Buying a new car
Step 1: Getting started
This section includes information about buying a new car. The menu above breaks down the process into five steps. Click on the steps to move throughout this section.
Use our checklist for a comprehensive overview of the new car buying process.
Your needs
A new car is one of the biggest purchases you will make and should not be taken lightly. Being informed about how to buy a car and how to protect yourself is important.
The first step in buying a new car is to decide what type of vehicle meets your needs. Do you do a lot of driving? Do you haul tools or equipment? Is fuel efficiency important to you, or are you interested in a luxury vehicle? How much can you afford?
Answer these questions using the provincial government’s In the Driver’s Seat publication to narrow down your selection.
Budget
What can you afford? Setting a budget will help narrow down your choices. Use Consumer Reports’ calculators and worksheets to determine what your lease or finance payments might be. When setting a budget, don’t forget to consider insurance, registration, fuel, maintenance and operating costs.
The Canadian Automobile Association's Driving Costs brochure
can help you calculate how much it costs to own and operate your vehicle each year.
Step 2: Choosing the vehicle
Once you've narrowed your choices down to three or four different vehicles, compare what it will cost to insure each of the vehicles. Insurance costs can vary depending on the make, model and features, so it's important to gather all of the information before you make your final purchase. Get a quick auto insurance quote here.
Crash ratings
Find out what the vehicle’s crashworthiness rating is by visiting the IIHS (Insurance Institute for Highway Safety) and NHTSA (National Highway Traffic Safety Administration’s) websites. Does the vehicle perform well in frontal, rear and side impact collisions?
Reliability
How reliable is the vehicle? It’s important to check a variety of information sources before making your final decision. This will allow you to compare the vehicle’s good and bad qualities.
Start your reliability research by checking the Driving.ca website. The site provides comprehensive Canadian information about new and used vehicles as well as pricing details.
Canadian Driver is also a Canadian vehicle information source that features vehicle test drives, reliability reviews as well as pricing information for new vehicles.
Compare vehicle features using MSN. The site includes reliability information, vehicle reviews and budget calculators.
Review road tests for various vehicles at the Consumer Guide website. Gather full details of a vehicle's safety, reliability, pricing and more, and compare it against other vehicles in the same class.
Fuel efficiency
Eco Calculator:
CAA has also introduced a new car comparison tool to help calculate the fuel efficiency of two different vehicles using the Natural Resources Canada Fuel Consumption Guide 2010.
Compare the fuel costs and greenhouse gas emissions depending on the number of years you plan to own the vehicle and the current price of gas. Use the Eco Calculator.
Fuel Consumption Ratings:
Is the vehicle good on gas? Natural Resources Canada provides a comprehensive list of vehicles ranked according to their fuel efficiency. Search by year, manufacturer or type of fuel to find the best fit for you.
Insurance
Once you've narrowed your choices down to three or four different vehicles, compare what it will cost to insure each of the vehicles. Insurance costs can vary depending on the make, model and features so it's important to gather all of the information before you make your final purchase. Get a quick and easy auto insurance quote in just five steps.
Extended Auto Warranty
Once you've selected the vehicle you want to buy, consider getting an AMA Insurance Extended Auto Warranty. Extended auto warranty can help protect you from the cost of most vehicle repair bills. There are four plans designed to meet your specific needs, and each plan includes nationwide protection, toll-free assistance and your choice of payment options.
Step 3: Shopping for your vehicle
Test drive
Once you’ve narrowed it down to your favourite two or three vehicles, take them for a test drive. Set aside one day so you can drive more than one vehicle, which makes it easier to compare.
A test drive allows you to get a sense of the vehicle’s characteristics, handling and options. It should last 30 to 45 minutes and duplicate the kind of driving you normally do, including some highway driving. It’s important to be objective.
Carefully determine whether or not the vehicle meets your needs. Use the Consumer Reports’ checklist to help. Take a notepad and jot down your impressions of the vehicle as soon as you’re finished, while your impressions of the vehicle are still fresh.
Tips while at the dealership:
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Step 4: Making the deal
Once you're ready to purchase your new car, familiarize yourself with the buying process. Learn the pricing terms; know your rights when leaving a deposit and how to negotiate the best deal.
