For most people, buying a car is a major investment. It is the second largest purchase of your life, after buying a home. People want to make sure their investment is wise and sound; but how do you ensure you are making a good choice?
The first thing is to understand that there is more to consider when buying a car than the sticker price. Andrew Wicken, General Manager of InsuranceHotline.com, pointed out that the total cost of owning a car must also factor in the costs of gasoline consumption, maintenance and repair, and insurance.
Rocketing gasoline prices have propelled fuel economy to one of the hottest topics in the auto industry. Manufacturers are focusing on gas economy, and we have seen gas/electric hybrids gaining in market share. In May, U.S. President Obama had just raised the CAFE (Corporate Average Fuel Economy) standard, calling for a 35.5 mpg standard by the year 2016. With the rising gasoline price, consumers have begun to trade gas-hungry beasts for small efficient vehicles. This should be a key factor in your choice of cars. Fortunately, the gas economy is a clearly stated figure, determined by using national regulations, so comparisons are easy.
The two remaining factors, namely the cost of repairs/maintenance and insurance, are less easy to measure. Cars need to be properly maintained, and you cannot assume the car will never require any repair throughout its life. Insurance premiums vary wildly for different cars, and even for the same basic policy on the same car and driver, the premium could be drastically different among different insurers. Each insurance company has a different way of calculating the rate based on the potential risk assessed through a wide range of data, such as driving history, traffic ticket history, claims history, and geographical location. So how do you navigate through this sea of confusion?
“Research,” Andrew said. As simple and obvious as this is, its importance cannot be over-emphasized. “Especially the Internet,” he continued, “which is quite different from even five years ago.”
On the maintenance front, Andrew suggests finding a good mechanic and sticking with that mechanic. That mechanic will be your car’s family doctor. The more familiar he/she is with your car, the better. The best way to find a good mechanic is through friend referrals.
Some dealers will try to sell you an extended warranty in one form or another. Be sure you understand what it really covers. Some of these have specific conditions, which exclude warranty repairs. Another thing to keep in mind is to regularly maintain your new car. Regular maintenance includes oil change and assorted inspections. Keep a record of maintenance activities (i.e. invoices), especially if you don’t intend on bringing your car back to the dealer for maintenance. In the unfortunate event that something goes wrong and requires dealer repair, the dealer may ask to see proof that the car has been properly maintained before they will honor the warranty. Some luxury brands have a complete maintenance schedule and they will hold your hand each step of the way for the first three or four years, but you are very likely to pay more for this level of service.
If you live in an area where it snows in winter, you may want to think about buying winter tires. This introduces another expense and a storage space issue. Even if you decide to go with all-season tires, keep in mind that rubber compound hardens and loses traction over time. It would be a good idea to work out a budget to replace those tires every five years or so.
Indeed, there is no shortage of information on the Net. As a matter of fact, there might be too much information, and it’s a mixed bag of truths and lies. According to Andrew, insurance brokers provide many online insurance quote tools, and they can only provide quotes for the limited number of companies they represent. InsuranceHotline.com is not a broker and its mission is to break through the noise on the Net and provide the lowest insurance quotes.
Andrew then pointed out that another handy online tool is Car Cost Canada. For a fee of C$40, you can obtain a detailed report on the dealer invoice price of new vehicles. This report can provide new vehicle buyers some ammunition in price negotiation with dealers.
Before the global financial meltdown of 2008, the North American automotive industry thrived on the leasing model, where owners hopped from car to car in a three to four year cycle. As a result of the credit crunch and bad economic times, people are keeping their cars longer, and hence have a longer commitment to the purchase. This places more importance on buying the right car in the first place—the key is research, research, and more research. This is one major investment in which patience gives great returns.
The first thing is to understand that there is more to consider when buying a car than the sticker price. Andrew Wicken, General Manager of InsuranceHotline.com, pointed out that the total cost of owning a car must also factor in the costs of gasoline consumption, maintenance and repair, and insurance.
Rocketing gasoline prices have propelled fuel economy to one of the hottest topics in the auto industry. Manufacturers are focusing on gas economy, and we have seen gas/electric hybrids gaining in market share. In May, U.S. President Obama had just raised the CAFE (Corporate Average Fuel Economy) standard, calling for a 35.5 mpg standard by the year 2016. With the rising gasoline price, consumers have begun to trade gas-hungry beasts for small efficient vehicles. This should be a key factor in your choice of cars. Fortunately, the gas economy is a clearly stated figure, determined by using national regulations, so comparisons are easy.
The two remaining factors, namely the cost of repairs/maintenance and insurance, are less easy to measure. Cars need to be properly maintained, and you cannot assume the car will never require any repair throughout its life. Insurance premiums vary wildly for different cars, and even for the same basic policy on the same car and driver, the premium could be drastically different among different insurers. Each insurance company has a different way of calculating the rate based on the potential risk assessed through a wide range of data, such as driving history, traffic ticket history, claims history, and geographical location. So how do you navigate through this sea of confusion?
“Research,” Andrew said. As simple and obvious as this is, its importance cannot be over-emphasized. “Especially the Internet,” he continued, “which is quite different from even five years ago.”
On the maintenance front, Andrew suggests finding a good mechanic and sticking with that mechanic. That mechanic will be your car’s family doctor. The more familiar he/she is with your car, the better. The best way to find a good mechanic is through friend referrals.
Some dealers will try to sell you an extended warranty in one form or another. Be sure you understand what it really covers. Some of these have specific conditions, which exclude warranty repairs. Another thing to keep in mind is to regularly maintain your new car. Regular maintenance includes oil change and assorted inspections. Keep a record of maintenance activities (i.e. invoices), especially if you don’t intend on bringing your car back to the dealer for maintenance. In the unfortunate event that something goes wrong and requires dealer repair, the dealer may ask to see proof that the car has been properly maintained before they will honor the warranty. Some luxury brands have a complete maintenance schedule and they will hold your hand each step of the way for the first three or four years, but you are very likely to pay more for this level of service.
If you live in an area where it snows in winter, you may want to think about buying winter tires. This introduces another expense and a storage space issue. Even if you decide to go with all-season tires, keep in mind that rubber compound hardens and loses traction over time. It would be a good idea to work out a budget to replace those tires every five years or so.
Indeed, there is no shortage of information on the Net. As a matter of fact, there might be too much information, and it’s a mixed bag of truths and lies. According to Andrew, insurance brokers provide many online insurance quote tools, and they can only provide quotes for the limited number of companies they represent. InsuranceHotline.com is not a broker and its mission is to break through the noise on the Net and provide the lowest insurance quotes.
Andrew then pointed out that another handy online tool is Car Cost Canada. For a fee of C$40, you can obtain a detailed report on the dealer invoice price of new vehicles. This report can provide new vehicle buyers some ammunition in price negotiation with dealers.
Before the global financial meltdown of 2008, the North American automotive industry thrived on the leasing model, where owners hopped from car to car in a three to four year cycle. As a result of the credit crunch and bad economic times, people are keeping their cars longer, and hence have a longer commitment to the purchase. This places more importance on buying the right car in the first place—the key is research, research, and more research. This is one major investment in which patience gives great returns.
