Congratulations! 2019 is the year you’ve finally decided to quit taking public transit and walking in the cold climates Canada has to offer and get your new car. This is as exciting as that time you graduated high school or landed your first paying job!
After doing tons of research, you’ve settled on a make and model and can’t wait to take to the streets. Before you put your money down and complete the transaction, tarry a little. You’re not quite finished with the research process just yet.
Are you aware of the common dealer traps that new buyers often fall victim to? Have you located the best new car deals in Canada? If not, don’t ruin your first-time buying experience with inadequate research. Save yourself a world of trouble by reading this article instead!
Breaking Your Budget – And Then Some!
The most pressing question for first-time car buyers is, “How much should your first car cost?” The best way to proceed is to set your budget at no more than 20% of your annual salary. For instance, if you make $85,000 per year, your budget shouldn’t cross over $17,000.
A common trap set by dealers is to catch new buyers unawares by drawing their attention to the monthly payments rather than the total cost. If you’re wise to this tactic, it’s easy to stick to your original plan. Remember that it’s not just the capital cost that you have to budget for but also the insurance, fuel, licensing fees and so on.
Ignoring Your Intuition
Some dealers may not have your best interests at heart. If you feel that yours is constantly trying to get you to splurge over and above what you’ve expressed an interest in, it might be time to look elsewhere. When your sixth sense is telling you otherwise and the transaction begins to go south, don’t compel yourself to get the car just because.
Going to another dealer might mean more cordial services and honest and consistent pricing solutions.
Assuming That Test Driving Is Just a Fool’s Errand
First things first. Is it better to buy a new car or a used car? Bear in mind that a new car depreciates by about 20% as soon as it exits the lot. If a budget isn’t your primary focus then it makes sense to purchase a new vehicle. A used car, on the other hand, will be 20-30% less expensive even if it is just a year old, however, there may be existing issues with a used vehicle that will cost you more in the long run.
Once you’ve made a decision on whether you want to buy a new or used car, the next step is to give it a whirl. While the car you have in mind might have the right features, it could still make for a less-than-comfortable drive.
The only way to know what you’re getting into for sure? Test drive like you mean it! Another dealer trap is for dealers to coax you to take a pre-decided route on your drive – a route that no doubt offers the least amount of challenges in the way of road conditions. If you are familiar with the area, choose your own route – preferably something that incorporates highways and streets.
Thinking That Walking Away Equates to Defeat
Many car shoppers ask, “Can I buy a car in one day.” You certainly can but it’s extremely ill-advised. If for whatever reason, you are keen to complete the transaction in a day, you can do so online to speed things up. There are many perks to taking your time with the purchase, not the least of which are allowing yourself time to research, test drive the car of choice, and walk away from an unsavory deal. That way, you can completely skip that dreaded post-purchase buyer’s regret.
Walking away from a deal ties in with listening to your intuition. If you find the dealer being excessively pushy and not meeting you halfway, it’s time to walk. Cue the third dealer trap. Dealerships will attempt to sell you on an extended warranty in the hopes that you’ve forgotten that new vehicles come with a bumper to bumper warranty.
If you intend on retaining the same vehicle for a long time and using a lot of miles, then an extended warranty might be up your alley.
Not Acquiring a Dealer Invoice Report
Perhaps the most grievous mistake of them all – failing to ask for a car dealer invoice report from a reputed agency. Just as with any large investment, it’s important to consider multiple offers from different dealers so that you can negotiate for the best price.
Additionally, you’ll want to get your hands on the latest rebates, certified dealerships, best add-ons, and the deals that other people in your area have gotten.
A car dealer invoice report reveals the actual amount paid by the dealer to own the car. That way, when you’re haggling for a good deal, you won’t have to pay the full MSRP. And when your dealer senses you’ve done your due diligence, they are that much more likely to be cooperative with your negotiation tactics.
A dealer invoice report enables you to decide on a great bargaining figure. A majority of dealers turn a profit of 8.7% on selling a new car. When you’re aware of the MSRP, you can follow the 3-5% rule which is adding about 3-5% on the invoice figure in your report to calculate the most lucrative negotiation price.
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