How to buy a new car
13 minute read Published on Oct 9, 2024 by BrokerLink Communications
Are you buying your first car? Well, buying a new car is a big deal whether it’s your first, second or third new car. It’s not as simple as buying a pair of jeans. If you don’t like it, you may be out of luck if your vehicle was final sale. That’s why we have created a comprehensive guide to help you buy your new car with confidence.
We will walk you through the research, the essentials, questions to ask the salesperson, how to get the right insurance plan before you hit the road and how to keep your car in the best shape once you have it.
That’s why we asked one of our insurance brokers, Alex Rei, to help answer some common questions you might have when car shopping. We’ve asked him every question in the book to make buying a new car easy. Stay tuned for some great advice. It doesn’t matter whether you’re buying a brand-new car or a car that’s new to you. Our helpful tips will give you the answers you need before you buy.
Do your research
Before you visit car dealerships and test-drive, do some research. Figure out what you want in a car and make a list of features that matter to you. Read reviews, check out news articles, and get advice from family and friends. There are plenty of resources available. However, this can be overwhelming.
Ask Alex:
Do you have any advice for someone buying a new car?
“Get the car you actually like,” Alex says. “I’ll get customers who ask what the cheapest car is for insurance. You don’t want to end up with a car you’re not happy with to save a few dollars on insurance. It’s the broker’s role to find you the right insurance. Find what you like, and we’ll find the most competitive quote available based on where you live and your driving record.”
All the information you need is a few clicks away. Websites that can help you research different vehicles include:
It’s always a good idea to learn as much as you can about your new car before you buy it. Only then should you go see it in person. After all, you could like the car on paper or for your budget and hate the way it drives when you take it on a test drive.
Should you buy a new or used car?
Both new and used cars have plenty to offer, but that doesn’t mean they aren’t without their advantages and disadvantages. That’s why we have broken down the pros and cons of purchasing a new car versus purchasing a used car. Continue reading to learn more:
New car
Buying a new car has several benefits, but there are some downsides as well. Let’s review the aspects you should consider when shopping for a new car below:
Advantages
There are several benefits to purchasing a new car, such as:
- Manufacturer warranty
- May have newer technologies and safety features
- Financing flexibilities, including leasing
- Potential for maintenance package included
Disadvantages
Understanding the following disadvantages is crucial in making an informed decision about purchasing a new vehicle. Purchasing a new car comes with a few drawbacks to consider, including:
- Depreciates as soon as you leave the lot — it doesn’t take long for cars to lose value
- More expensive
- Parts may not yet be available for repairs
Used car
Buying a used car is often the economical option. However, you also take some risks when you buy used. Here’s what you should know before purchasing a used car:
Advantages
Considering these advantages, a used car can be a smart and economical choice for many buyers, balancing affordability with a range of available options. Therefore, purchasing a used car offers several compelling advantages, including:
- Less depreciation than a new car
- More affordable
- More data and reviews are available for older cars
- Parts may be readily available in the event of an incident
Disadvantages
When considering the purchase of a used car, there are several potential disadvantages to keep in mind. These drawbacks include:
- More likely to encounter maintenance issues
- Lack of customization and might not be able to choose the colour or trim you want
- Subject to higher financing rates
Ask Alex:
Should I buy new or used?
“If you get a new car, you’ll be eligible for coverages that are not available for a used car. However, a used car is less expensive to buy. Everyone wants a new car, but at the end of the day, it’s about what you can afford.”
In the end, the decision is up to you. When you buy a new car, you can know that no one has driven it before, and maintenance costs will be fairly low. However, you will be paying more upfront for a new car. The opposite is true for a used car. Despite this, you should learn about any issues the car has before you buy it. Even new cars aren’t perfect.
Questions you should ask before buying a new car
Whether you’re shopping at a car dealership or buying from a private seller, there are a few questions you should ask before you buy a new car. You will need to ask yourself some of these questions. Others can only be answered by the seller. Here are some questions to consider asking before purchasing a new car:
How much can you afford to pay?
Before you buy a new car, you need to review your budget. How much of a down payment can you afford, and what can you spend on a monthly payment? Find out how much you can spend early on to avoid falling in love with a car you can’t afford. Used car values are often lower, but they are often more affordable.
How much is my trade worth (if available)?
Are you upgrading your vehicle? If so, research its value. Consider the make, model, trim, and year of the vehicle, as well as its mileage and condition. Knowing how much your current vehicle is worth can help you get better new car deals.
