Topic: New Car Shopping - NO CLUE where to start (Help...please)

[JohnnyMac]

Nissan Micra. Base. $9,998. BOOM.

Did the math and he could get a fully loaded Micra for under his $300 per month budget, sure it would be over 6 years, or he could save a couple dollars and lease it over 4 years.  I think the Micra actually looks fairly good in the higher trim levels.  Perfect size for the city and if you get the manual it's a fairly fun little car to drive.  Hell they have a whole race series based off this car, how can you go wrong.

[Solstice2006]

Bet there would be some good deals on the Cruze, as this is the last year of the current generation.  Since the OP, plays to keep it a long time.  Resale probably isn't as high a priority.  1-2 year old mid trim Cruze can be had for $16,000 with tax, with less than 20k. 

[ArticSteve]

2. Budget - monthly approximately 200 to 300 a month. I'm still a student, but have saved up enough to afford monthly payments

[tpl]

^^^


A really good winter beater ?

[dkaz]

Or just buy a car that's not the automotive equivalent of chloroform and have a little fun.....why all the hate against Alberta??

I love my home province, don't get me wrong.

[caretaker007]

If you are living and working in Toronto, do NOT  get a stick..You know what the traffic is like in this HELL HOLE. Your left leg will be killing you after a week driving in the rush hour here...   I would go with the Civic (2013-2015) automatic...

[Gurgie]

If you are living and working in Toronto, do NOT  get a stick..You know what the traffic is like in this HELL HOLE. Your left leg will be killing you after a week driving in the rush hour here...   I would go with the Civic (2013-2015) automatic...

Insurance on the car in Toronto would be too high... an Elantra, Mazda 3, Corolla, would be at least $300/yr less.

[johngenx]

For anyone that's not an enthusiast and wants a new car that's inexpensive to operate, I always recommend the Corolla.  It's not the least expensive in terms of pricing, but in terms of long term value, it's really hard to beat.  The 11th generation is a very nice car that offers a lot of great features for the money.

First, don't buy a manual.  Yeah, I love DIY shifting, but the CVT Corolla and others offer better economy and DRAMATICALLY better resale value.  If you're minimizing costs, the extra upfront cost of an AT is more than offset by the later resale value.

Second, don't buy either a very base car or the very top trim. Base models without any creature comforts again are resale dogs and the top trim levels sell easily, but for the same money as the "mid" levels.  So get something with some nice stuff, but don't get the top trim with all the packages.

For new, I'd either go with the Micra or Corolla in terms of minimizing costs.  The Micra is a decent car and the price is low - especially if you're prudent with the options.  The Corolla is a much nicer car that offers a lot more creature comforts with no real economy penalty, but you will pay more upfront.

[tooscoops]

smart comments from john there... i agree.

only thing (that really isn't about this topic per se) is about the resale on a base car... sometimes when it is all about resale, the base (or more importantly, the advertised) car is the one to get... as THAT will be the car that used prices will be compared to.

ex. ram trucks... buy a bit nicer one for 35 grand while they advertise some at 29995... when you trade it in, the shop will be looking at what a customer will be thinking, which is, "why wouldn't i buy the new one for 29 instead of this used one for 27 and get a better finance rate?" so that 35k truck will only be worth a couple grand more than what the advertised special would be, even though it cost 5k more.

[Viper]

Thanks for the warm welcome!

1. Yes first car (of my own)
2. Mid 20's just out of loonnnng university life
3. It will be used for social driving of course. Main purpose is to get to and from work
4. Ideally as long as possible.
5. I'd be financing. Budget is around 200-300 a month. I will need to worry about insurance and gas too, so maybe I'm trying to get a sense of budget as I'm shopping, too.

Additionally... I'm not super picky about look. I think what's important to me is gas, safety, and upkeep. If I'm allowed to be a bit greedy, I would love a nav system, but I realize this is something I can add in most cars now anyways.

If you haven't had your name on an auto finance contract before you may be asked for a cosigner. Also, you know what your budget is but the lenders will also tell you what your budget is based on your debt servicing ratio.

