Purchasing a new vehicle is a big decision that you shouldn’t take lightly. In some ways it’s like introducing a new member into your family because it plays such a big role in your daily life. While it can’t autopilot the kids to school in the morning (yet), it needs to be reliable. And since you’ll have it for quite some time, you’ll want it to have all the bells and whistles to make your life easier.
That’s why it’s important to put time and commitment into the process to ensure you’re making the best decision for both your short- and long-term needs. Before stepping onto the lot, you’ll need to consider the budget, style and model, and whether you’re going to purchase directly from a dealer or a private sale.
There are lots of moving parts when it comes to buying a vehicle. Here are a few things to keep in mind.
Shop around
A rule of thumb: knowledge is power. Before heading off to the dealership, do your research. Make sure you’ve considered all models and makes that meet both meet your specific needs and budget. Know what the average price point is for that vehicle, as well.
Even if you’re in a pinch, it’s a good idea to visit more than one dealership. Every dealership prices their vehicles differently, so knowing the average price of that blue minivan you really want will play in your favour when negotiating.
New vs. used
It’s important to weigh the costs of buying a new vehicle vs. an old one. A new vehicle will give you peace of mind that you’re getting something reliable that will only require regular maintenance and upkeep. However, as soon as you drive off the lot, your new ride has already depreciated in value.
On the other hand, a used vehicle will likely cost a lot less and could be only a few models off the new version in its used condition. But you also run a greater risk of seeing higher maintenance and repair costs, and the warranty could be expired.
Loan vs. lease
For a lot of people, paying cash to buy a new car isn’t realistic. And even if it is, you choose to use your savings in other ways. That leaves you with either taking out a loan, or if you’re a small business owner, you may opt to lease a vehicle to take advantage of possible tax benefits. Both have their own advantages, so it’s up to you to determine what’s best.
Know your budget (and stick to it)
It can be tempting to walk into a dealership and make a beeline for the newest SUV model, but it’s important to be realistic when budgeting for your new ride. Auto financing can be a great way to open up your options.
A pre-approved loan gives you a pre-determined budget for your purchase, so you’ll know how much you can actually afford and how much the loan will cost you over time. That means less pressure from salespeople to get something outside your price range, as you’ll have the upper hand in negotiations. Pre-approval will also give you access to a great rate and eliminate the stress and uncertainty that comes along with getting the special car you’ve been looking for. Like that VW Beetle with the eyelashes.
Make sure you get the best rate. And don’t forget the fine print.
Most dealerships will offer either a low rate on financing or a cashback incentive. Do the math to see what could potentially be the better offer. For example, you may be offered financing at 0.5% for 36 months, or a lump sum in cash back with no financing from the dealership. While it might be tempting to take the lower rate option, if you take the cash back and apply it to the loan you get through a financial institution (at say, 4%), you may have a lower monthly payment than if you took the lower rate option. Crunch the numbers before you decide.
What happens if it’s a private sale?
If you’re planning to go with a used vehicle through a private sale (like Craigslist or an auction), it’s important to have the car thoroughly checked out by a mechanic before you finalize the purchase. The mechanic’s report may provide you with the leverage you need to negotiate a lower purchase price.
Psst… You can also use our auto financing to get your car through a private seller. Once you’ve found the car you’re looking for, we’ll pull the Carproof or lien searches to give you peace of mind on the car’s history and valuation.
Get a helping hand (or a team of helpers, if you want)
As the only financial institution with a dedicated auto department, we know that having knowledgeable staff is important. That’s why we know a key to getting your dream car is to work with someone you can trust.
Our auto experts can help advise you on the best financing options available, give you a hand with paperwork, and even help you obtain vehicle history reports to make sure you’re getting what you think you are. So give us a shout.
