Monday, January 23, 2012

Buying or Leasing a Car?

Many drivers are resorting to long-term leasing as an alternative to buying a car. Is it better to lease or to buy (i.e., finance) a vehicle? Revenue Canada’s rules ensure that neither option has more tax benefit than the other. So the decision depends on your situation, needs and cash flow. Be sure to compare the cost of each option over the term you expect to own the vehicle.
Leasing a car
  • The monthly payments on a lease generally are lower than on a car loan, so you can lease a more expensive model than you could afford to buy with conventional financing;
  • You can move up to a new car relatively easily;
  • You have consistent, predictable cash flow requirements;
  • Most lease agreements include a purchase option so you can choose whether or not to buy the car during or at the end of the lease period.
  • You do not build equity in the car; you are simply renting it for a set length of time and not acquiring ownership;
  • Restrictions may apply on where you can drive the car (e.g., not outside Canada);
  • Overall leasing costs are likely to be higher than purchase costs, since the former include financing, administration and other fees and penalties;
  • You have to maintain the car according to the maintenance schedule set out by the lessor. This could cost you more money than if you were free to make those decisions on your own as a buyer;
  • You could incur a hefty penalty if you exceed the typical 25,000 to 30,000 km annual limit on driving stipulated in the lease agreement. There may also be a penalty if you wish to terminate the lease early;
  • At the end of the lease agreement, the car has to be returned to the lessor with only “normal wear and tear.” But unless you’ve agreed before signing the contract on what that means, you could be hit with a penalty based on an interpretation that differs from yours.
Buying with a car loan
  • You own the car, so there are no restrictions on its use;
  • You build equity in the car (its value minus the debt you have paid off);
  • The overall cost of conventional financing is generally less than the total cost of leasing the equivalent vehicle;
  • You can use the car as collateral for a loan;
  • You can sell the car or trade it in for a newer model
If you wish to drive a luxury car, are not concerned about having ownership and like to switch to a newer model every two or three years, then the lease option may appeal to you. However, the reason why leasing appears less expensive than buying is that you are not committing money to build up equity. When you service a car loan, you are paying off the debt, and therefore building up equity.
A best-of-both-worlds solution may be to purchase a “new used car.” A new car depreciates 25 percent or more the moment you drive it away from the dealership. So your best bet is to buy a used car that is a year or two old, but has been well-maintained and doesn't have a lot of km on it. Such a vehicle may look and run like It's new, yet its price is that of a used car.
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Thursday, January 12, 2012

Ways to Save Money on Auto Insurance

Auto insurance is one of the expensive aspects of owning and driving a car. There is a strong possibility, though, that you are actually paying more than necessary for the coverage that you maintain on your vehicle. Here is what you can do to lower your auto insurance rates and save money in Ontario.
Own a lower profile car
The cost of insurance is partly determined by the kind of car that you own. Some cars are prominent targets for auto theft. Others are more expensive to repair. These kinds of vehicles tend to cost more to insure.
Be a safe driver
Being a safety-conscious driver can save you money. If you have no traffic violations or accidents, then you can qualify for extra discounts. Graduates of Ministry of Transport-approved driver instruction courses receive a discount. Having safety features such as airbags, automatic seat belts and anti-lock brakes will also lower your rates.
Raise your deductible
Raise the deductible on your auto insurance policy -- especially if you’re a safe driver. The higher you set your deductible, the lower the premium you’ll be charged. Yes, you run the risk of having to pay for damages to your vehicle out-of-pocket if you have an accident, but the savings on your premiums can be as much as 15 to 30% annually.
Low-mileage discounts
Some auto insurers offer discounts to motorists who drive less than a pre-determined number of kilometers. Try to qualify for these low-mileage discounts. If you live in the suburbs, organize a carpool with other drivers who want to lower their premiums. Drivers who lease cars are well-placed to obtain a low-mileage discount since the lease agreement often sets a maximum number of km per year.
Ask about anti-theft device discounts
If your car has an alarm system that disables your ignition or shuts down your fuel pump, you may be eligible for a discount. Some auto insurers provide discounts for visible theft deterrents such as "The club".
Drop collision coverage on older models
Sometimes it's not worth buying collision coverage if your car is not worth much at the outset. If you’re driving a clunker, the money you receive on a collision claim might be far less than what you paid for collision coverage over just a couple of years. One rule of thumb is that if a vehicle is worth less than $3000, it’s not worth buying collision coverage for it.
Tell your agent about better deals
Auto insurance is a competitive market, so be sure to comparison shop. As you talk with your agent about various options, let the agent know of a better deal you’ve been 6ffered by another insurer.
Bundle your policies
Consider bundling your insurance policies with one insurance company. If you require home insurance, ask if you can receive a discount for getting coverage for both your house and your vehicle with the same insurance company.
For information about PRUDENT VALUE CARS, visit our web site: 