Those things aside, if I were you I would look at leasing. It eliminates the worry about resale; the vehicle will be covered under manufacturer warranty for the majority of the term (meaning to cover yourself with extended manufacturer warranty will be more economical - and many come with service packages now, as well); and the maintenance costs will be at their lowest. Also, leasing gives you options in the future - you can keep it, or you can return it depending what is happening in your life at the time. As far as going over on kilometers on a lease, you're going to pay for kms regardless. If you know how many kilometers you drive in a year right now, you can build them into the front end of a lease and pay much less than you would as a penalty after the fact. Also, in many cases the manufacturers charge less for kms than the private market - meaning that if you purchased or financed a vehicle, it would depreciate more as a result of excess kilometers when trying to sell it to an individual or to trade it in.

I agree with most the posts here saying that a Corolla, or a Civic would be a solid choice. If you choose not to lease, I would be wary of the 'cheaper' cars because it's easy to get buried when the time comes that you want to trade in and the vehicle isn't worth what you owe.

With respect to buying used, just keep in mind that you need to finance a minimum amount (usually around $7,500), and that depending how old the vehicle is you can only finance it for a certain number of years. And by all means DO NOT buy a vehicle on a line of credit!

I hope this helps!

[Solstice2006]

What's so bad about buying a vehicle with a line of credit?  I bought my Odyssey on my line of credit, and my trailer.  Slightly lower interest rates...

[Viper]

What's so bad about buying a vehicle with a line of credit?  I bought my Odyssey on my line of credit, and my trailer.  Slightly lower interest rates...

Typically lower rates, yes, but stats show that only about 30% of people are disciplined enough to actually pay off a line of credit in due time similarly to an installment loan. Also, lines of credit have floating rates, so they may be lower for now, but if you aren't great at paying it down or paying it off, it could bite you.

It's also very easy to bury yourself with a LOC because you can add other debts to the vehicle. By adding other debts to it it gets very blurry in terms of when you've actually paid it off. If you get in the habit of using a line, you could find yourself in a situation where you still owe lots on your current vehicle when it comes time to trade it in. Also, LOC affect TDSR which makes it more difficult to get installment loans should you need to.

You're definitely right that for some people they are better than a traditional loan. But for the majority, not so.

[Solstice2006]

What's so bad about buying a vehicle with a line of credit?  I bought my Odyssey on my line of credit, and my trailer.  Slightly lower interest rates...

Typically lower rates, yes, but stats show that only about 30% of people are disciplined enough to actually pay off a line of credit in due time similarly to an installment loan. Also, lines of credit have floating rates, so they may be lower for now, but if you aren't great at paying it down or paying it off, it could bite you.

It's also very easy to bury yourself with a LOC because you can add other debts to the vehicle. By adding other debts to it it gets very blurry in terms of when you've actually paid it off. If you get in the habit of using a line, you could find yourself in a situation where you still owe lots on your current vehicle when it comes time to trade it in. Also, LOC affect TDSR which makes it more difficult to get installment loans should you need to.

You're definitely right that for some people they are better than a traditional loan. But for the majority, not so.

My guideline is usually, if I don't have the savings for what I need to buy, then it's the LOC if it's under $10k, it's over $10k then installments.  Since the Odyssey was around $5500k, it was some LOC.  With my camper, around $5500, some LOC. 

What is TDSR?

[tpl]

What's so bad about buying a vehicle with a line of credit?  I bought my Odyssey on my line of credit, and my trailer.  Slightly lower interest rates...

Typically lower rates, yes, but stats show that only about 30% of people are disciplined enough to actually pay off a line of credit in due time similarly to an installment loan. Also, lines of credit have floating rates, so they may be lower for now, but if you aren't great at paying it down or paying it off, it could bite you.

It's also very easy to bury yourself with a LOC because you can add other debts to the vehicle. By adding other debts to it it gets very blurry in terms of when you've actually paid it off. If you get in the habit of using a line, you could find yourself in a situation where you still owe lots on your current vehicle when it comes time to trade it in. Also, LOC affect TDSR which makes it more difficult to get installment loans should you need to.

