6 Great Tips for Buying a New Vehicle

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With vehicle sales topping 2 million for the first time ever, 2017 was another year of rapid growth in Canada’s auto industry. While mid-range and lower end passenger cars actually experienced a 3.4% decrease in sales, light trucks and luxury brands saw unprecedented demand as leading manufacturers like Audi, BMW, GMC, Ford and Toyota broke annual sales records.

So, if you’re looking to upgrade your wheels or enter the car market for the first time, then 2018 seems as good a time as any to make your big-ticket purchase. But, before you start splurging your hard-earned cash, it pays to do your research; after all, spending on a new vehicle will likely represent one of the biggest investments you make in your life.

Within a limited budget you need to make sure that your car meets requirements for reliability, safety, comfort, aesthetics and fuel economy. Then, once you’ve picked a suitable vehicle you need to work on securing necessary financing, and insurance coverage. It’s a lot to handle, especially for a novice car buyer. But don’t worry! the car experts at 123Quanto have years of experience negotiating deals on new, and used cars at the best value. Based on their insights, we’ve compiled a list of do’s and don’ts for anyone looking to purchase a new vehicle, in 2018.

Start With a Budget

Whether you’re relying on cash or financing to cover the cost of your vehicle, you need to know how much you can safely spend before making any buying decisions. Factors to take into account when budgeting include: the listed values of vehicles in your price range, sales taxes on the purchase, interest charges, applicable registration fees, insurance premiums and any government or dealer incentives available.  

Industry websites like Edmunds and Kelley Blue Book are great resources for unbiased information on vehicle prices, existing automaker discounts and available rebates.

Understand Your Needs

When you’ve figured out your budget, it’s time to narrow down your buying options, and the best way do this is with a checklist. Questions you might want to ask are:

·       Will this new car be your primary mode of transport? If not, will you be using it for extra duties or leisure?

·       Will you mostly be using the vehicle yourself, or do you have to make allowances for other family members and friends?

·       Do you have any physical issues which require special consideration?

·       Will your vehicle be used for work? If so, what is the nature of your job, and can your new vehicle cope?

·       Do you expect to drive in rough terrain, or extreme weather?

Based on your budget and requirements choose at least a couple of different models and brands in the vehicle class you desire.

Get Your Finances in Order

Most buyers make the mistake of only applying for credit once they’ve completed the negotiations for the car of their dreams, only to find out that the they’re either ineligible for financing, or that they only qualify for a loan at a higher interest rate. So, the first thing you’ll need to figure out is how easily you’ll be able to obtain financing. Get in touch with one of two major credit reporting agencies, Equifax Canada, or TransUnion Canada and ask for a free copy of your credit file by mail.

Those of you with excellent credit scores will likely be able to obtain financing on good terms from either the dealer or a bank. But if you have a less than stellar rating then it might be a good idea to talk to your financial institution, to get a quote on how much interest you’ll likely pay on your car and the maximum amount of funds you’ll be offered.

Pre-arranging finance before you even step foot into a dealership puts you in a strong bargaining position when it comes time to negotiate financing terms. You might even be able to bargain the dealership manager down to a lower interest rate than the one you’ve been promised by your bank.

Test the Vehicle

Independent reviews are great for research, but before you can enter into negotiations you have to figure out whether the car lives up those promises. If you’re buying a family car, then make sure to bring along everyone involved in the buying decision to check out the interior, exterior and drive quality of your prospective purchase.

The Negotiation

Don’t ever start negotiations at the list price; this is simply the amount the dealer would like you to pay for the vehicle. What you need to determine is the actual price the dealer paid for the car (dealer invoice price), it might take some research to figure out this value, but once you do you’ll have an invaluable tool in the bargaining process.

Ideally you should look to negotiate a purchase price of around 3-5% above this actual cost. Most dealerships operate at a 3% profit margin, so this shouldn’t be too difficult to achieve.

If you’re planning on trading in your old vehicle to help finance the deal, then establish book value of your old vehicle beforehand, using a resource like Canadian Black Book, this should help you set a baseline figure for trade-in value. Adjustments can then be made based on the condition, and popularity of your make and model of vehicle.

Timing Matters!

While there are no hard and fast rules when it comes to negotiations, there are some interesting trends you might want to consider before walking into a dealership.

·       End-of-the-day negotiations are usually quicker, and more hassle-free

·       Most dealerships receive monthly bonuses from manufacturers on the basis of vehicles sold. If you happen to arrive at the right dealership at the end of the month, then they may be willing to sell you your car at below market price just to make up their monthly quota.

·       The best incentives and discounts usually arrive at the end of the year

·       Vehicle sales generally lag during winter months, so dealers are often more willing to make a deal during these periods.

·       Just before a new model is released, dealers are often in a hurry to clear out last generation stock models. If you opt for one of these slightly older models then you could see a hefty discount on the sales price.

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