Buying a car is one of the most important financial decisions millennials can make early on in life so it's important to have the right information.
This post was written by Christopher Rogers, originally published in The Reply.
Recently I decided to trade in my 10-year-old Subaru for a new car. I had owned my vehicle since high school and I was sad to see it go, but it had reached a point where I was unwilling to spend any more money to maintain it. This isn't a new-car horror story. I purchased a new car 18 months ago and I'm still as happy with it as the day I bought it. I had a good car-buying experience because I asked a lot of questions and when I wasn't sure about the answer I got, I went looking for advice. But the process got me thinking about the best way for millennials to navigate a buying process that can feel outdated.
"I Thought Millennials Weren't Buying Cars?"
Vehicle ownership seems to be somewhat of a contentious issue for millennials. There are countless conflicting reports about whether this generation is actually buying cars. But regardless of the trends, or whether your current plans even involve buying a car, knowing the ins and outs of the process is certainly helpful.
It doesn't matter how you look at it, buying a car is a major purchase. Unless you're paying cash, you need to secure financing, look at insurance options, and understand the nuances of vehicle warranties and protection plans, and that's only once you've decided on the car you like. All that information can be intimidating, especially to the first-time car buyer. And even more so if you don't know much about vehicles.
Whether you're a certified car nut or you're just buying a car because you need it for commuting, it's important to feel empowered and knowledgeable while you shop. To get all the best advice on the process, we spoke with Silvana Aceto, Corporate Communications, from CAA South Central Ontario, and asked her what we needed to know about buying a car. CAA is Canada's largest not-for-profit Automobile Association and it has over 1.9 million Members in South Central Ontario.
My personal advice: If you live in a cold climate, remember to account for additional seasonal costs like snow tires and rims.
THE REPLY: When buying your first car, is there a best place to start? (With a budget, vehicles I like, buying new or used?)
ACETO: When buying your first car, start with determining what type of vehicle suits your needs. Then you will want to set a budget. Remember to factor in insurance, maintenance and operating costs.
There are so many kinds of vehicles available (compact, SUV, sedan), how should I start to narrow down what I want?
A: Create a list of vehicles you are interested in and start your research. Look at model ratings, reliability information, crash ratings, fuel efficiency and owner satisfaction. Try to check out a local auto show or Consumer Reports. Once you've narrowed down your options to two or three vehicles, take each one for a test drive.
What kind of budget should I set?
A: Buying a car is usually the second biggest purchase in your life. For most it means borrowing money from a bank or credit union. Determine how much you can afford and what you want to pay for a car.
"Everyone wants to give me advice..." How much emphasis should I place on reviews or word-of-mouth?
A: Turn to family and friends for advice. They may have valuable insights based on previous experience with a type of car and/or dealership. But don't forget about the many professional resources available, such as the Automotive Journalists Association of Canada.
Buying a car is usually the second biggest purchase in your life.
"I'm intimidated because I don't know a lot about cars..." Are there some basics I should be educating myself on before I start going to dealerships?
A: Know the terms dealers use, such as MSRP. The manufacturer's suggested retail price is set by the manufacturer and is commonly known as the list price or window sticker price. This price includes all factory installed options, preparation and freight charges.
What should I know when I go for a test drive?
A: A test drive allows you to get a sense of the vehicle's handling and options. It should take approximately 30 to 45 minutes and mimic the routes you normally drive, as well as include some highway driving. Be objective and determine whether or not the vehicle meets your needs.
"I'm nervous about paying too much..." How do I make sure I am paying a fair price?
A: Familiarize yourself with all the costs associated with the purchase. These typically include: taxes, pre-delivery inspection, freight charges, licensing and administration fees. Read and understand the contract before signing it. And ask questions if you don't understand. Typically, 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.
Do you have car buying advice for other millennials or are you just beginning to look for your new ride? Share your thoughts in the comments!