What safety features does this car have?
Before you put a down payment on a vehicle, you should know about its safety features. New technologies are making cars safer than ever. Before you purchase your car, you should know how your vehicle can protect you from getting into an accident.
Does this car fit my life?
Buying a car today is different from what it was in the past. You have to think about people other than yourself. Does your vehicle need to fit a child’s car seat or multiple car seats, stroller, dog, and hockey gear? If this is the case, you’ll need a vehicle with a decent amount of cargo space.
Does this car come in my favourite colour?
New vehicles come in a variety of colours. When it comes to choosing the right car, you have to like the way it looks. That’s why you should choose a new or used vehicle that comes in your favourite colour. After all, you’ll be looking at it and driving nearly every day.
Getting your new car for the best price
New cars are expensive, but there are ways to reduce the purchase price. The first step when you visit your local dealership is to look at the price tag. The key to getting a vehicle for a great price is understanding the terminology. Let’s review the basics below:
MSRP
What is MSRP? MSRP is an abbreviation for the manufacturer’s suggested retail price, often called the sticker price. This is the amount that car dealerships want you to pay, but with the proper negotiation skills, you can pay a lot less.
It’s important to note that MSRP doesn’t include sales tax or additional dealership fees. However, determining sales tax isn’t hard. All you have to do is add the Goods and Service Tax (5%) set by the federal government and the Provincial Sales Tax (PST), which is determined by where you live. Ask the car dealership directly about their specific fees.
Down payment
A down payment is a percentage of the car’s price that you pay upfront, which can range from 10% to 20%. Putting more money down will reduce your monthly payments.
Making a bigger down payment leads to less interest, reduces depreciation, and improves your chances of getting approved for dealer financing. Although making a down payment isn’t mandatory, if you opt out of this option, you may need a co-signer. Sometimes a down payment comes in the form of a vehicle you have decided you wish to trade in, the dealer will subtract the trade in value from the overall price of your new lease or loan.
Manufacturer incentives
Additionally, manufacturers offer incentives to different dealers. However, this detailed information isn’t usually public. On the other hand, there are benefits for consumers.
Why do manufacturers offer these incentives? Deals like low financing and lease rates alongside cash rebates are great for increasing sales. Knowing about these options will help you get a fair price and car loan.
Negotiating a better price with the car dealership
Car dealerships want to make a profit, but you don’t have to buy the car at the MSRP. In fact, car dealerships paid less than that amount for the car. Dealerships pay what’s known as a factory invoice price, which can come with rebates. Doing your research beforehand will get you the best deal when buying a car.
Once you find out about factory rebates, you can use them to get a better deal on a new car. Car dealers will not break even, but you can still pay less than the sticker price. Aim to give the dealer at least a 10% profit when you start your negotiations. It will save time and help you secure financing.
When to buy a new car
While there isn’t a perfect time to buy new cars, some are better than others. There are many times to get a good deal. You never know—you might find a new vehicle for a price that seems too good to be true! Below, we will explore the best times to purchase a new car:
End of the year
Towards the end of the year, car dealerships will be getting rid of their inventory, increasing your likelihood of getting a good deal. Although the dealership might consider these cars to be “old,” they were likely manufactured in the past few years, meaning almost no one has driven them, and the price may be lower due to the fact that they are “older” models.
End of the month
Not everyone can wait until the end of the year. If your car is on its last leg, your best bet is to purchase a new vehicle at the end of the month. That’s because dealerships have monthly quotas, and salespeople may be pressured to sell at a lower price to meet them.
Holidays
A dealership might offer special deals during holidays, such as Black Friday and Boxing Day. Dealers don’t miss a chance to make a sale, which means you could give yourself the gift of a new car if the price is right.
Buying a new car isn’t a decision you should take lightly. The process can feel long and drawn out. However, it’s worth it in the end. Consider these tips before making a purchase:
Visit multiple car dealerships to find the best price
Receiving multiple offers can allow you to get the vehicle with the latest technology for an affordable price. You may even be able to go to another dealership for the same make in another city to receive a better price.
Consider your budget
If someone is trying to sell you a car you can’t afford, it’s time to walk away. Getting pre-approved for dealer financing can help simplify your decision. Another option is seeking assistance from a bank or credit union.
