Why I am writing this post? one of my friends just got into a car deal and now she seriously regrets it and we had to do research to get out of it!
Now, let's get to the topic at hand. how to pick a car! If you are a millionaire and money is no issue for you, just buy the damn car you love. but If you have limited budget and want to get the best deal possible stay with me here.
Firstly, you must pay attention to the interest rate. you may think 2.99% and 5.99% are almost the same. But they are not. I see so many people who got into a deal with 7% or 9% interest rate deals. Let's take a look at a car with the price of 20,000 CAD in Ontario, (13% provincial sale Tax)
with different interest rates(2.99- 5,99- 8,99), with 48 months Terms.
As you can see, in 48 month with these interest rates, one would pay 24,000 then 25,400 then 26,999 CAD. Pay attention to the interest rates. with longer terms the difference is bigger!
USED or NEW CARS ?
If you have the cash to purchase a car, do it. avoid the monthly payments, avoid the interests. almost all the time, Used cars have higher interest rates. According to Equifax, it is easier to secure a loan on a new car than a used car. Used Cars are cheaper and depreciated.
for example a Mercedes CLA class is depreciated 53% after 5 years.
if you care about the depreciation, look up your car. see what the selling price of the said car is compare it to a similar model in the marketplace. Usually , Toyota and Honda's cars typically preserve values better. always research the car's depreciation if you want to Finance it.
FINANCE VS LEASE
There are benefits for both, if you have a business a lease would be good. if you want to work with Uber / Lyft it would be good as long as you do not exceed the yearly KM. There is a penalty for exceeding Km ( for instance 0.16 cent / km) every 10,000 km extra at the end of the contract costs you $1600. for business purposes you can write off the expenses such as monthly payment, insurance, gas and ... . Financing is a better option if you want to keep the car at the end of the contract.
Remember, a leased car is transferable, a Financed car must be paid off first. then it can be transferred. even if you changed your mind about the car financed, on the first day you must pay the loan first. but for the leased car, this does not apply. Someone else can take over your lease. you can list it on the Leasebuster website.
How to deal with a salesperson
Remember, salespersons are not your friends. they pretend they are your friends. I repeat it again. They are not your friends. they are there to close the deal. Sure there are salespersons that actually enjoy the conversations they have with the customers, but eventually they also want to make money.
i am going to give you a list of things you must know on how they perform.
1- they try to bash your current car and make a big deal out of every minor problem to make you feel bad about your current car to buy it with a lower price. For example; my current car still has warranty on it. I went to this dealership and he mentioned the engine light is on and made it a huge problem and he was willing to not consider it of I took the new deal. i simply said : " I will fix it for free next week " . Do not get emotional about it. your current car is a good car.
2- the most important rule : IT IS OKAY IF YOU GO BACK EMPTY HANDED
do not get into a deal because you just want to get a car. you must be able to say "NO".
a salesperson is not your friend. it doesn't matter how friendly they are. It doesn't matter how hot or how handsome they are. After Closing the deal they will not reach you even once. You must negotiate on your terms. you must stick to your hard earned money. you must be able to say no. consider it a war. threaten them that you walk away. you have the power
3- Don't get friendly with them, stick to the business stay professional. Don't tell about your personal life. stay away from chatting. It is hard to say "no" to someone who is becoming your friend.
4- when you say I need to think about it they say
What is there to think about ?
This offer is available now. If you leave you won't get it.
Other people just want this car. I have no problem selling it.
Create another fictional available car which is going to be sold right away when you are there to show how competitive the market is so you would hurry up and sign the deal.
If after signing the agreement you changed your mind, before the delivery date, they might say we sent your car for licensing. remember. no one car register a car without an insurance in Ontario. they might take your deposit after approval. but you just lose the deposit.
I cannot say it enough. Focus on what is best for yourself. Don't get into a deal because you feel pressured. I remember plenty of people who got into a deal by pressure. by feeling obligated to do so .By a charming or Hot salesperson who smiled at them and was friendly.
Educate yourself, learn the tricks, be honest and open on what you want.
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