7 ways to make sure you don't buy a lemon

By Hilary VizelPhoto of a man in blue suit handing car keys to a woman

Unless you live in a city with world-class public transportation, love spending half your income on Ubers or don't mind phoning a friend every time you want to hit up Ikea, you will very likely end up shopping for a car at some point in your life. It's a big purchase—most people spend close to $30,000 on a set of new wheels, according to Canadian sales data—and there's a lot to consider before taking the plunge. But the more prepared you are prior to buying, the happier you’ll feel about the ride you end up with. We shopped around for some of the best advice available. Here are seven things we think you should consider before wheeling any deals.


1. Take your sweet time

Guess what? According to Auto Trader, a third of Canadians aren’t completely satisfied with their new car purchase. With 1.9 million new cars sold in Canada last year, that leaves more than half a million people driving around in cars they don't love.

So what? Some buyers mistakenly believe you have 48 hours to cancel any major purchase. This so-called "cooling-off" period can apply to major contracts like gym memberships, time-shares and condominiums, but it does not apply to cars. Once you sign the papers, any sale is final.

Now what? Plan to say no a bunch on your first visit to the dealership. Some experts even suggest leaving your credit card and other financial information at home so you’re physically unable to make a purchase that day. Bring a friend or partner with you and don't be afraid to say, "I'm just gathering some information."


2. Set a smart budget

Guess what? According to Statistics Canada, the average Canadian will spend 20% of their take home pay on a new vehicle.

So what? Even at the low end that's still a huge chunk of your paycheque—and the number doesn't account for costs beyond car payments, like insurance, maintenance and gas. The real cost is higher.

Now what? You need to decide if you really want to spend a quarter of your income on a car. Either way, when you're determining your budget, set aside about 5% to cover annual expenses like insurance, gas and repair bills.


3. Get pre-approved

Guess what? Data analysis by DesRosiers Automotive Consultants found that the average cost of a new car in Canada was $27,563 in 2015. Unless you have that kind of cash lying around, you're going to need financing.

So what? Most dealers can arrange convenient financing, with seasonal incentives like cash back and promotional interest rates. That doesn't mean it's always the best option for you.

Guess what? Speak with your bank beforehand. That way you can compare the terms of a bank loan to whatever the dealer's offering. Sometimes the promotional offers are worth it, but not always. 


4. Have three options

Guess what? A shocking 52% of buyers perform only a single test drive during their purchasing journey. That's like marrying the first person you date.

So what? All new cars feel amazing—especially if you’re trading up from an older model car. (OMG heated seats!) But if you buy the first car that you test drive, you may be missing out on a vehicle that suits you even better.

Now what? Now is the time to indulge your FOMO. Go on as many test drives as you can handle. Take note of the features you love and who does them best. And then narrow down your search to three cars you'd be totally happy to own. Now you've got options (but not so many that it's overwhelming).


5. Ignore the MSRP

Guess what? The Manufacturer’s Suggested Retail Price (MSRP) is what the dealer is hoping you will pay. The number on the car window has a fat profit baked into it and, incidentally, they're pretty flexible about it.

So what? It's the invoice price not the sticker value that you want to pay attention to. Don't ask. They won't tell you. But sites like Unhaggle.com can give you a rough sense of how much the dealer paid for the vehicle. 

Now what? Negotiate from the invoice cost up, not MSRP down. Your first offer should be the invoice price plus a few hundred for the dealer. Expect the negotiations to start from there.


6. Be prepared to walk

Guess what? Patience pays off. According to Car and Driver prospective buyers who walk away from a dealership are likely to receive a call a few days later with a better deal.

So what? Salespeople are human too. When the opportunity to make a sale is close they're willing to work harder to get it done. We know this as the Goal Gradient effect.

Now what? Don't feel pressured to get a deal done just because you're there. If negotiations stall, simply thank your salesperson for their time and sashay away. There is no shortage of cars. Plus, you've already found three that you'd be happy to own.


7. Go shopping in December

Guess what? It turns out there is a right time to go shopping for your car and, according to Truecar.com, it's the most wonderful and chilly time of the year. Many dealers are looking to meet their annual sales goals and offer rich incentives to move their inventory.

So what? You can save a bundle by shopping in December. Truecar's researchers found that buyers saved 7.7% off the Manufacturer’s Suggested Retail Price (MSRP) in the last month of the year, compared to only 6.8% in January. 

Now what? Check the weather forecast, and head to the dealership on a crummy day. With fewer customers around, your salesperson will potentially feel inclined to sweeten any deal.


Have you got a killer car-buying tip? Let us know at [email protected] We'll share the best ones with our readers!

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