We are proud to launch our new Financial Literacy Scholarship to encourage young Canadians to develop better money management habits.
5 Car Buying Mistakes to Avoid
Loans Canada: The Country's Best Loan Comparison Platform
Buying a car, whether it’s your first car or your fifth car, can be a complicated and intimidating process. There are countless things to remember and mistakes to avoid that’s why being as informed as possible is your best defense against dealer scams and credit traps. To ensure that you get the best deal possible and aren’t tricked into spending more than you can afford we’ve compiled the top 5 most common car buying mistakes that you should avoid. Knowledge is power so keep reading and then go out and get the car you need at the price you want.
1. Buying a Brand New Car
A brand new car is a luxury that most people simply cannot afford, even people who do buy new cars probably shouldn’t. The average car isn’t an investment so it’s best to not treat it like one. The moment you drive your new car off the lot it loses some of its value. This means that if you’re financing your car, which most people do, your loan amount is now more than your car is worth. A shiny new car is definitely appealing especially if you work hard for your money and want to treat yourself. But guess what? You can get practically the same car you want that’s a year or two older for significantly less money. Think about purchasing a used car and save your money to invest in something that will increase in value over time.
2. Forgetting to do Your Research
Thanks to the internet, there is almost no excuse for not properly researching a car, especially a used one, before you purchase it. The internet is full of information about cars including reviews on specific models, websites devoted to providing the best suggestions and even owner ratings. Doing some research before you head to the dealership or check out a used car will not only give you peace of mind that you’re making the best choice but could potentially save you some money.
Take your research one step further, especially if you want to purchase a used car from a private seller, and get the VIN number of the car. There are several websites that you can use to check the history of a vehicle, this way you’ll know everything about the car before you make your final decision. You’ll have to pay for the report but it will include vital information about past accidents and repairs.
3. Forgetting About the Final Price
Some car dealers like to try and trick unsuspecting clients by discussing the price of a car in terms of monthly payments instead of the total cost. What your dealer will do is discuss the price based on the longest term possible so that the monthly payments they offer you will seem pretty low and affordable. But of course they will conveniently forget to explain to you that you’ll be paying an arm and a leg in interest. Yes everyone wants to have a low monthly payment, that’s what makes a car affordable. But think of it this way, a $25,000 car with a 5 year term and a $16,000 car with a 3 year term both roughly have the same monthly payment. In the end you’ll end up paying a significant amount more for the $25,000 car because of interest, even though you had a monthly payment you could afford.
So when you head to your dealership ask to discuss the cars based on their total costs not based on monthly payments.
4. Getting Upgrades from the Dealer
What most people don’t know is that a car straight from the dealer often doesn’t come fully upgraded with all the fancy add-ons, you have to pay for them and pay you will. Upgrades and add-ons are expensive and more often than not completely unnecessary. Upgrades exist to increase the sale price of the car for the dealership and are often overpriced. Things like tinted windows, leather seats and DVD players might seem like a good idea but you’ll end up paying a lot more and they could hurt your resale value if and when you decided to get a new car.
5. Accepting Financing from your Dealership
All dealerships offer financing, it’s a way for them to make even more money off the sale of a vehicle. Sometimes financing your car from a dealership is a good idea especially if you have bad credit or can get a good deal. But before you make any decision you should shop around and compare rates. Personal loans and online loan companies are more often than not your best bet for a great deal. Just make sure you compare all your options before you choose dealership financing.
Purchasing a new car is a big step and an expensive one, that’s why it’s important that you make as many informed decisions as possible. Avoid these 5 common mistakes and you should be equipped and ready to head to the dealership and get the best car for your situation at the best price possible.
Largest Lender Network In Canada
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
Score-Up — Harnessing The Power of Technology to Boost Credit and Make Financial Goals a Reality For Canadians
Score-Up is challenging traditional credit repair and helping Canadians improvement their credit and make their financial goals a reality.