Buying a Car – The Research
As I mentioned in my last net worth update, I am in the process in doing some research on replacing my 8 year old vehicle. Ideally, I would like to keep my current car a big longer, but it has recently turned on me and the repair bills are really starting to add up.
In keeping with my “find the best deal” personality, I am on the lookout for the best value for the features that we are looking for. Speaking of my personality traits (or pitfalls as my wife would put it), I have the tendency to over analyze things. Especially with consumer items that cost tens of thousands of dollars.
So far, we have agreed to go with the compact SUV market. As this market is quite broad, we have narrowed it down to a 3 – 4 contestants. However, out of the SUV’s, we’re still on the lookout for the best deal whether it’s new, used, out of province or out of country.
New Car Market
The new car market isn’t as “deal friendly” as it was earlier in the 2009, but there are still some incentives available. Most are currently offering 0% for at least a couple years, but not that great a deal if you’re a cash buyer. If we do go new, we hope to drive the vehicle for at least 10 years. In addition to “factory incentives”, the dealership themselves should have some wiggle room as their margin is typically between their invoice price and MSRP. The trick is finding their invoice price! In Canada, invoice prices aren’t as readily available as in the U.S, but they can be found… at a cost.
I joined Car Cost Canada which provides 5 car invoice reports for the price of $40 (they provide 3 bonus reports if you complete a survey). What’s great about the membership is that it provides listed factory incentives as well. For example, the Honda website does not list the $1,500 factory rebate available for July (CRV), but it’s there and can sway the balance when two vehicles are neck and neck. I’m not sure if I’m supposed to say this, but it seems that the compact SUV market typically has a $2k markup. Not a lot, but provides some room for negotiation.
Since we are considering a new car, it makes sense to consider the large discounts on new cars offered in the U.S as well. Even after the exchange rate differences (today $1.10), there is up to $5k-$10k potential savings which is quite significant on a $30k vehicle. However, the savings can be eaten up by the 6.2% customs charge if the vehicle does not qualify under NAFTA, expensive FOREX from the banks, and the cost of travel to actually pick one up (depending on how far you live). Furthermore, not all manufacturers will honor the warranty if they are purchased across the border. Needless to say, there is a lot of due diligence required when purchasing across the border. I will be writing more about the process of purchasing a car from the U.S in the near future.
Used Car Market
Knowing the depreciation of new vehicles, naturally, I’m going to consider a late model lightly used car as well. Being in Newfoundland means that the import used compact SUV market is extremely limited which means looking in other provinces as well. As with buying any big ticket item used, proper due diligence is required to ensure that you’re not buying a dud. For me, I would prefer a used car that is late model, low kilometers, accident free (carproof and/or carfax report) and properly maintained. Off-lease vehicles usually fit the bill.
So that’s how I’m starting my research into a new vehicle, wish me luck! Any tips that you have is appreciated.