Everything You Need to Know Before Buying a Car in Canada


Here's Everything You Need to Know Before Buying a Car in Canada

The internet made us think differently before making purchases like we used to, buying cars included. You can buy a car online and even have it shipped to almost any place in the world, but that’s not always the case. Most people use the internet to educate themselves about different car models, reviews of customers, and the best deals floating around. If you feel like it, you can walk down to the nearest car dealership, look for your dream car, settle for a poor man’s replica of the model, sign a few papers and voila, you just shot yourself in the foot. 

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Applying this scenario in real life, which is more common than you’d think, it would only end up costing you hundreds, if not thousands, of extra dollars that you’d be better off investing in accessories or a better car, to begin with. When you’re buying a new car or even a used one, you have to ask yourself a few questions to know beforehand what you’re looking for and how you’ll get it.

Canada is a pretty big country, with a lot of bustling cities and quiet towns. If you’re in a city, public transportation will be suitable as long as you’re not into road trips, hiking, and getting out of the city anyway. 

Going to work through public transportation is convenient, but you don’t have the liberty to simply start the engine and move wherever and whenever you decide to. If you live outside the city, a car is a must. It’s not just about convenience, but more about practicality; when you’re in a place with limited public transport, your only option would be to buy or rent a car. Depending on how long you intend to use the car, long term renting almost always costs more than simply buying the car.

If you already own a car and would like to know when exactly should you be getting a new car or even a new used car, you’ll have to take some factors into consideration. It’s becoming easier than ever to convince yourself that buying a new car is a manageable feat that wouldn’t end up backfiring, especially in this time of extremely low-interest rates and zero down-payment plans. 

Some people set a rule of thumb regarding the timing of buying a car; if you repair it more than 2 or 3 times a day, you’re probably better off buying a new car. Making the decision of buying a car is certainly not an easy one, it’s a long-term commitment with a lot of risks if not managed correctly. We’ll be presenting you with our brief yet comprehensive guide about buying a car in Canada, whether it’s a new car or a used one.

Breaking Down the Repair Bills

If you happen to own a car and you’re starting to feel like you’re being bled dry by repair bills, then it’s time to consider purchasing another car. There are a few outlooks that can be used to determine if that’s the correct financial decision or not. No matter what the car model and its age, repairs are inevitable. The older your car gets, it will need more maintenance than the average new car, it will also become gradually more expensive to get it repaired.

Let’s say you’re looking for a new car, and that new car is going to cost around $500 every month, rounding up to $6,000 per year. You can use that value as a measurement tool to see how much repairs are weighing you down. If your current car needs at least 4 repairs per year, and those repairs cost $2,000, then you should think about keeping your old car. If your repairs reach $4,000 to $5,000, you’re probably better off with a new car as your car will probably start getting a lot of repair bills and it will snowball into a spiral of unnecessary expenses. 

Even though the value of the repairs can be used as a determinant factor to decide if you need a new car or not, it’s not exactly a standard. Let’s say you have a 5 or 6 years-old car, and the transmission has been giving you trouble, buying a new transmission would probably set you back $3,000 to $4,000. 

You shouldn’t exactly account that into annual repairs, since buying this new component can push the life expectancy of your car a few years, especially if it doesn’t need a lot of new repairs annually. Another cost-effective element is your knowledge about cars, if you can handle doing some manual repairs, it will cost you a lot less than going to a mechanic every time a little thing goes off.

Understanding Interest Rates

What attracts most buyers is the value of the monthly payment, the lower it is, the better. That’s not really the case though, car dealerships use a common sales technique to divert your attention from what you’re actually getting into. You need to know that car loans are basically given by entities to make a profit using interest rate and principal.

You can ask the dealership about their best interest rate offers, but you’ll notice that those usually require a high credit score. Some new buyers face an issue that is more common than you’d think, they’d sign the contract and take their new car home, only to find the dealership calling them a few days later telling them that they didn’t qualify for the payment plan signed upon. 

The best way to deal with this is to contact your bank and know exactly what’s the rate they’re going to give you on a car loan, so you’d be able to have the choice of choosing between the two. Usually, it’s the bank that offers you a better payment plan.