Be aware that you should pay attention to the total price of the car rather than the monthly payment. This can help save you money in the long run. Deducting money from the total price of the vehicle will allow you to secure a lower monthly payment.
Get the right insurance for your new car and register it
Now that you’ve done your research and asked all the right questions, you can finally get behind the wheel and drive off into the sunset — actually, not quite. Before you purchase your car, you have one more important thing to do: make sure you have the right insurance.
In Canada, driving without car insurance is illegal. Insurance protects you, your car, your passengers and others on the road. With the right insurance plan, you can have peace of mind knowing you’ll be protected if you get into an accident or damage your car. However, you should be aware that insurance for young drivers is expensive due to their lack of driving experience.
Ask Alex:
How do I get insurance for my new car?
“The first thing you want to do is have a conversation with an insurance expert. They can listen to what you are looking for. Then they tailor a package that works specifically for you.”
Finding the right insurance policy can be overwhelming. This is especially true after shopping at multiple car dealerships, taking your vehicle for a test drive, and being approved for financing. An insurance broker can simplify the process by taking the guesswork out of insurance. Keep in mind that you may have a grace period in Alberta and other provinces to get a new insurance policy after you purchase a vehicle. Once you've secured insurance for your new car, the next step is to register it. Here's what you need to know about the registration process:
Register ownership
Once you have your new car, you need to register it with your local government body. It’s illegal to drive an unregistered vehicle. You will need the following:
Proof of insurance
Before you register your vehicle and hit the road, you’ll need to prove that you have a valid insurance policy.
Legal ownership permit
To register your vehicle, you need to show proof of ownership, including your VIN number. You will be given this after you purchase the vehicle.
Licence plates
You will need a licence plate (or a pair of licence plates) that are registered with your respective province.
Driver’s licence
Bring your driver’s licence with you when you go to register your new car. You can register your vehicle yourself at a local government office. However, the dealership can also do this for you for a price.
Retrieve the licence plate and sticker
You need a licence plate with up-to-date stickers to drive your new car. Here’s what you need to know:
- All vehicles need licence plates (depending on the province, sometimes you need one on the front and the other on the back)
- Licence plates are only registered to the owner, and you have to keep them if you sell the vehicle later on
- Licence plate stickers have to be renewed every one to two years
- A validation sticker is to be placed on the right corner of the back licence plate
After you get your licence plates and stickers, you legally own your vehicle. All that’s left to do is test its fuel efficiency by taking it for a drive.
Maintain your new car to keep it running
Congratulations on purchasing your new car! After doing your research, buying your new car and insuring it, you can enjoy your new wheels. However, there’s one more thing to think about. New and used cars are both huge investments, which is why maintenance is important. Here are some ways you can maintain your car:
Read the manual
Don’t just toss it in the glove compartment. The owner’s manual provides useful information about your car, including a maintenance schedule.
Check the oil
Your owner’s manual will tell you how often you need to get an oil change.
Check tire pressure
Inspect your tires monthly to ensure you don’t get a flat sooner than expected.
Top up fluids
The anti-freeze, coolant, wiper fluid and power steering fluid should be checked regularly to optimize your vehicle’s performance.
Get winter tires
Investing in winter tires will keep you safe and save you money on your car insurance.
Watch out for the “check engine” light
If the check engine light turns on, bring it to the car dealership or a licensed mechanic to find out what the problem is.
Buying a new car? BrokerLink can help get you on the road!
It doesn’t matter whether you’re buying your first car or your second. Buying a new car is a big deal, and a lot goes into making such a big decision. Vehicles go on sale, but dealers are trying to make the most money possible. The key is to focus on your personal needs, whether those involve aesthetics or practicality, like having good fuel economy.
New cars require insurance coverage. Getting car insurance isn’t hard. You will be given time to switch your insurance policy, but you should take this time to figure out the type of coverage you need. Some types, such as liability car insurance, are mandatory, while others are not. Consider the following:
- Third-party liability coverage
- Accident benefits coverage
- Direct compensation - property damage coverage
- Uninsured automobile coverage
- Collision coverage
- Comprehensive coverage
- Accident forgiveness coverage
Buying a new car can be an exciting yet overwhelming experience. Take some time to do your research and find a vehicle that feels right for you. Once you make your purchase, get in touch with your friendly neighbourhood insurance advisor. At BrokerLink, we are here to help. The only thing we can’t do is pick your car colours—that’s all you!