How to pay is vitally important
Questions: lease, buy? Should you pay cash, or is financing better for you?
Many consumers who are in the market for a new vehicle will be attending the 2016 Canadian International Auto Show (Feb. 12-21, autoshow.ca) to evaluate the latest makes and models.
Choosing the right vehicle for your driving needs is important, and so is figuring out how to pay for the vehicle.
It’s estimated that 85 per cent of buyers finance or lease their vehicles (as opposed to paying cash), according to a 2013 Consumer Reports survey.
Here are some points to consider when buying your next new vehicle.
1) Establish a budget. The costs of owning and operating a vehicle can vary widely. Avoid choosing a vehicle and options that aren’t critical to your driving habits and lifestyle. Gas, maintenance, insurance, depreciation and borrowing costs should also be included in determining your budget. Focus your efforts on driving needs, rather than driving wants.
2) Understand your credit score. A credit score is a number based on a person’s repayment history (re: mortgage, personal loans, lines of credit) and is used to determine creditworthiness. Having a poor credit score doesn’t preclude you from being approved for a car loan; it simply means you will probably pay a higher interest rate than someone with a good credit score.
3) Understand the role of the business office. A dealership’s business manager’s role is to present customers with products meant to protect their investment and add value to ownership. Car buyers should research the products that are likely to be discussed with a business manager (i.e., appearance protection package, fabric/leather protection, anti-theft devices, extended service plans and extended factory warranties).
There is also an administrative side to the business office that includes reviewing a customer’s credit application and credit report with the finance source, negotiating the finance rate and terms that best meet the customer’s needs. The business manager oversees all financial arrangements and compliance-related issues and prepares the delivery documentation.
4) Dealer/manufacturer financing. Zero per cent interest rates, cashback offers and rebate programs have made car ownerships affordable for many. In some instances, interest rates and other financial incentives offered by automakers are more competitive than rates offered by banks and financial institutions. When considering manufacturer financing, buyers should understand the terms of the offer, such as down payment requirement, length of the loan, cost of borrowing, what models the offer applies to, etc.
5) Purchasing versus leasing. Purchasing a car may be the right choice for many consumers, but that doesn’t mean it’s the right choice for everyone. Leasing is also popular and many car buyers opt for this type of ownership. The Trillium Automobile Dealers Association has written extensively about purchasing versus leasing; visit our website (tada.ca) and check out previous Wheels columns on the subject.
6) Review the numbers. When buying a car, you may speak with several financial institutions and new car dealerships. Review the details with the appropriate dealership staff to ensure you understand the financial considerations and obligations. This will ensure that you get a fair price and a vehicle that fits your needs and desires. For more information about buying a new vehicle, visit carsandjobs.com.
Once again, the TADA is proud to support Prostate Cancer Canada. This year, our association has donated a custom 2016 Audi S5 (valued at more than $119,443) for the Rock the Road Raffle. For ticket information, visit rocktheroadraffle.ca. This column represents the views of TADA. Write president@tada.ca or go to tada.ca.