When it comes to New Year’s resolutions, one of the most popular is to create and stick to a realistic personal budget to help with important things like paying down debt or saving up for a house, a vacation, or even a new car.
If you’re looking to upgrade your motor vehicle in the new year, it’s important to do your research, understand the risks associated with financing a vehicle, and safeguard your financial plan to ensure you stick to your budget.
There are four things to consider when it comes to the financial side of buying or leasing a car.
1. Be aware of your credit rating
Speak to a representative from your financial institution to ask about your credit rating before visiting a dealership. That way, you’ll enter the dealership already knowing the options available to you and will make an informed decision when comparing financing offers.
2. Set a realistic budget you can afford
Being informed about your credit rating and the financing options available to you can also help you develop a realistic budget for your new vehicle. It also offers you a picture on what your total monthly costs will be.
When considering whether you can afford a vehicle, remember to ask yourself important questions like:
- How much will I have to pay for parking?
- What will my maintenance costs look like?
- Will I purchase any after-market products?
3. Know who your credit application is submitted to
If you’ve decided on a vehicle and are arranging financing through the dealership, be aware that the dealer may submit your application to one or more financial lenders. Consumers should ensure they know who their application is being submitted to, and always inquire about each lender’s offered terms/rate, as multiple applications can negatively impact your credit score.
4. Know your rights when it comes to all-in pricing
Once you’ve established a budget for your new vehicle, it’s important to be aware and know your rights when it comes to all-in price advertising, which is the law in Ontario. You should never be charged more than the dealer’s advertised price for a vehicle, and the only things not included in the advertised price should be HST and licensing fees.
Once you’ve determined your budget and start shopping, know that the advertised price for a vehicle must include things like freight, a pre-delivery inspection or expense, administration fees, government levies, and the 10-dollar OMVIC fee. Products or services that have been pre-installed on a vehicle by a dealer must also be included in the advertised price.
If you’re feeling the financial pinch after the holidays, know you’re not alone and that there are ways to ensure purchasing or financing a vehicle fits into your overall budget. OMVIC’s consumer support team is available to help answer your questions when it comes to financing a car. Become an informed consumer by visiting omvic.ca or call 1-800-943-6002.