Throughout the month of May, AMVIC is raising awareness of the financial costs of buying and owning a vehicle. From liens to negative equity, AMVIC wants you to be a smart shopper and to watch your wallet before you sign on the dotted line.
The first step in car buying is setting a reasonable budget by looking at the total price of the vehicle. Low monthly payments may seem affordable, but you could end up paying more due to interest expenses with long term loans that have terms of seven or even eight years. It is important to think about the term for that low monthly payment and the interest rate.
Also, consider what type of vehicle best suits your needs. Is it a mini-van to haul all your children’s sports equipment around or is it a small car that’s good on gas? Are you buying used or new?
Once you’ve made these initial decisions, you will be less likely to be persuaded to buy a vehicle you don’t want and maybe can’t afford. Buyer’s remorse does happen at times and there is no cooling off period. Once you sign the contract, it is binding.
Figure out if you want to lease or buy. If you’re going to buy, will you require credit and how will you obtain this credit? Will you get financing from your own bank or straight from the dealership?
Add to your budget the cost of insurance as well as maintaining the vehicle. Additionally, decide if you think you will require aftermarket options such as protection packages, extended warranties, life insurance and security etching.
Don’t let ads that advertise a low monthly payment change your mind on your budget or the car you want. Remember, if a business wants to advertise a monthly payment then the ad must also state the all-in price and the cost of credit.
To help yourself set a budget, visit the Financial Consumer Agency of Canada for tips, guidance and an online calculator for financing vehicles.
Arm yourself with knowledge of your consumer rights and other useful tips by visiting amvic.org.
Next week, we talk all about liens!