You're definitely right that for some people they are better than a traditional loan. But for the majority, not so.

I have bought a car using a LOC.   The car was paid for immediately as if it were cash money.  If one then intends to pay off  the LOC by installments which I guess is what you would expect to happen...in which case you are correct. 



TDSR is Total Debt Service Ratio.   Some banks like to see that under 35% before they will lend you any more money....and quite right too imho.

[ArticSteve]

HELOC were the most evil lending instrument ever devised.

The following chart shows the % of mortgages that are 90 days past due.  IMO, if one were to miss even one mortgage payment for lack of funds, then IMO that person is fairly facked in the cash flow department.  However, and most conveniently, those stats don't include HELCOs attached to the property.

http://www.cba.ca/en/media-room/50-backgrounders-on-banking-issues/657-changes-to-canadas-mortgage-market

(see paragraph Canadians are prudent borrowers and clink on pdf link).

[tpl]

HELOC were the most evil lending instrument ever devised.

The following chart shows the % of mortgages that are 90 days past due.  IMO, if one were to miss even one mortgage payment for lack of funds, then IMO that person is fairly facked in the cash flow department.  However, and most conveniently, those stats don't include HELCOs attached to the property.

http://www.cba.ca/en/media-room/50-backgrounders-on-banking-issues/657-changes-to-canadas-mortgage-market

(see paragraph Canadians are prudent borrowers and clink on pdf link).

I disagree but I appreciate that as the sums of money available tend to be quite large it must be very tempting to get in well over ones head.   We find the use if for purchasing something large, like a basement reno and paying for it without having to sell an investment until the right time.  We use ours maybe twice a year and pay it off within a week.


As for that PDF the % has not changed all that much and I bet that if you map it against recessions you will find it lags behind by a few months which is what I would expect.  Also I'd want to see the % mapped against house prices  and interest rates.   The set of graphs I suspect would show that Canadians ARE prudent.

[ArticSteve]

Few, few, ppl pay their HELCOs off within a week as they wait to liquidate assets to cash. The reality is the vast majority pay interest only in perpetuity which was, of course, by design.

Consequently, the question remains; do stats noted in that pdf contain Helocs late payments?  Has the industry separated them in a "reporting"  SLEIGHT of hand?

I don't think "Canadians" are prudent as a whole.  Obviously retired ppl due to past experiences, and the fact that they have harvested all the low hanging fruit, are more cautious.  This country is going to enter the mother of all recessions.  All the past levers of mitigation are gone due to record high government debt loads, stripped out manufacturing, a commodity COLLAPSE, and record personal debt. 

[tpl]

Few, few, ppl pay their HELCOs off within a week as they wait to liquidate assets to cash. The reality is the vast majority pay interest only in perpetuity which was, of course, by design.

Consequently, the question remains; do stats noted in that pdf contain Helocs late payments?  Has the industry separated them in a "reporting"  SLEIGHT of hand?

I don't think "Canadians" are prudent as a whole.  Obviously retired ppl due to past experiences, and the fact that they have harvested all the low hanging fruit, are more cautious.  This country is going to enter the mother of all recessions.  All the past levers of mitigation are gone due to record high government debt loads, stripped out manufacturing, a commodity COLLAPSE, and record personal debt.

The vast majority  are employed and have income not capital so yes.  BUT the paying interest in perpetuity is the same in principle at the 7 year car loan.
Sleight of hand
AS for the recession thing, maybe and if it does come to pass then I have a feeling that Trudeau jr is going to be as bad as his father economically and as bad as Martin ( as PM not as Finance) as Mr Dithers and not getting anything done.

[safristi]

Batten down the Hatches (and trunks),BUY GOLD..and baked beans..ARMAFARTGEDDON approaches....negative (INTEREST!! ) rates and stocks a tumbling....the only good news is will still be posting  $1 per   payPal or COLD HARD CASH accepted...Artic Steve U get $10 credit

[C4]

Im late to the party but I would say a Nissan Micra or a slightly used impreza