Shop around throughout the month and find what you want to buy. Then close to the end of the month, make a deal on the car for you.

Is Always Driving a New Car Worth $4.2 Million to You?

3. Start Your Vehicle Search from the Comfort of Your Couch

Think about how you currently use your vehicle, if you anticipate your needs changing, and why you are car shopping at this time. Also, seriously consider used versus new. Together with your budget, know what kind of features you want, and if there are any that you can’t do without. Make a list and keep it handy as you search online for vehicles to look at and test drive.

The reason why you need to shop from the comfort of your couch first is because it’s very easy to get carried away buying more car than you can afford. The choices are absolutely endless and salespeople mention enticing offers that make buying more than you want almost too easy.

New Car Offers & Financing Incentives Could End Up Costing You More

4. Consider How Much Your Trade is Worth

Did you know that you can trade in a vehicle worth the same or more than what you want to buy? That means you could leave the car lot without a penny changing hands, or even with a cheque in hand

This definitely doesn’t work for everyone, but if you have a desirable vehicle to trade in (e.g. something sporty and popular), and you’re buying a vehicle worth about the same (e.g. something bigger but more family friendly), negotiate strategically. To do that, go in knowing the current book value of both your car and the one you want to buy. A dealer will still need to give you less than the book value of your car to sell it later with a profit, but there is always room to negotiate.

Deciding whether or not to trade a vehicle in can be a bit of a dilemma. Selling your car privately will often give you a little more cash, but it can take longer and it comes with certain risks (e.g. someone test driving on your insurance). It can also be to a buyer’s advantage to negotiate a deal without a trade, then see how that deal changes once a trade is figured in.

5. Be Firm About Your Budget – Monthly Payments Can Be Manipulated to Look Better Than They Seem

When looking at cars either in person or online, stick firmly to your budget. If you can afford $18,000 for a good used vehicle, window shopping for cars that cost $25,000 or more only leads to temptation spending.

If you are financing your purchase, changing the term of the car loan and/or the interest rate can make a significant difference to your overall cost at the end, even if it hardly changes your monthly payment amount.

Consider these two example scenarios:

A salesperson may present their buyer with scenario A – a reasonable interest rate and monthly payment amount. However, if the buyer states that their budget allows for a maximum monthly payment of $375, for instance, then the salesperson might present scenario B.

By changing either the time-frame and/or the interest rate, the monthly payments can be raised or lowered making for very attractive and tempting offers, so keep an eye on what is called the “cost of borrowing.” *The cost of borrowing includes all interest, fees and finance charges a buyer must pay. Use an online Canadian auto loan calculator to see how this works for yourself before you sign on any dotted line.

6. Some Extra Fees & Costs Can Be Negotiable – Others Are Not

On top of a car’s price tag, there are a number of extra costs to keep in mind. Extended warranty packages are a big win for the people who sell them. They are available for new as well as used cars and typically come at a pretty penny. They get even more expensive if you roll them into a loan and pay interest on them for several years. Sometimes the peace of mind is worth it, but for most people, saving up the same amount of money in your own savings account is a better deal in the long run.

Don’t forget to factor taxes and provincial fees in when you calculate how much you can afford to spend on a car. They usually total several thousand dollars. Trading in a car will actually lower your taxes in some provinces because you only pay tax on the difference in value between the vehicle you’re buying and the one you’re trading in.

Insurance tends not to slip our minds because we know we must pay our insurance premiums if we want to drive. However, when buying a vehicle, there can be additional sales tax (if you bought privately and didn’t pay it to the seller), a licensing fee or even a new license plate charge, depending on your situation. It can also be worthwhile asking for an insurance quote on any vehicle you plan to buy. Insurance for some vehicles is higher than for others, based on differences we might not be fully aware of.

The documentation fee that car lots and dealerships charge often ranges from $200 – $500. They make it difficult to negotiate reducing or eliminating it, however the amount they end up charging you is entirely within their discretion. Even if it comes preprinted on their sales agreement form, someone in the office can reduce or eliminate it if they want to. So push back and find the right person to talk to if the documentation fee is a sticking point for you.

When It Comes Right Down to It, Be Prepared to Walk Away from a New or Use Vehicle Purchase

Becoming stressed and worried about money and debt isn’t worth it. Even after spending hours looking for just the right car, doing your research, and negotiating with your salesperson, if the numbers aren’t working, if you need more time to think about it, or if it feels too expensive – walk away. There are thousands of vehicles available for sale in every city. Don’t get stuck with one you can’t comfortably afford.