Financial Literacy for Everyone
Follow Us
Worksheets & Quizzes
free materials

Follow Us On Twitter
Looking for financial tips and news from Practical Money Skills Canada?
Follow Us Now

free materials

Free Lesson Plans
Give your students a deeper understanding of money management with curriculum offered by Choices & Decisions: Taking charge of your financial life™.
Learn More

Choosing a Car

Choosing a car is a little bit like dating. There are so many different cars out there. What do you need in a car? What do you prefer in a car? Do you feel that special connection when you're driving it?

But unlike dating, you can settle for a vehicle that fits your needs right now, even if you can't see yourself in it for the long term. And as long as you're smart about the financing, you can set yourself up so it's easy enough to trade it in for a newer model when the old one is no longer your darling.

Start searching for a car according to what you need. Once you've found several choices that match with your requirements, narrow down your choices according to what you want. For example, you need room for transporting things to work and a price that fits your budget. You want a car that looks cool and is fun to drive.

Make an inventory of your needs

  • What will you use the car for most? If you're just driving back and forth to work, all you need is a dependable car with good gas mileage. If you have to haul around kids, you need it to be roomy. If you entertain clients, it needs to have some style and class. You get the idea.
  • Where do you live? You may need four-wheel drive or front-wheel drive. It needs to be able to withstand some major wear and tear if you live on a bumpy gravel road.
  • Do you drive in stop-and-go traffic often? That may make an automatic transmission a necessity.

Comparing vehicles

Now that you have a list of your needs, it's time for more research. There are literally thousands of models to choose from. But your needs list should help you narrow them down fairly economically.

Auto magazines are a great place to get unbiased information about particular models and the advantages/disadvantages associated with them. Consumer Reports is a very thorough publication with a reputation for bias-free reporting.

You can also get a lot of information from a manufacturer's website and literature, but stick to the facts they provide since much of the material may be heavily biased.

If it's worth the investment to you ($30), you might consider signing up with Car Cost Canada. This organization lets you behind the scenes on the world of Canadian car pricing. Your membership buys you access to information such as confidential dealer invoice cost prices and confidential factory-to-dealer cash rebates.

Dealerships are often the worst place to get information. They have a lot of material, but it may be very heavily biased and you may have to endure a strong sales pitch just to get simple data points. If you visit the dealership when it is closed, you can look at the cars and read the information on the vehicles without worrying about the salespeople hounding you.

Take special care in buying a first-year model. The first year of a new model's rollout is a time to iron out the kinks and you may become an unwitting guinea pig for the problems the manufacturer has to correct for the next year's model.

The test drive

You've compared numbers and features. You've checked into the gas mileage. Now it's time to put away all the theory and speculation and get to the point of choosing a car: how it drives.

You have to be able to focus when test driving a car. If you go to a dealership to test drive cars, make sure the salesperson gives you some space to make your decision. As a matter of fact, tell the sales team you have no intention of buying on that day. That announcement should secure you enough breathing room to test drive without distraction. If it doesn't, be sure to avoid these sales people when you're going to actually buy a car. If they get too pushy, go to another dealership for your test drives.

If you're not comfortable with visiting dealerships just for a test drive, try renting the cars you're interested in. It may cost you $100 or so to try out your favourites, but the price comes with the freedom of driving a whole day without listening to any sales pitches.

Compare the Dealerships

Shopping for a dealership is just as important as the other comparisons you have been doing. It can help you save a lot of money AND ensure that you have some customer support while you're still under warranty.

All dealerships buy the cars from the manufacturer for the same price. This is the "dealer invoice price." The difference between it and the "dealer sticker price" -- the public price of an automobile that is plastered to its windshield -- is both your haggling room and the dealer's profit window.