Sunday, January 8, 2012

Tips on Buying a Used Car

Buying a used car has important advantages. You can purchase for much lower than it would have cost you when it was new, as most of the depreciation occurs in the first three years of a vehicle’s life. In fact, the value drops significantly as soon as the new car leaves the dealership. People who buy a new car are actually paying thousands of dollars extra for the brief pleasure of a ‘new car scent’. However, there are risks in buying used, especially if you’re buying from a private seller. So be sure to investigate before you do the deal.
Determine the car’s value
To help you determine the value of a used car, you can check the Canadian Red Book, available at any local library. But this is only a guideline. Look for other cars of the same make, model and year online to see what prices are being asked for them.
Ask plenty of questions
Be sure to ask plenty of questions when buying a used car. This is especially so if you are planning to buy privately rather than from a licensed car dealer or salesperson. Your questions should include:
● Are you the car’s original owner (if buying privately)?
● If not, how many people have owned the car?
● Why do you wish to sell the car (if buying privately)?
● What condition is the car in? How about the body and upholstery?
● Has the car ever had repairs costing more than $1,000?
● Has the car ever been involved in an accident?
● Do you have service records?
● Was the car ever used as a taxi, police car, a lease or a rental?
● Is the odometer’s mileage count accurate?
Always inspect a vehicle in daylight
Make sure to inspect the car in the light. Look for extreme wear of the seats, upholstery, brake and accelerator pedals. Also, look for anything new, since this may indicate the car has had a lot of use. Carefully check the exterior, and watch for waves on the body as that may mean bodywork or that the car has been involved in an accident.
Take the car for a road test, driving it at different speeds and on different road conditions. The road test will help you assess the brakes, steering, shock absorbers and front-end alignment.
Check the car's registration and history
Check whether the car you are buying is registered in the seller’s name. If it isn't, be sure to ask why. You don’t want to purchase a car that has been stolen or rebuilt. To check the car’s history, you will require its Vehicle Identification Number (VIN), make, model and year; if the seller won't provide this to you, you should walk away.
Ask for the Used Vehicle Information Package
Under Ontario law, private sellers of most vehicles have to provide buyers with a Used Vehicle Information Package. This package contains.
● Description of vehicle
● Ontario vehicle registration history
● Odometer information
● Outstanding debts (or liens) on the vehicle
● Wholesale and retail values for the vehicle's model and year, if available
● Retail sales tax requirements
● Bill of sale
Find out about parts availability.
What is the price of parts such as brakes or exhaust that often have to be replaced? If there are generic brands available from auto parts stores, it may help lower your future repair bills. Be cautious when considering cars that were expensive when new, especially if they’re selling at a large discount as used vehicles: their parts could be extremely costly to replace.
Calculate the insurance rates
Find out how much it will cost to insure the car. The rates depend, in part, on the car itself. As with the cost of parts, you want to discover if this cost is a budget-breaker before you buy.
Ask your mechanic to check the car
Before you agree to purchase the car, obtain an objective evaluation from a mechanic whom you trust – rather than someone whom the seller suggests.
For information about PRUDENT VALUE CARS, visit our web site: 

Tuesday, January 3, 2012

Finding the Right Mechanic for Your Car

Finding a reliable auto repair shop can be a challenge, so don’t wait until something actually goes wrong with your car before starting to search for an auto mechanic.
When you begin your search, do the same sort of careful research that you do for any other big-ticket purchase.

Repair options
You have several options. You could go to a large national chain or a dealership. But they may be more interested in generating revenue than in saving you money. If your car is still covered by the warranty, that may not be an issue, but if the warranty has expired, you’re vulnerable. In either case, you’ll almost certainly not get to discuss things with the mechanic who would work on your vehicle.
If your car needs more than a simple oil change, your best bet is a local, independently owned garage. The local repair shop owner may be the mechanic who actually works on your car. Owners are interested in building a long-term relationship with their clients. They are more likely to consider your interests and get to know your car over time.

Choosing a local mechanic
So how do you find the right local repair shop?
You could start by seeking recommendations from friends, co-workers and neighbours.
You could ask local car club members, too. If you belong to the Canadian Automobile Association (CAA), they can point you toward a CAA-approved vehicle repair facility, which improves the odds of your getting quality service at reasonable prices. The Automobile Protection Association also maintains a list of reputable repair shops.
You can check Ontario repair shops’ ratings on the website Consumers give each repair shop they’ve dealt with an overall rating as well as rating them for costs/fees, knowledge; honesty; and wait times.
Questions to Ask
Then it’s time to visit some repair shops in person. Here’s what to do.
● Talk with the service manager and ask questions. Are they responsive or annoyed by your questions?
● If the mechanic’s licence isn’t displayed, ask to see it.
● Ask the shop for references and be sure to check them.
Make sure the repair shop guarantees its work. How long is their warranty good for? Does it cover only parts, or include labour, too?
● Ask if the mechanic is knowledgeable about your specific car model?
● Make sure the final bill will match the upfront estimate. You should not have to pay for repairs you haven’t authorized.
● Ask if your final invoice will clearly itemize each of the repairs.
● If you’re coming to the repair shop with a specific problem, get a second opinion on the diagnostics, then negotiate a time line for the repairs.
For information about PRUDENT VALUE CARS, visit our web site: