Establish a Budget – and Stick To It

I know that financial folks and auto enthusiasts everywhere will say find the car that’s right for you and then find the money to pay for it later. But realistically, in this age of fixed incomes and growing expenses, I say you should set a budget you know you can live with before anything else. Once that’s done, stick to it. Don’t torment yourself (and waste your time) by looking longingly at what you cannot afford.

When setting your budget, though, you need to consider all the factors involved and be a little flexible with where you put your money. For example, setting a budget does not mean deciding ‘I can afford a Ford Focus and nothing more.’ Rather it means, ‘I know that with my income I can only spend so many dollars per month, all-told’. So sit down and calculate. Once you know that figure, good research will help you see how you might partition those funds to obtain the greatest value for your money later on.

When purchasing or leasing a new or certified pre-owned vehicle, remember that taxes, interest and insurance will have to be factored in as part of your monthly expenses. Granted, you do not know all these costs upfront. But as you start to browse for your next vehicle, keep in mind that only a portion of your budgeted funds will be going towards paying the vehicle’s purchase price. If after some preliminary research you realize that you cannot afford a new(er) vehicle right now, then you can readjust your search criteria before you get overly invested in a specific model.

Consider Your Lifestyle

Ask yourself:

• What is my primary reason for obtaining a vehicle?
• Am I doing a long daily commute or am I running about town?
• What are the driver’s needs when using the vehicle and what features will meet these in the best way possible?
• How many people do I need to transport on a regular basis?
• Do my passengers have special needs? For example, will I have babies or young children, elderly or disabled persons travelling with me? What might their needs be for seating, safely travelling in and entering and exiting the vehicle?
• What about my pets? Where will they and their gear travel, and how much space will this require?
• What sort and what size of a cargo area do I need? Must I allow space to address specific needs, such as a baby stroller, commercial or work-related equipment, a wheelchair, or renovation or hobby projects?
• How important is towing, all wheel drive or off-road capabilities?
• What role will fuel consumption or economy play in my decision?
• Where will I park it? If the vehicle is large, will it fit within that space?

Considering these questions may immediately narrow your choice of vehicle type (or class).

Set Your Priorities

In all decisions, some sacrifices and compromises must be expected. You need to decide how far you will go to get what you really want. So, having considered your lifestyle, ask yourself:

• Which vehicle characteristics are absolutely integral to the satisfaction of my key purpose?
• Where am I willing to be flexible or what might I be willing to totally give up if necessary?

Do Research

Now you are ready to start looking purposefully, with needs in hand and wants in check. Remember that nothing is a substitute for good research. To get you started, I’ve already assembled a list of links to the Web sites for each vehicle brand for sale in Canada. Researching online is (I think) the best way to get a no-obligation feel for what’s realistically out there and roughly how much it costs. Doing so will help you to narrow down your search before talking to a salesperson.

Of course, many more decisions will need to be made before you settle on a specific vehicle. But by establishing a budget, evaluating your needs, setting your priorities and doing research, you can save yourself the hassle of aimlessly test-driving vehicles, or worse, purchasing a vehicle which doesn’t suit your circumstances.

What would you add to this article? What process or criteria have you found effective when searching for a vehicle? What further questions do you have on this subject?

If you want to read in-depth about these or other less-common types, this Wikipedia article http://en.wikipedia.org/wiki/Car_classification has some more detailed information.

Cars are available in literally every price range from every manufacturer. Often the same car model is available as a coupe (two door) or sedan (four door). Coupes or sedans may be available in hatchback versions (which feature an integrated cargo area with a lift gate) and are sometimes referred to as three door or five door models. Coupes often are styled to subscribe to a younger, sportier aesthetic, while sedans are usually geared more to families.

Sports cars are also engineered primarily with performance in mind. Being less practical (not usually used as a primary vehicle) and more about grabbing attention, usually they have only two seats and lots of sporty styling choices. The sky is the limit when it comes to price, but there are affordable options out there too.

Full-size vans are usually only used for commercial purposes nowadays. But nothing seems to be able to beat a minivan when it comes to practicality and value. Minivans are very versatile, boasting plenty of cargo room and passenger room and (best of all) the ability to reconfigure how much space you want to allow for each of these as your daily needs change. Minivans may seat seven or eight people, or by removing or collapsing the seats that passenger space can be regained for cargo room. Of late, minivans are not as widely produced as they used to be.

SUVs (Sport Utility Vehicles) seem to have become the “cooler” choice. These vehicles combine the passenger/cargo space with off-road and towing abilities. Large and mid-size SUVs have loads of interior space, offering three rows of seating. But for most people, using a large vehicle to runabout town is overkill and so there’s the compact SUV, which usually has five seats.

Pickup trucks may be two door (with space for two or three passengers) or four door (to seat five). Often pickups are available from the manufacturer with different engines, suspension, axle choices and so on, intended for different practical purposes. Pickups can range from the most basic to totally luxurious, but they always have that one definable feature – the open cargo box on the back.

Crossover vehicles are much talked about but hard to define. Essentially, they are vehicles which combine the elements from two or more vehicle types. The term “crossover” typically refers to a vehicle which grabs the styling and cargo space of an SUV but is based on a car’s proportions, making the vehicle lighter, lower to the ground and more fuel-efficient.

But which one is the best for you ? We’ll talk about that in a future post.

In its most basic sense, from a Canadian perspective, a vehicle is considered an import when its manufacturer’s country of origin is outside of North America. Vehicle manufacturers whose birthplace is North America are considered domestic, such as Chrysler, Ford and General Motors.

Imports have long been perceived as being better designed and built, translating to better performance and reliability, superior styling, greater fuel economy, and overall higher resale value than their domestic competitors. But due to import vehicles and their parts traditionally having been designed, built and shipped from overseas, a downside is that they are generally more expensive to purchase, finance, insure and repair.

Conversely, while domestics have often been seen as less reliable and less refined, they have also proven to be less expensive to acquire and insure. Add to this that when the vehicle must be serviced or repaired, the common availability of trained repair professionals and domestically manufactured parts generally make a domestic vehicle cheaper and faster to fix.

So which is better for you? It depends on your perception, purpose and the current realities of the market.

The perceived superiority of one side or another is usually directly related to a person’s demographic, with younger persons enthusiastically embracing stylish imports and the older generation tenaciously clinging to practical and economical domestics. Realistically, the evolution of the global economy means that the traditional definitions and differences are more subjective than ever. Today, auto makers may share technology so that a domestic may contain components based on an import, and vice versa. Several of the widely available imports now manufacture their vehicles in Canada, the United States or Mexico, and may even provide jobs in your community. Many import brands are now owned by domestics, such as is the case with Mazda, Jaguar and Volvo being owned by the Ford Motor Company. This interchange, coupled with a constant need to keep an edge over the competition, has meant good things for the consumer.

For example, for a long time in North America, rural communities and trades people have relied on hardy domestic trucks to get their work done, while professional urban dwellers have viewed imports as a means of communicating their upwardly moving social and economic success. Today, import brands offer solid alternatives to sectors traditionally dominated by domestic brands, such as pickup trucks. On the other hand, domestic brands have shown they are willing to devote more attention to aesthetics, detail and quality. Both camps offer a wide array of models geared to specific lifestyles and purposes, or to appeal to the environmentally or economically conscious buyer.

It may be argued that import vehicles have long held higher consumer satisfaction ratings than their domestic equivalents. And after all, consumer satisfaction is important since you want to be happy with your purchase down the road. Interestingly, according to the J.D. Power and Associates Vehicle Dependability Study for 2007 , times are a changing. They say, “For the first time since 1993, Lexus is not alone as the top-ranked nameplate. This year, Buick ties with Lexus as the most dependable nameplate according to survey respondents. Cadillac, Mercury, and Honda round out the top five rank positions, respectively.”

Really, selecting a vehicle today should be more about finding the specific vehicle that suits your lifestyle and budget than being enslaved to a perception that may not even hold true in your case.

