Buying a New Car

Thinking of buying a new car? There is a lot to consider. Once upon a time there was only “the big three,” GM, Ford and Chrysler. Today there are over a dozen. Back in the fifties European cars started to make inroads in the Canadian car market, then came the Japanese. Now everybody is making and selling cars. Small wonder the new car market is confusing. It is hard to balance your needs and make a choice between the hundreds of models available. But here’s how to do it.

First of all, don’t be your own worst enemy. The car buying exercise can bring out the worst in our consumer tendencies. What looks great in the driveway may not be the best vehicle for you. Know yourself and know what you want. Some of the questions you should consider are: Who will be driving the car? What is its primary purpose? What type of driving will it do? Has my situation changed? What happens if it’s down for service? How long do I intend to keep it? What features and options do I need?

Be wary of advertised low prices. You rarely will be able to actually buy the car at the price offered. Sometimes the vehicle in the offer “was just sold.” Almost always there are numerous ad-ons; delivery, dealer prep, or unwanted but installed options.

Before you go to a dealership, decide on who you want to talk to. If you walk in the door unannounced, you will get the person who happens to be on the floor, and that could be a new recruit with limited knowledge. Check out the sales staff on the dealer’s website. It’s not too hard to identify the pros. Then call for an appointment.

When you talk to the selected sales person, be polite. You well get better information about models, features and purchasing options if they are relaxed and comfortable with your relationship. Ask for a walk around, and don’t hesitate to ask questions. Today’s cars are feature rich and complex, and can be very different in their operation.

Dealer margins vary from 6 to 12 percent, with North American vehicles at the high end and Asian vehicles at the low. This is why you will see big discounts promoted by GM or Ford, and not by most foreign makers. You should be able to get half of that margin knocked off the MSRP, more if you buy when dealers are trying to reach sales targets, such as the end of the year.

Automobile dealers have raised the closing of the sale to a fine art. Once you have narrowed the selection down you will be shown to the business office. At this point a business manager will fine tune the deal, and here you must be wary. The dealership wants you to have a good buying experience, but they MUST make a profit. It’s time to be careful.

The extras that creep into the deal can be expensive, and you can often do better elsewhere. For example, the offered rate for life or disability insurance to cover financing may be comparable to a term policy from your insurance agent, but the dealership policy often only covers the descending balance, while the face value of a standard term policy stays constant. On the other hand, you may be able to get job loss insurance from a dealer which may be unavailable elsewhere. If you buy rust protection, make sure the quoted price is competitive with the independents. And an extended warranty may offer zero value if you take the car on a short term lease.

Check out the dealership’s reputation. Post a request for suggestions on Facebook, or do it the old fashioned way, ask your friends and co-workers.

Trade-ins are always a big question. But it boils down to whether or not you have the time and inclination to sell the car yourself. The dealer has to have enough margin to pay for labour, overhead and the financing needed to carry unsold inventory. It is not uncommon for a dealership to spend a thousand dollars to recondition a trade-in for resale. If he wants to get rid of it quickly, he has to put it up for auction, which usually guarantees the lowest possible price.

A new car purchase is one of the most expensive decisions you can make. It is possible to get the right vehicle at the right price, but it takes a lot of preparation and diligence, and a certain amount of luck. Perhaps you should consider using the services of an auto broker with over thirty years’ experience. Call Hup or Gary at 506-638-9340 and put that accumulated knowledge to work for you.