Are you looking for a new car? There are several things to consider when getting ready to buy or lease a new car. Follow these tips from OPA's insurance partner, COSECO Insurance, and you'll be on the road in no time!
Buying vs. leasing
Often, one of the biggest decisions you'll make when buying a car is whether you will purchase the vehicle outright or lease it. The two biggest perks of leasing are:
- Lower monthly payments
- The ability to get a new car more frequently
Leasing makes sense and is a great option for those on a tighter budget. When you lease, you only pay for the amount the car will depreciate over the period of your lease. What you forfeit when you lease is equity. This is similar to paying rent for an apartment. When the contract is up, you walk away without any equity.
If you have a budget that allows you to purchase a car, it’s typically a better financial decision. The downside is that you will have higher monthly payments if you choose to finance the car. Financial experts suggest buying a car that is one or two years old. Cars depreciate quickly when they’re new, but that investment flattens out over time.
Types of vehicles
- Narrow down your choices. What kind of vehicle does your family need, and what fits in your budget? Create a short list.
Comparing your short list
- What are the benefits of each model? Compare their features, safety ratings, and consumer reviews and reports. Look for reputable resources like Motortrend Canada, JD Power and the Insurance Institute for Highway Safety. There are also reports detailing which vehicles will have the lowest insurance premiums.
The test drive
- This is the way to know if a vehicle is right for you and your family. Do a "walk around" inspection of each car, adjust the settings in the driver’s seat and use a predetermined route with similar road conditions for each car. A test drive should last 20 – 30 minutes.
Negotiate the deal
- Sharpen your negotiation skills. Ensure you understand the difference between the manufacturer's suggested retail price (M.S.R.P.) and the dealer invoice price. These prices represent the basic range of your negotiating window - M.S.R.P being the highest price and the dealer invoice price being the lowest price. Sites like carcostcanada.com and unhaggle.com can help you find fair prices for the cars you are exploring. You can also research potential factory rebates that haven’t been advertised.
- Once you’ve settled on a price you're willing to pay, you’ll need to decide on your initial down payment and what your monthly payments will be if you’re financing the balance. Online calculators will help you explore financial options.
Ensure you're protected when you drive off the lot
Your dealer’s insurance doesn’t cover your new car once you complete the purchase. Dealerships require you to have your own insurance before you leave their lot, especially if you’re leasing or financing the vehicle. To ensure you have coverage for physical damages from an accident, contact COSECO Insurance before you drive your new car off the lot. Driving without insurance can lead to heavy fines. It can also affect your ability to get insurance in the future.
It’s important to make sure you have the right coverage. For example, you can get extra protection by adding a limited waiver of depreciation. This coverage protects against the loss of depreciation of a new car if, as the result of an accident, your car is beyond repair and must be replaced.
Also, remember that you can’t transfer your insurance from your old vehicle to your new vehicle by simply switching the licence plate.
Owning or leasing a new car could be one of your biggest investments. Doing your homework will ensure it's an enjoyable and safe experience.