Buying A New Car? Save Some Money
One of the most amazing wonders of the twentieth century was the development of automobile technology. Can anyone imagine today what life would be like without the automobile? Although we have concerns today about pollution and global warming directly related to our love of the automobile, chances are it’s invention and continued development have done more good than harm, when one considers that before the auto, horses would defecate on public streets, there was no fast way to get medical treatment, and so much more work and labour would have to be done by humans.
In order to effectively market the automobile, the franchise system was used to create big profits for both the auto manufacturers and the dealers. Buying a new Ford or GM vehicle means that you have to purchase from a dealer who has been assigned exclusivity on brand new vehicles for a geographical area.
This gives the dealership advantages. If you want to buy a Ford, you have to buy it from the Ford dealer. If you want to buy a Cadillac, you have to buy it from the GM dealer. Both dealers can try to offer you incentives, but at the same time, they can both agree to try to charge you for other “services” or products once you’ve made your decision to buy.
The industry of car dealerships have come up with a variety of methods and practices that can cost you money if you are an unsuspecting customer. Here are some things to be aware of when you go to purchase a brand new vehicle:
1. Set up and prep charges. Eight hundred dollars for a car wash? Every vehicle that leaves the manufacturer is inspected at the factory. Any damage that occurs enroute to the dealership is the responsibility of the transportation company. There is little set up or preparation needed by the dealership to deliver your new car to you.
2. Trade In: The dealer is going to offer you the lowest price possible - and likely only the minimum amount he knows he can get at an auction. If you’re willing to sell your present vehicle privately, you might get up to 25% more for it than what the dealer is offering you as a trade-in.
3. Periodic Maintenance: This includes oil changes. Taking your vehicle to the dealer and paying fify or sixty dollars is not required. Most oil change operations like Jiffy Lube or Mr. Lube are covered by the manufacturer’s warranty and will cost you much less over the warranty period than taking the vehicle to the dealer for your regular oil changes and maintenance.
4. Life and Disability Insurance: Shop around for you are taking out a loan for your vehicle. Your bank may be able to match or beat any interest rates the dealership is offering you. As well, be wary of auto loan insurance policies - they could cost you a ton of money over the life of the loan. North Americans are probably the most “over insured” people on earth.
5. Dealer’s markup: The avereage markup of a new vehicle by the dealer is about 20%. Having this information can help you negotiate the best price possible.
In the end, realizing that a new car will depreciate 20% as soon as it leaves the lot, you really might want to think about buying a good used vehicle, and save even more money. I personally have never purchased a brand new vehicle and I doubt I ever will. The car I purchased six years ago for $3,000.00 is still going strong, passed the Ontario Emmissions test last month with flying colours, and has cost me almost nothing in repair costs over the six years I’ve owned it.
