No matter what your price range is, it’s essential to set a solid budget before you start shopping for your next vehicle. A budget will help ensure you don’t spend money on extras you don’t need or never considered to begin with. It will also ensure you don’t get into financial trouble or be swayed to sign a contract that gives you buyer’s remorse.
Here are some budgeting tips to help keep you focused and on track:
- Think about what type of vehicle will best meet your needs.
- Do you want to buy or lease?
- Will you require financing and where will you get it? Interest rates can vary significantly. Remember, under Section 68 of the Consumer Protection Act (CPA), you have the right to pay off any non-mortgage loan any time after you sign.
- Establish non-negotiable requirements that you need from the vehicle such as passenger capacity or fuel economy to prevent you from buying a vehicle you didn’t want to begin with.
- Decide beforehand if you are going to accept or decline offers to purchase aftermarket options, protection packages, extended warranties, life insurance and security etching. If you are interested in these options, decide how much you are willing to spend.
- Always focus on the total price first. A longer term loan to get a low monthly payment may allow access to a more expensive vehicle, but consider whether the total price of the vehicle including the cost of credit is truly affordable.
- If the vehicle was advertised at a specific price, is that the price you are paying, excluding GST and financing costs (if applicable)? If the vehicle was advertised for a specific price, all fees, such as an administrative or documentation fee should be included in the all-in advertised price of the vehicle.
- Ensure all items are clearly itemized on the bill of sale, including the administrative or documentation fee. The bill of sale should accurately reflect the transaction.
- Trading in a vehicle? Do you know what negative equity is?
Under the CPA, it is an unfair practice to charge a price for goods or services that grossly exceeds the price at which similar goods or services are readily available. Remember, a salesperson or business must not mislead a consumer into believing a fee is mandatory, required, or set by law if it is not.
Purchasing a vehicle is one of the largest financial decisions you will make, so take your time and shop around so you don’t go over your budget. There are more budgeting tools such as the “six steps in budgeting” consumer guide and many other resources available on amvic.org.