Chapter 1: Smart Vehicle Shopping: A Step-By Step Guide

This chapter contains a quick reference guide in the form of bulleted lists that cover the important points to remember when you:

• Choose the right vehicle
  
• Set the price you want to pay
  
• Decide on Leasing or Buying
  
• Count the Costs
  
• Buying a vehicle
  
• Leasing a vehicle

Decide on Leasing or Buying

There are key questions you should answer when deciding between buying and leasing.

• How often do you replace your vehicle?
  
• Do you want to drive a better vehicle than you can afford to buy?
  
• How much do you enjoy buying, trading and selling vehicles?
  
• How much do you have for a down payment?
  
• What is your annual mileage?
  
• How well do you take care of your vehicle?
  
• Will you use the vehicle for business or pleasure?
  Consider leasing:

Consider Leasing:

• If you like to replace your vehicle every four years or less.
  
• If you want to have lower monthly payments for a more expensive vehicle than you would pay to purchase that same car.
  
• If you are not comfortable striking deals for trade-in, sale or purchase of a vehicle.
  
• If you want to avoid high initial costs when purchasing a vehicle.
  
• If your mileage is under 20,000km per year.
  
• If you take good care to maintain your vehicles and can avoid scrapes and bumps in the course of regular usage.
  
• If you plan to us the vehicle for business so that tax deductions become a factor.
  

Consider buying:

• If you like to hold on to a vehicle for five years or more.
  
• If you are comfortable striking deals for trade-in, sale or purchase of a vehicle.
  
• If you can afford to cover the higher initial costs of a purchase or financing deal.
  
• If your mileage is more than 20,000 km per year.
  
• If it is important to you to own your vehicle outright, fix it or maintain it yourself and keep it in the condition you want.
  

Count the costs

• Know the cost of financing precisely and don't let that it become intertwined with the price of the vehicle.
  
• Consider the tax benefits of leasing for business vehicles.
  
• With an owned vehicle, the deduction is a function of depreciation and it may be less overall than with a leased vehicle because of a limit on total amount you can deduct.

Note: It is important to review the current tax rules specific to your business and location regarding deductions for business vehicles.

• Consider the potentially significant impact vehicle choice can have on your insurance rates due to differences in safety and theft ratings.
  
• Protect yourself with gap insurance coverage for a leased vehicle. Gap insurance is often obtainable as a dealer add-on and it will cover the full cost of the balance of the lease that you owe in the event of total loss due to theft or damage.
  
• Remember that monthly insurance payments cost extra.
  
• All vehicles cost money to maintain properly and this is a substantial factor to consider.
  
• Repairs are a substantial expense that should be accounted for in the car buyer's annual vehicle budget. This cost can be affected by a couple of factors, warranty and vehicle choice.
  
• Depreciation is a factor if you lease a vehicle or if you buy new with the intention of selling within four years.
  
  

Previous

Next