THE ONLY CAR BUYING TIP YOU’LL NEED,
Don’t purchase a car based on monthly price
There is really only one thing you need to know when you go to buy a car.
Nobody wants advice they didn’t ask for, and people who do ask don’t want as much as they’re usually given. Having said that, if I’m falling off the side of a cliff and someone asks for the only piece of advice on buying a car that I’ ll have time to give as I hurtle toward a certain death, it would be this: Don’t buy a car a month at a time.
You’ve probably started noticing stray headlines showing up on websites you visit — reputable sites, mainstream sites, sites you’ve visited on purpose. Yet there they are, in the margin or at the bottom of the page, crazy second- rate headlines that remind you of knock-off merchandise called Kalvin Kline or Goochi. They’re like the ShamWow commercials of the Internet.
“More Canadians with bad credit are eligible for car loans,” said one that popped up on my screen the other day. Oh, awesome, I thought. The absolute best thing for people with shattered credit to do is to go buy a car they can’t afford.
Cars are big purchases, costing tens of thousands of dollars. And yet, they seem overwhelmingly to be called “$ 300 a month” purchases in every ad I see. When I look through a newspaper’s real estate section, the big number is always the big number. Rental prices are usually ad- vertised with by- the- month prices because you’re only signing up for a year, and you can usually find a way to squirrel out of it sooner if you really have to. You can’t squirrel out of a car purchase.
Because few of us can walk into a car dealership and plop down tens of thousands of dollars, like Oprah or a pirate, we have to decide wisely what our budget can bear. The problem is not in establishing how much we can afford a month toward this purchase; the problem is forgetting you have to multiply that number by all those months to realize how much you are actually paying.
Ontario has something called all- in pricing, which means a dealer is required by law to post the total price of a car, excluding only HST and licensing. There can be no fine print under the fine print. That price written on the windshield, stuck in the window, printed in the paper or posted on the website must be the true price. However, consumers can become confused if they read an ad placed by the automaker rather than the dealer, because manufacturers do not have to abide by the all- in rule. Which is crazy and confusing, if you ask me.
This law is a good one, and can help you determine how much a car costs. The problems arise when you get inside a showroom and wander, physically or emotionally. Perhaps they don’t have that exact model as advertised ( they are supposed to be able to get it); maybe it’s only on certain colours, and you really want orange; maybe your heart skips a beat when you see a higher level of trim or the next model up, and your original choice now looks like a wallflower. I blame consumers as much as I blame sellers. But, this is your money; don’t be pushed off your position.
The first question out of a salesperson’s mouth is going to be, “How much do you have a month to spend?” This is where you fight back, at the very first question. If you know you have $ 25,000 because you’ve budgeted four hundred bucks a month for five years, don’t let them magically get you into a $ 35,000 car that costs the same four hundred a month — for an extra 24 months. It’s not magic, it’s math.
It happens in increments. GPS would be nice, the leather looks lovely, I can totally hear the difference in that upgraded stereo. If a salesperson says, “For an extra $ 35 a month we can get you into this model,” hesitate. Then get out your calculator and multiply that 35 by 60 — the number of months in your original payback plan. You might want it for $ 35, but do you really want it for more than $ 2,000? When they suggest you can keep to your original payment by extending your payment period, just leave.
There are several ways to finance a car purchase. Talk to your bank. Maybe that incentive financing is right for you, if that zero or one per cent is on a car you want. If you have no intention of leasing but find yourself considering it to stay within your monthly target, go home and think some more. Be wary of any place that will give you money when nobody else will, unless it’s your parents. Actually, be wary of that, too.
Reputable dealers want you happy with your car purchase for years to come. They need your future business and your referrals. But there is no cooling- off period, no contract hangover clause that will undo your signature. The weight of that total cost — those tens of thousands of dollars — should feel big. Don’t let anyone do some monthly payment sleight of hand to let you think otherwise.
And don’t do that sleight of hand to yourself.
FEW OF US CAN PLOP DOWN THE CASH, LIKE OPRAH OR A PIRATE