If, for example, you were to find two great vehicles – one domestic and one import – which both equally suit you, then careful mathematics are needed to determine which would be the soundest investment, dollar for dollar.

Financial factors for consideration may be:

• projected depreciation over the intended ownership period, and whether the vehicle is being leased or purchased with resale in mind;
• available financing rate and terms;
• insurance costs;
• and service and repair costs after the warranty has finished.

My advice is to get the vehicle that is actually best for you , not one that impresses your neighbours or pleases your workmates. You are the person who has to live with driving it every day and paying for it for the next x-number of years. Think for yourself. If you were to discount a perfectly sound investment in a vehicle you love simply to align yourself with one side or the other, you could really be selling yourself short.

Then again, that’s just my opinion. This is a topic that is widely and hotly debated. Which do you think is the better buy – import or domestic? I encourage you to make a comment.

Below is an alphabetical, comprehensive list of new vehicle makes being sold through authorized dealers in Canada in 2008, with corresponding links to each official Canadian Web site.

Acura, Audi, BMW, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ford, GMC, Honda, Hummer, Hyundai, Infiniti, Jaguar, Jeep, Kia, Land Rover, Lamborghini, Lexus, Lincoln, Mazda, Mercedes-Benz, Mini, Mitsubishi, Nissan, Pontiac, Porsche, Saab, Saturn, Smart, Subaru, Suzuki, Toyota, Volvo, and Volkswagen.

The following list shows luxury auto makers having authorized dealers in Canada, but for whom I was not able to locate an exclusively Canadian Web site at the time of this article’s publication.

Aston Martin, Bentley, Ferrari, Lotus, Maserati, and Rolls-Royce.

Have I missed any? Be sure to comment and let me know.

Obvious differences can even be found between vehicles sold in Canada and the USA. For example, the Buick Allure in Canada is being sold as the Buick LaCrosse in the United States. But there are other differences that may be more subtle. In advertising, there is often a footnote that indicates it is the USA model being featured because some aspect of the vehicle may not be available elsewhere. So what should you look for?

Be aware of potential Canada/USA differences regarding:

• available makes;
• model offerings or names;
• standard or optional equipment, accessories and/or trim levels;
• government safety or environmental standards, ratings and/or rebates;
• imperial versus metric units of measurement (such as when comparing sizing, fuel consumption, acceleration or warranties);
• pricing, taxes and freight fees;
• manufacturer discounts or incentives.

So when it comes to researching vehicle specifications or reviews on the Internet, in magazines or on television, be sure to check the source’s country of origin so that you will be able to accurately compare the presented information. For simplicity, you may wish to focus your research on Canadian sources for the most pertinent information.

An auto maker refers to a company that manufactures vehicles, such as GM (General Motors Corporation). Of the vehicles an auto maker produces, it may choose to sell these under just one brand name or several different brand names, called makes (or marques) such as Buick, Cadillac and Chevrolet. Within a make, each car is given a unique model name, such as Chevrolet’s Cobalt, Impala or Malibu. All units within a model share a body style and basic standard features (or standard equipment).

For each model, auto makers will offer options (or optional equipment), which are factory-installed features, upgrades, or amenities. Options may be presented individually, or organized as packages intended to increase the vehicle’s appeal to a particular lifestyle or purpose. Elements from multiple packages are often bundled with unique features to become model levels (sometimes also referred to as model ranges, trim levels or just models). These sub-models may be differentiated by a word or initials after the model name, such as LE (Luxury Edition or Limited Edition), SS (Super Sport), Touring and so on. A base model has no upgraded features.

To further customize and personalize your vehicle, auto makers offer an endless array of accessories, such as spoilers, pedal covers, rubber floor mats or exhaust tips. These products are termed “genuine” because they have been designed and tested by the auto maker to be fully compatible with your specific vehicle. As such, they are sold through an authorized dealer. (Non-authorized accessories may be purchased from a third-party market retailer, like Canadian Tire or your local parts store.) You may wish to order genuine accessories when you purchase your vehicle so they can be installed at the dealership before you pick up your new car. Or you can purchase them later and have them installed, or install them yourself.