# Car Purchase



## supperfly17 (Apr 18, 2012)

Hoping someone with some experience can chyme in. I haven't purchased a vehicle in the last 12 years, so I am not sure how things have changed. I will look to buy one this summer, used, for about 25-30k$.

What is the best way to proceed with this purchase?

1: Finance through the dealership I am buying from
2: Finance through the bank (Do big 5 banks offer auto loans, would their rates be lower?)
3: Open a line of credit through a bank, 30k$, and use the money to pay for the vehicle that way.

Thanks for the advice.


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## AltaRed (Jun 8, 2009)

Buy for cash. I've never purchased a vehicle with a loan.


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## supperfly17 (Apr 18, 2012)

Good point, but if that is not possible at this time, which option would you recommend?


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## sags (May 15, 2010)

For buying a used vehicle, a secure line of credit (HELOC) would be the best option.

An unsecured line of credit would have a comparable interest rate to a personal loan at a bank, which would likely be around 8%.

If you are spending $25,000 to $30,000 on a used vehicle, I would suggest comparing the monthly payments and total cost of a loan for a new vehicle financed at 0% by the manufacturer.

The vehicle may cost more intially, but the lower interest rate will equalize the payments and overall cost, and you would have a full warranty.


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## atrp2biz (Sep 22, 2010)

One quick note about paying with cash.

I went into the dealership adamant about paying in cash. However, the financing guy said I could get a conventional car loan with the bank and could then take of $800 from the cash price. After reading all the fine print, I paid for my vehicle with the bank loan and paid off the bank loan immediately in full without penalty. I ended up paying a grand total of $32 in interest while saving an additional $800 off the vehicle.


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## twa2w (Mar 5, 2016)

Dealership financing is often cheapest 0 - 3% but not always depending on promotions. Check with your bank.
Expect lots of fees. Paperwork fee, licencse transfer, gas fee, tire tax, air tax etc.
Expect a hard sell. For rust proof, paint and fabric protect, financing, anti theft etching(which they like to insist you must pay for) locking wheel nuts, etc etc
Be prepared to feel slimey and want to take a shower after dealing with the sales people.

Just some of the reasons I buy privately a year or two old plus of course the incredible savings due to depreciation and not having to put up with the chemical outgassing( aka new car smell)


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## agent99 (Sep 11, 2013)

AltaRed said:


> Buy for cash. I've never purchased a vehicle with a loan.


I would only use cash if I couldn't make more (after tax) than the loan interest rate, by investing. At least one make is offering used vehicle loans with terms of 2 to 4 years at 0.9%. 

Another option may be to lease. It is possible to lease used vehicles.

This is not too illuminating, but be of some help to OP. http://www.usedcarscanada.com/members/finance


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## rsyl (Aug 15, 2014)

atrp2biz said:


> One quick note about paying with cash.
> 
> I went into the dealership adamant about paying in cash. However, the financing guy said I could get a conventional car loan with the bank and could then take of $800 from the cash price. After reading all the fine print, I paid for my vehicle with the bank loan and paid off the bank loan immediately in full without penalty. I ended up paying a grand total of $32 in interest while saving an additional $800 off the vehicle.


We planned on doing the same on our last purchase, but convinced the dealer to just take the $1000 finance credit off the purchase price instead, saved me some paperwork and a credit check, I'm not sure how the dealer is paid on the financing, but I suspect paying the balance off in full on day 2 would have cut into their earnings anyways.

As for the original poster, do you need to buy a 25-30K used vehicle, could you not survive on a 5-6 year old loaded Accord for 15K instead, especially if you are going to finance it.


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## nobleea (Oct 11, 2013)

Not buying from a dealership will likely save you more than the interest costs you're mulling about.

Find a vehicle you like privately, have it sent to the dealer of your choice for an inspection. It'll cost you a few hundred. $25-30K is pretty steep for a used vehicle, so expect you can save 3K+ by buying privately.

If you don't have money saved up, then use something like a HELOC.

I would look at the total cost of ownership over 10 years for a new car at 30K and a used car at 25K or whatever. I suspect they might end up pretty similar as has been pointed out. We were looking for a used vehicle for my wife a few years ago. 4-5yr old models were selling for 21-23K, when a brand new one off the lot could be had for under 27K. Factoring in the 0.49% financing, compared with ~2% on a HELOC, it was a no brainer to buy new.


