Assignment 3: Journey to a New Car

Many people are in the market for a new vehicle but don’t know how to buy one with the least amount of money. Are you in the market for a new car? If so, this blog will enable you to become a smart purchaser!  If not, well, you can read and help your friends or family to buy a car later.

Many people say they want a car but have no idea what type of car they want. For example, some want sedans and some want hatchbacks to fit their dogs.  Some guys want pick ups to transport their goods and also help them feel they own the roads.  Some drivers prefer SUVs because they are better in the snow and have a higher ground clearance for better visibility. Some might want sports cars or convertibles to enjoy the sun and impress the ladies.  With that said, it is very important to know what type of vehicle you are looking for in the beginning.

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Know Your Budget

After knowing the type of car you want, calculate how much money you are willing to spend towards a depreciating asset.  Cars depreciate once they are on the road, unless they are rare cars.  So make sure how much money you are willing to sacrifice towards your monthly lease, finance payment or lump sum.  A Porsche SUV and a Hyundai SUV are both SUVs but the cost are extremely far apart. We can be talking about a car worth $57,000, versus a car with $19,999.

-Lease, sort of like renting a car at with a monthly payment.  The car still does not belong to you at the end of the contract/lease.  You have the option to purchase out the car with a lump sum or the option to return the car to the dealer without any charges, unless there are damages to the car.  Some people prefer to lease cars because they like to change cars every so often and not be worried about fixing their cars when they are driven up to higher mileages.

-Finance.  This is the option of purchasing when you pay out the whole car’s worth of value in a period of time. This option may be more suitable for people who wishes to keep there cars for a longer time or until their cars die to the ground.  For people who drives very seldom and does not need a new car all the time, this might be the better option because the car will have a low mileage, meaning less maintenance to do. Last of all, the car belongs to you.

Cash.  This option is when purchase the car with a one time payment in the beginning and which the car is yours.

Both Lease and Finance have their own benefits and each is suitable depending on the individual.  Some like to lease for tax reasons and some like to finance than pay cash to keep cash flow for other investments.  Therefore it is important to know your current financial situation and use the better suiting method of purchasing.

Purchasing second hand or certified pre-owned vehicles from dealers may also be wise because certified pre-owned cars are cars that have been checked by the official dealer and usually have an extended warranty.  This way, you can save some money as well.

Do Some Research

This is where the world wide web fascinates.  There are many online information regarding to the car you want.  Many automotive journalists write reviews and blogs about the cars they test.  Safety information regarding crash safety rating can be found on www.euroncap.com.  Car forums can also be helpful because members give the utmost down to earth information since they are usually driving one.  Consumers’ view about driving pleasure, mechanical failures, what to watch out for can also be usually be found at the forums.  But take notice, forums are usually biased with opinion related questions because forum members take pride in what they buy.  For example, Audi fans would say their A4 is better than a BMW 3 series because of such and such but BMW fans would say their car is better than the A4 because of such and such.  So keep this in mind!

After doing research for the particular model of car you have in mind, find out the invoice pricing of the car.  The invoice is the price dealers get the cars from the factory.  The MSRP price and the invoice pricing is the gap for price negotiation.  Keep in mind some factories give rebates the to the dealer because they might want to sell a particular model for the new model coming up.  In this case, your negotiation room is the cost of the rebate plus the difference in MSRP and invoice.  To find out the invoice pricing, www.carcostcanada.com is a helpful site to use at a cost.

Visit the Dealers

Test-drive the cars you like.  Understand you will be driving it for a somewhat period of time.   Take as long as you like to know the car’s handling, looks and comfort.  Is the headroom high enough? Is the storage space good for you? How comfortable are the seats and how’s the visibility like around the car?  Is the power sufficient for your needs? Does the car stop well?  These are very key things to notice when you test-drive cars.

Find out the options that you would like to have in your car.  Cars nowadays have a lot of options for you to choose because of the sophisticated technology.  For example, would you like a navigation system? A sunroof? Parking sensors? Rear view camera? Blind spot detection system? Power rear trunk? Optional Airbags?

Don’t let the salesmen pressure you to make decision.  Figure out if the car is suitable for yourself, financially and mechanically.  Get the cost of the monthly payment and find out if you would like to put a bigger down payment to lower the monthly payments.

Put an Offer

After your salesmen gives you a break down of all the costs, put in an offer. Keep in mind of the invoice pricing and rebates.  The usual practice in the GTA is 3-4% above the invoice price.  But this can change with demand and supply.  Next, find out how long it would take for the car to be taken delivery.  If it is too long and you cannot wait, move along to another dealer or look for another car.  On the other hand, if the dealer does not accept your offer, go to another dealer.  Some people in fact just send emails out to the dealers with their offers because it can help save time.

Once the offer has been accepted, Congratulations you have a new car.  Find out when you can pick up the car.  At this point, you should be filling out all the purchasing agreements and documents.  Try to use your credit card to put the offer because most credit cards give a rebate meaning you can save a little bit of money here and there.

At The Pickup

Check if its the car you wanted with the bells and whistles.  See if the colour choice is the one you wanted, yes some people have their cars delivered in another colour because the dealer wanted to make a quick sale. Check if the car is damaged free.  Most important, check how many kilometers there is on the car.  A brand new car should have less than 100km.  Ask the salesmen why there are so many clicks if the numbers don’t add up.  Ask for reduction in cost if needed to be.

Check the papers and cost to make sure there no difference than the one you signed when handing in the offer.  Audit the terms and interest rates to see if there is a change.  Usually the interest rate is the one on the day you take delivery from the dealer.  If everything is good, CONGRATS! You have a new car!

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What are your experiences with buying cars? How smooth or terrible did it go? Let me know down below in the comment box! Remember, don’t forget to thank me when you buy a new car with my tips!

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