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RBC Financial Planning - Tips on Budgeting and Borrowing

Thinking About a New Car?


Tips if you're thinking about a new car

Next to buying a home, buying an automobile is probably one of the largest purchases you will make. Especially if you’re looking at any new luxury auto, where the price can easily run from $50,000 to $100,000 and more.

Talk to ten different people about buying a car and you’ll get ten different opinions. When it comes to buying a car, there is no pat answer for everyone.

For some people a car is just a means of transportation and as long as it is reliable, it’s fine. For others, a car is a very personal thing, an expression of who they are. Some people are concerned only about value and economy, others are concerned about comfort and luxury. Most are somewhere in between.

Wherever you stand, there are dozens of tips on the best car-buying strategies. Here are just a few key tips you may find helpful.

  • If you’re excited about a car, don’t let the salesperson know how you feel. The more excited you seem to be, the weaker your negotiating position.
  • Price is important, but it may be worth paying a little more if you know you’re buying from a dealer with a good reputation for customer service. Ask your friends and neighbours about their experiences.
  • You will obviously need service so you may want to choose a dealer that is conveniently located, either close to your home or office.
  • Do some price research up front (the web is easiest and fastest) so when you ask to see the "sticker price" at the dealers, you’ll be armed with real numbers.
  • Don't settle for an around-the-block test drive. Insist on taking the car out on the highway so you can see how everything performs.
  • No matter how much you are pressured – and it could be a lot – do not sign a contract until you've carefully read it. There may be quite a bit of reading to do so don’t hesitate to take the contract home. And if the salesperson tells you that the deal is only good if you sign right now, all the more reason not to sign.
  • If you want value, consider buying a smaller car. Car companies tend to price them lower to sell more cars and meet government quotas for average fuel efficiency. Mark-up is generally much higher on full-size, sports and luxury cars.
  • Negotiate for options rather than dollars off. Dealers usually have very high mark-ups on options and can afford to give good deals on them.
  • Keep in mind that if the smell of a new car is not all that important, you can save many dollars by buying a demo or used car.
  • Finally, knowledge is power. The more you know about the car you’re interested in and the auto market in general, the more powerful you will be. So be sure to use the web to do some research.

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Tips if you're thinking
about a new car
Your car options:
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 İRoyal Bank of Canada 1995-2017 Last modified: 09/24/2014 09:40:34