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## supperfly17 (Apr 18, 2012)

Thanks for the reply. But in Ontario the dealer price is what you pay plus tax. A new law was enacted so there is no more hidden fees etc. So really makes no difference anymore buying private or used.

I guess I coud buy an accord, but we all have needs and mine are different. I could also buy a civic for 10k, with same line of thought.

Anyone know of the interest is calculated the same way with a car loan from a bank as opposed to interest from a line of credit?


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## noobs (Sep 27, 2015)

You`ll probably have to shop around and see who offers the best rate. here in QC I`ve seen as low as 0.99% from a dealer...

Out of curiosity what`s the main purpose for this car? daily driver? summer car? second car?
To you, is a car something that gets you from A to B or do you need driving pleasure or more?


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## supperfly17 (Apr 18, 2012)

noobs said:


> You`ll probably have to shop around and see who offers the best rate. here in QC I`ve seen as low as 0.99% from a dealer...
> 
> Out of curiosity what`s the main purpose for this car? daily driver? summer car? second car?
> To you, is a car something that gets you from A to B or do you need driving pleasure or more?


Thanks for the reply. Its going to be a vehicle for a business.


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## coptzr (Jan 18, 2013)

padamchhabra said:


> I would suggest you to go for finance from bank itself as the dealer has its comission also. And while going for bank you can even check different banks and go for the best one. You can even search online on websites like deal4loans, dialabank etc for the best rate of interest available for your car loan.


SPAM much?


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## Feruk (Aug 15, 2012)

supperfly17 said:


> Thanks for the reply. But in Ontario the dealer price is what you pay plus tax. A new law was enacted so there is no more hidden fees etc. So really makes no difference anymore buying private or used.


Your logic is flawed. It'll almost always be cheaper to buy private than from a dealer. Otherwise, dealers would make no money on used cars and not sell them...


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## supperfly17 (Apr 18, 2012)

Good point but most private sellers get their prices from dealer ads therefore they ask the same.


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## agent99 (Sep 11, 2013)

Feruk said:


> Your logic is flawed. It'll almost always be cheaper to buy private than from a dealer. Otherwise, dealers would make no money on used cars and not sell them...


It's not his logic that is flawed 

The dealers make a profit because they offer low enough prices on trade-ins so that after cleanup, any repairs, safety etc they can still make a profit. The market determines the price that buyer will pay for a used car. Dealers can only sell for more that a private seller if they can offer some added benefit, such as a warranty, safer transaction or other service.


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## coptzr (Jan 18, 2013)

Feruk said:


> Your logic is flawed. It'll almost always be cheaper to buy private than from a dealer. Otherwise, dealers would make no money on used cars and not sell them...


Not always, depends a lot on if you have cash or credit. Also have to consider the type of use and requirements of that vehicle.


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## coptzr (Jan 18, 2013)

agent99 said:


> It's not his logic that is flawed
> 
> The dealers make a profit because they offer low enough prices on trade-ins so that after cleanup, any repairs, safety etc they can still make a profit. The market determines the price that buyer will pay for a used car. Dealers can only sell for more that a private seller if they can offer some added benefit, such as a warranty, safer transaction or other service.


In today's market, its actually not that common for dealers to repair and resell trade-ins. Most go to auction. Dealers normally like to pick and choose what they sell. Buying a trade-in is used to sell the listed product.


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## coptzr (Jan 18, 2013)

supperfly17 said:


> Hoping someone with some experience can chyme in. I haven't purchased a vehicle in the last 12 years, so I am not sure how things have changed. I will look to buy one this summer, used, for about 25-30k$.
> 
> What is the best way to proceed with this purchase?
> 
> ...


First thing that changed is new or used you pay 13% tax on the vehicle purchase.

1) New car dealerships can get pretty good rates, normally around 4% new or used. Some new offer 0.9%.
2) Financing through the bank usually doesn't offer much better rate and adding another party to the purchase can be frustrating.
3) This can be cheaper, will release any lien on title of vehicle, make insuring less complicated, and in case of resell - no question of whether lien has been immediately cleared.

Auto loans are good that they "make" you pay them off by method of frequency. The LOC method is nice because it can be a like a hole you fill it at your own pace. You have to be careful to make sure the total interest is not greater than the original amount.

I would take the time to compare new vs used based on term of financing, ownership, total mileage, and type of use. Interest can add a lot of overall cost, daily vs weekend runner, do it yourself repair vs turn key.

Pm sent.


