of a previously enjoyed car may permit you to afford a more luxurious vehicle.
• Give some thought as to whether you plan to pay cash, finance or lease. If you are not paying cash, talk to a personal banking officer at your branch and investigate how much of a loan the bank would extend you. Compare that to the financing offered by most dealers through the chartered banks and the manufacturers’ finance companies. The rates and terms available through the dealer are often more competitive than those you may receive from your own bank because of manufacturers’ rebates or discounted interest rates through the manufacturers’ finance company. A number of the chartered banks have special rates and terms through their automotive finance centres which have greater latitude than their branches. Some large dealerships have their own finance companies. Be clear which finance source is offering what deal. Dealers practise full disclosure and should explain the differences in the finance contracts between the chartered banks, manufacturers’ and dealers’ finance companies.
Consult a financial adviser to examine your situation to help determine what is best for you. In general, paying cash or bank financing works if your desire is to own the vehicle while paying the least amount of money in interest, or if you drive many kilometres annually.
Leasing is increasing in popularity every year and may be attractive to you because it allows you to drive “more car” with a lower monthly payment relative to a loan of the same term. A short-term new-car lease (two years or less) offers a predictable monthly car expense based on the expectation of no repair costs due to the manufacturer’s new car warranty.
Remember that you are responsible for regular sched-
uled maintenance like oil changes and repairs to body work, regardless of a lease or a purchase.
Do Die Obvious:
• Read up on the current models via automotive books and magazines and the Internet. Some suggestions are CAA Car Buyers and the Consumer Reports Annual Auto Issue. Most manufacturers have comprehensive Web sites with product information that allows you to select a model and equip it with options to determine a manufacturer’s suggested retail price (MSRP) before you step into a dealership.
• Make a short list of two to three models with the options that fit your needs, wants and budget. Prioritize the options just in case you have to cut one.
With your research done, visit the automotive retailers of the vehicles on your short list.
At the dealership:
• Test drive the model equipped with the options that you mean to buy. As a courtesy, make the salesperson aware that you are just shopping at this time.
• Bring a buddy along for the ride. Take a small notebook and record his or her comments as well as your own first impressions of the car, the salesman and the dealer. Test the car on the highway. Get a feel for the handling, acceleration and braking. Are their blind spots that prevent you from making safe lane changes? Turn the radio off and note the amount of rattle, wind and road noise — can you talk to your friend without yelling? A friend is especially helpful if you have a weakness for impulse purchases or for spending more than you can afford. Remember to buy the friend lunch or dinner as thanks for accompanying you.
• If you liked the car, ask for a price quote on a work sheet with all options including: freight; pre-delivery inspection (PDI); all applicable taxes such as gas, tire, air, etc.; administration or documentation fees plus any other charges; GST and PST. If you have a trade-in, you may be able to get an estimate as well. This is not the final, discounted price, just a quote.
• Take the information home and compare models, using your impressions of the vehicle, the dealership and the prices from the worksheets. Ensure you are comparing apples to apples.
• Now that you have a choice, do you want to negotiate the price of your purchase or not? If not, then select a retailer that offers “One Price Selling” or “No Surprise Pricing” which are nonnegotiable prices posted on each vehicle that are discounted from the MSRP based on local market conditions.
• If you want to negotiate, return to the salesperson whom you felt the most comfortable with at the dealership that retails your first choice of car. Let him or her know that you are
ready to buy. Bring along a cheque, cash or credit/debit card to make the deposit on the vehicle you would like to buy.
• Negotiate, it can be very rewarding. In addition to the car, you can negotiate on extended warranties, after-market car alarms, and stereos and sometimes on finance or lease rates.
1. Shop around, but do not agree to apply for financing through a dealer until you are ready to buy. Once you want to proceed with your purchase, limit the credit application to three financial institutions. If you apply for financing at every dealership you visit, the finance companies may interpret you as a credit seeker. Once you have credit approval with a chartered bank or manufacturer’s finance company and you cancel the deal with that automotive retailer, your finance approval should be valid for approximately 30 days and usable with another dealer. Some large dealers have their own finance companies, and their car loan or lease credit approvals may be non-transferable.
2. If you still need another opinion before you sign the contract, make sure you write on the Bill of Sale, “subject to this source’s approval.”
3. The deposit is kept by the seller to hold the car only when you reach an agreement. If you get cold feet the next day after making the deal, most dealers will completely refund the deposit to cancel the deal unless
they incurred costs such as transporting the vehicle from far away.
4. Remember when buying a preowned vehicle that they are unique. Dealers know there is not another car like it, so try not to fall in love with any one car. Be prepared to walk if the deal is not to your terms.
5. Consumers often receive better deals at the end of the month or year. Salespeople and managers may accept an offer that they would not normally take so that they can reach sales and revenue targets. Usually the deeply discounted price is given on the condition that you can take delivery of the car before the month ends.
So buying a car is not predestined to be an exercise in frustration. For the shopper, information is the key to success in purchasing a cost-effective and stylish automobile.
Even with the explosion of the Interment and e-commerce, the traditional direct buying process is not ready to go the way of the dinosaur yet. We still need to touch, see, smell and hear our vehicle before taking ownership. For consumers the safest and most professional car sources are the recognized dealers of the manufacturers with reputations and millions of dollars at stake. These trained professionals’ primary goal is to give you, the client, what you want, so that you in turn will give them what they want. And that is you, a satisfied customer who will return time after time with family and friends.
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