The Chronicle Herald (Provincial)
Should you keep a vehicle you’ve won?
Nabbed a Lambo in a lottery? Rolled up a RAV4? You have some decisions to make
Whether it's a Honda Civic you discover under the rim; or a Lamborghini from one of the wealthiest lotteries in the country, should you keep a new car that you've won?
“Desirable cars and other prizes are chosen to make an emotional connection with the donor that is stronger than the appeal of a money award,” George Iny of the Automobile Protection Association (APA) notes. “It allows the charity to develop a story around the prize.”
It works; I have to admit, if I see a glorious Jaguar Ftype or the latest Audi e-tron sportback in a raffle, I think, Oh! Want.
The Princess Margaret Home Lottery, for example, entices you with glorious custom homes in Ontario's most desirable areas. They park fantastic vehicles in the driveways. Who hasn't imagined launching off into an entirely new life? Lotteries like these are held by hospital foundations across the country; the cost to dream is usually around $100 a ticket, and with it going to a great cause, there seems little downside to participating.
Who can forget the original great car giveaway? Oprah Winfrey gave away (or rather, GM did) 276 Pontiac G6s to her audience. It was a huge, emotional moment. These were people who needed cars. Unfortunately, everybody overlooked the fact that each winner would be required to pay income tax of, on average, $6,000 to keep that car. GM paid the state tax, but winners had to handle the additional taxes.
Canadians are far luckier than their American counterparts when it comes to winning things. In the U.S., you have to pay taxes on anything you win: a Powerball lottery, your casino payout, or a gameshow washer and dryer. Canada? Off you go. Free and clear, taxes on the original amount a moot point. It makes others jealous of us. It makes me want to win something.
What if you win not cash, but a fancy car? It's different from winning a Kia Rio or a Toyota RAV4 or a Honda Civic or, this year, rolling up a rim for a Volkswagen Taos Highline; you might even already be in the market for one of these popular vehicles, or becoming close enough to make the move from your current vehicle.
But what if you win a Porsche, or a Maserati, or a Ferrari? First things first; yes, they pay licence and registration. But do you have a (safe) place to park it? Have you taken a boo at the cost to insure it? Wanna know how much a set of tires costs for that baby? An oil change?
“If you cannot afford to buy a Porsche, you likely don't want the accompanying expense of operating one with $500 tires that wear out after 25,000 km and $1,000-plus service visits,” explains Iny.
It's true: winning a car is the gift that keeps on taking, and very few vehicles do anything except depreciate from the moment you take possession of them. The higher the sticker price, the steeper the associated costs.
Some lotteries offer you a choice of the vehicle or a cash buyout; the discrepancy between the advertised worth of the vehicle and the amount of the cash option may make you pause, but auto consultant John Raymond explains that usually the charity purchases the car at dealer cost, less a charitable donation by the dealer. That, then, becomes the amount you can cash out for.
Many of the winners of the megahomes in these huge lotteries sell them quickly, and at a price far off the original prize value. That's not surprising. The value reflects the landscaping, the furnishings, and the design content of the homes.
Some take the furnishings out.
In New Brunswick, by 2017, every winner of the dream home in the Hospital Home Lottery had sold the house upon winning. Most cited ongoing costs associated with large, new homes.
Many of these lotteries have started adding a cash bonus to the winning houses, and it doesn't take long to figure out it will be needed for property taxes and maintenance, even if the house goes on the market immediately.
Luxury cars don't come with a similar booster fee.
Keeping the similar greater cost of ownership on highend luxury vehicles in mind, what should you do? If you were already looking to add a new Mercedes-benz to your stable, the timing of your win might be perfect. Maybe your current perfectly-goodenough drive makes you yearn for even a little time with the upscale prize.
Be careful about accepting the vehicle with an eye to reselling it — once it's registered and titled, it's considered used. The time to make the decision — whether to keep it or not — should be made before it leaves the dealer's showroom.
Much as I'd love a fancy new daily driver, I know what my decision would be: take the cash offered and buy my kids new less-fancy hybrids.