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## sprocket1200 (Aug 21, 2009)

never pay more than 10K for a car...


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## coptzr (Jan 18, 2013)

sprocket1200 said:


> never pay more than 10K for a car...


huh, well there you go


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## gibor365 (Apr 1, 2011)

My mother-in-law want s to buy a new car... she is considering Toyota Yaris or Nissan Versa, dealerships offer financing 0% for 2-3 years ... so even though she can pay 100% cash, financing looks better (unless dealership gives around 1K discount if she pays in cash).
Question is....if insurance for a car will be more expensive?


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## MrMatt (Dec 21, 2011)

gibor said:


> My mother-in-law want s to buy a new car... she is considering Toyota Yaris or Nissan Versa, dealerships offer financing 0% for 2-3 years ... so even though she can pay 100% cash, financing looks better (unless dealership gives around 1K discount if she pays in cash).
> Question is....if insurance for a car will be more expensive?


Call the insurance company for a quote. $10-20/month can be the cost difference between vehicles. 
In some cases it is outrageous, a 20 something guy should never buy a Honda Civic.

IMO the Golf is a far better car for a bit more money. More cargo, more comfortable, safer, longer warranty etc.
If price is a real concern, Kia is really looking good.

Disclaimer, I bought a Golf 2 months ago, The only auto stock I own is Ford.


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## coptzr (Jan 18, 2013)

^^^Good point here, after calling our insurance to get quotes regarding the Hyundai Sante Fe and Ford Edge, the Hyundai was cheaper not based on price, but on safety rating. Made me lean more towards the Hyundai. I don't have the numbers handy, but wrote them down at the time.


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## ian (Jun 18, 2016)

I would decide on the car that you want, and the options that you want.

Then do the deal via email. Don't bother with the salesperson, the sales manager, or the business manager. Focus on the bottom line. Dealing on line will help you keep emotion out of it.

Don't forget to get bottom line price,,,,no add-ons like PDI or that rip off admin fee. And don't bother with the undercoat, etc. If you want that, get it done later. It will cost half the price. 

Don't bother with built in GPS. The cost of upgrading to new maps is terrible. Better to stick with a portable Garmin product that comes with lifetime upgrades and is portable between vehicles.

Good luck.


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## new dog (Jun 21, 2016)

I needed a new Sienna mini van and looked on line until I found the cheapest one possible in BC with the lowest KM, 38000KM, it was a 2011. I went to the dealer on a Monday an hour and a half before closing and took the price down over $1800.00 with no fees and got a great deal. I bought a 7 year or 140,000 KM warranty bumper to bumper for $1,600.00 which gave me a practically new van for half the price of the new vans today.


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## hystat (Jun 18, 2010)

I remember renting a Yaris once. thought I was going to die in it. It had this really zippy pep off the line, so you would confidently pull out to merge with traffic .. then WAAAHHHHHBBBBGGGGGG.... it would bog right down like it was stuck in a vat of molasses. gutless piece of junk.


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## hystat (Jun 18, 2010)

coptzr said:


> ^^^Good point here, after calling our insurance to get quotes regarding the Hyundai Sante Fe and Ford Edge, the Hyundai was cheaper not based on price, but on safety rating. Made me lean more towards the Hyundai. I don't have the numbers handy, but wrote them down at the time.


I'm not understanding why it would cost less to insure a safer car. You can mow down 50 kids the same in any car. Maybe it has better brakes (stopping distance) 

I suspect it more "safe" for them, based on stats and who is likely to buy it and likely to operate it in a safe manner. i.e. it doesn't appeal to street racers


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## Spudd (Oct 11, 2011)

hystat said:


> I'm not understanding why it would cost less to insure a safer car. You can mow down 50 kids the same in any car. Maybe it has better brakes (stopping distance)
> 
> I suspect it more "safe" for them, based on stats and who is likely to buy it and likely to operate it in a safe manner. i.e. it doesn't appeal to street racers


Probably because they don't have to pay out as much medical costs if you get injured in a wreck.


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## coptzr (Jan 18, 2013)

A vehicle with better security features(less chance of theft claim), economically priced replacement parts (less collision repair expense), better crash test safety rating(fewer personal injury claim), etc... is a money maker for them so they offer a better rate/cheaper premium.

Here is a link to a spreadsheet where you can compare vehicles or different year/make/model.
http://www.ibc.ca/pe/auto/buying-auto-insurance/how-auto-insurance-premiums/how-cars-measure-up


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