Use Unhaggle.com to get a great price on your new car.
Consumer rights
Learn how to protect yourself as a consumer before signing anything. Read our consumer tips section, which includes information about signing a contract, refunds and exchanges and warranties.
Deposit dos and don’ts
Signing a sales offer and leaving a deposit represents your commitment to purchase and is legally binding. The dealer has the right to keep your deposit if the deal is not completed in order to cover his costs. If you wish to have your deposit returned in the event the deal falls through, include a statement to that effect on your offer to purchase. A deposit of $100 is adequate.
Extra costs
Familiarize yourself with all costs associated with the purchase, like taxes, pre-delivery inspection, freight charges, etc. Before signing, read and understand the contract. Additional features such as window tinting, extended auto warranties, rust proofing, and paint and fabric protection are additional costs that will be added to your final sale.
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Negotiating
Negotiate from a position of strength. Use Unhaggle.com to get up to 5 free Dealer Cost Reports a month. Build and the new cars you're considering and then view the Dealer Cost Report to see what the dealer paid for the vehicle.
The amount of profit included in the cost to a buy a new car depends on many factors including the type of vehicle, supply, demand, and the dealership. As a rule of thumb, the amount of profit figured into the cost of a new vehicle ranges from five to 15 per cent.
There is little room for price negotiation with entry-level vehicles. Negotiation power increases with each step up the ladder from entry level to luxury vehicle. Vehicles in extremely high demand and low supply are often subject to higher mark-ups.
The dealer’s cost for options vary considerably. Factory options are commonly marked up 15 to 20 per cent and dealer-installed options can be marked up 30 to 40 per cent.
Negotiate the price of the new vehicle first, before talking about your trade in or financing options.
A reasonable offer would allow the dealer approximately half of the mark-up as profit. Negotiate terms, like the price and interest rates. Make sure you get everything in writing, including all promises made by a dealership.
Remember:
- If a dealer won’t talk price, think twice about purchasing a vehicle there.
- Don’t fall in love with any vehicle – your objectivity will suffer.
- Learn what the car cost the dealer and negotiate up from the factory invoice if possible, not down from the sticker price.
- Keep the deal simple. Don’t confuse negotiations with discussion of a trade-in or financing.
Pricing terms
Know the pricing terms before entering into negotiations.
MSRP – Manufacturer’s suggested retail price
The MSRP is set by the manufacturer and is calculated by adding a suggested profit to the dealer’s factory invoice cost for a vehicle. MSRP doesn’t usually include optional equipment costs, preparation and transportation fees, or any taxes.
Sticker price
The sticker price is a label that accompanies the vehicle from the factory. This price usually differs from the MSRP and includes special equipment, options, preparation charges, and other fees. In many cases, the label with the sticker price is removed from the car before it’s sold, leaving consumers with little information about the dealer’s asking price for the vehicle.
In Alberta there is no legislation requiring that price stickers appear on vehicles. Consumers are encouraged to ask the dealer to see the vehicle’s sticker, which should be on file at the dealership.
Wholesale Invoice
Also known as the Dealer Invoice Price, Factory Invoice, Dealer Factory Price or Dealer Cost. The dealer’s cost for a car is based on the wholesale invoice. The factory invoice lists the price of the basic car, its options and shipping costs. Other factors, like a damage allowance (to repair damage during shipment) and holdback payments, also influence the dealer’s cost. These may be equivalent to three per cent of the value of the car.
Step 5: After the deal
Taking your new car home
Inspect the vehicle before taking delivery to ensure it meets your approval. If there are defects, ensure the dealer addresses them to your satisfaction before taking delivery.
Resolving complaints
If your new vehicle buying process hasn’t gone as smoothly as you hoped, you can find out how to resolve your complaint.
Insurance
You will also need to get insurance for your vehicle. Get a quick and easy auto insurance quote in three steps, online. Find out what personal auto insurance is, as well as coverage options.
Registry
Don’t forget to register your vehicle before you take it home. You have 14 days to transfer the registration from your old vehicle to your new vehicle. Find out what you need to bring to register your vehicle.