Buying a Used Car

Like anything, people are always inclined to buy a new car, it’s definitely a good feeling. You shouldn’t focus on the emotional side though and remove practicality from the equation. The cost of buying a car is the most important determinant if you should make the decision or not. To understand the actual benefits of buying a used car, you need to understand the concept of depreciation. 

Cars depreciate, in other words, lose a percentage of their original value, the most over a period of two years. It could lose 30 or 40 percent of its original value in those 2 years. This makes used cars a double-edged weapon; if you decide to buy a new car, you need to have the commitment to drive it for 8 years for depreciation to not affect you that much when you sell it off. 

When buying a used car, you only have to keep an eye out for bargains more than anything else. The value of the car has already been slashed a big percentage once it’s labeled as used, look for slightly used cars to get a good deal.

Lease Takeover

A lease takeover in Canada is a great financial maneuver if you want to buy a car at a good bargain. It simply means transferring a lease from a seller who wants to discontinue their lease to you, a buyer who purchases the lease with all its terms, conditions, and the remaining duration of the lease. There are a lot of variables involved in determining the value of the car you’re getting; the contract, car condition, and the private conditions the seller is demanding.

There is a common term used, its residual value, which basically means the value a car ends up with at the end of its lease. This value isn’t 100% accurate, it’s estimated by the leasing company once the lease of the brand-new car is sold. This value determines how much you’ll have to pay to own the car at the end of your lease. 

The leasing company takes on the risk of not estimating the value right, which would end up costing them money if the market value of the car is higher than the residual. These 2 contrasting car values can be a gamble for the buyer as well, the buyer could pay more, or pay less, depending on their own estimation. This blog post explains the intricate details of how and if you should proceed with a lease takeover. You’ll need to do a lot of research before proceeding with it, as it can be a major loss or a major win.

Analyzing All the Costs of Owning a Car

The costs of owning a car aren’t just taking out your credit card and proceeding with payment. There are a lot of variables that can actually make the initial cost of the car the least of your worries. It’s very risky to find out that you can’t handle the actual costs of owning a car after you bought it. 

Take notice of the operating expenses, insurance plan, how much gas the car uses, annual taxes, and the type of duty you need the car for. Let’s say you finally got yourself a bargain for the dream model you had in mind; before you rush into a deal waving money as if you found it on the sidewalk, you’ll need to assess how practical it is. Some cars require costly maintenance and repairs, due to the sophistication of some elements in the car. 

Some models require special tires that could be worth twice as much as average tires, some cars use way too much gas to be practical. The insurance company takes these elements into consideration as well to make you the final offer.

Thanks to the internet, you don’t need to spend weeks asking around mechanic shops and people you know for information about a certain model. In a few minutes, you can have access to hundreds of reviews about the car you’re looking to purchase. 

You’ll know the average lifetime of some of its most important elements like the motor, brakes, transmission, and many others. You’ll also want to know how often should it be checked and where are the best places that could give you a deal on those routine checks.

Equipment Upgrade

The cost of repairs and monthly payments aren’t the only factors that determine if you need a new car or not. Your care may be going strong for years with minimal costs of maintenance. The reliability of the car is also one of the major criteria that could help you determine if you need a car or not. 

The safety element of a car is very important; if you don’t have airbags, safety locks, warning mechanisms, and other essential safety factors, you should seriously consider upgrading your car. Having children makes safety a very serious concern, you don’t want to have your children traumatized or hurt due to getting into an accident in an unsafe car.

Safety isn’t the only thing that you may be lacking in your current car, there are some technical features that could drastically improve your experience. GPS is one of the most popular technological capabilities marketed for cars, and for a good reason, since it can enable you to navigate almost every place in the country. Phone-related capabilities like Bluetooth, which can also be considered a safety feature, and USB charging. All these elements can be essential to your line of work, so you’ll have to take it into consideration.

There is no actual one-size-fits-all solution. Buying a car in Canada is dependent on many variables that are different from one person to another. You will need to make a deep breakdown of your needs and requirements compared to what you’re ready to afford. 

Looking for bargains may be a luxury where a lot of people may not have when they’re buying a car, whether it’s because they are not good at it or started living recently in Canada. The role of research cannot be neglected when you’re looking into making a very important decision like buying a car. Even if you can afford it, make sure you’re not throwing money into a rotten deal.

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