Buying A Car

Buying a car will most likely be one of the largest purchases you make in your life and so its importance cannot be understated. With such a huge array of vehicles to choose from, throughout the various price ranges, research will be the key to a successful purchase.

When you are thinking about buying a car there is one important factor to appreciate - in financial terms nearly all vehicles are liabilities. That is they LOSE money and are an added burden to your finances - not only the initial purchase but also the insurance, gas costs, repairs and then the depreciation when you come to sell it.

That said, vehicles are quickly becoming an essential possession in the modern world - only major cities have comprehensive public transport systems, so to get around at your convenience there is only one option - buying a car.

The first item to consider is the method of payment for the vehicle - buy to own or lease over a period of time. Either way you will need to calculate your budget to see what you can afford not only up front or monthly payments but also the following:

  1. 1. How reliable a make of car it is - are the parts expensive?
  2. 2. How long is the warranty period and how comprehensive is it?
  3. 3. How much does the insurance cost?
  4. 4. What are the service intervals and how much do they cost?
  5. 5. The economy of the vehicle compared with the type and distance of driving you normally do.
  6. 6. Style of vehicle ? do you need a truck or SUV for local/inner city driving? How many passengers do you carry?
  7. 7. How long will you want to keep it? (Marriage, kids or relocation?) Don't sign up for expensive 5 year financing if you only want to keep it for 12 months.
  8. 8. What is the MRP of the vehicle ? always look for discount.
  9. 9. What is the resale value of the vehicle - is the depreciation high?

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Methods of Purchasing

1. Buying a car new - This is fast becoming a more affordable method of buying a car and you can either pay cash up front (if you're lucky), arrange your own financing or take out the financing from the car dealer (if buying from a dealer). Most domestic manufacturers will offer either large discounts for cash payment or 0% financing over a period of up to 5 years. The imported vehicles (far eastern/European) are very popular and most don?t need to offer such large incentives for sales as the reliability and economy of their products are in high demand.

There seems to be 2 major factors when choosing a new vehicle - price over quality. A Japanese / European import will have the quality but you will pay handsomely for it - a North American vehicle (GM, Ford, Chrysler/Dodge) definitely have the price and incentives so that will come down to personal choice.

2. Buying used - The most likely choice of many of us buying a car either through a private sale or a used car dealer. Many private transactions are completed due to reasonable pricing (agreed between the seller and purchaser) that is normally based upon the condition of the vehicle (any crashes or service history), the age, and fair market value. The main drawback is that these sales are completed "sold as seen" and there is very often little or no comeback should the vehicle subsequently fail shortly after the transfer of ownership.

It is a necessity to have the vehicle history checked if you are committing to a private transaction. If the vehicle is stolen or has finance owing on it there is a very strong chance of it being repossessed should it be uncovered. These checks also show the last known mileage (prevents clock tampering) and also any reported collision damage (written off and then rebuilt) and for a small fee can save an awful lot of heartache and financial difficulties.

If you are buying a car from a reputable dealer you will pay more for the vehicle but will normally be able to trade in any old vehicle. Again you will not be paid too much for the trade in but not having to worry about the sale of the old vehicle may well offset that. You should also have a decent warranty with the vehicle you buy which may be the balance of the manufacturers warranty or up to 3 months from the dealer. If it is a dealer warranty, make sure you fully understand what is and more importantly isn't covered - the small print must be read and understood. Depending upon the size of the dealership, you may be able to purchase an extended warranty, again check what is covered and for how long - you really don't need any surprises when the problems arise.

3. Auctions are another method of buying a car which can save you a lot of cash if you are brave enough. You will have the chance to look over the vehicles prior to the auction and the auction company will usually run some background checks to avoid selling stolen cars. If you know what you are doing this can really be a cost effective way of buying a car but also probably the one with the highest risk. Most towns and Cities will have at least one auction house that can normally be found in the yellow pages. I'd thoroughly recommend visiting the auction for several different runs to learn what goes on and be comfortable in the surroundings.

Carproof offer a great service that provides detailed history on any particular vehicle before you buy it. This prevents buying stolen, written off or debted cars and can save you a lot of trouble and money!

4. Lease - This entails a down payment (normally) followed by a monthly payment which will be less than the financing of a new vehicle payment. This method isn't everyone's idea of monetary sense as you make payments but will never have any equity at the end of the lease term. The major benefits are that you will be able to have a new car every few years (usually before the warranty period expires) and simply give the vehicle back in exchange for the next new one (subject to disposition fee's). You will most likely have a pre agreed limit on mileage that will cost you extra should you surpass it and you will be liable for the servicing costs. There is every possibility that all 4 tyres will have to match - if not you'll have to pay MSRP to replace any none standard!!!! Most retailers will have a 3rd party inspection of the vehicle carried out at lease end and anything classed as not being fair wear and tear you will have to pay to put right.

Leasing has to be fully explored and check ALL the small print. There may well be an ad saying a low price but add up all the extra's like taxes and fees and you'll soon be up there. Swapalease is THE system for empowering YOU as the buyer, to be able to negotiate the best deal for your lease. They also connect you to "want out" lease sellers which can offer you fantastic savings on a lease. Just click on the banner for more information.

Porsche for $350/month - NO MONEY DOWN!

If you don't think you can make the payments or would want to change the vehicle before the lease term is up DO NOT lease. The cancellation penalties are large and you have entered into a legally binding contract. Make sure that the monthly payments you sign up for are the correct amount that relates to the total amount the vehicle is worth. An unscrupulous dealer may agree a reduced "cap cost" (total amount vehicle is worth agreed between you and dealer) and then charge the payments for the higher cost. Always check what you are signing and don't be rushed or fooled into signing the contract.

Whether you are buying a car - new or used - never pay the "price" on show - these are heavily inflated and you should be able to negotiate a substantial discount. If not - go somewhere else - you are the customer that they should be bending over backwards to please. Do not be afraid to walk out on a dealership if you are unhappy with what's on offer and definitely visit several different dealerships and play them off against each other to gain a favorable price.

Whatever you choose, if you are new to Canada or just the area and are buying a car - if you can avoid being committed to expensive monthly repayments it will make your settling time a whole lot less stressful. If it means going without a brand new or expensive car for 12 months while you make sure the financial footings are secure it will pay back dividends in the future!

Good Luck.

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