Buying a Vehicle: Dating or Love At First Sight

Mary Beitz
I am a Daughter, a Sister, a Wife, a Mother of many, an Aunt, a Grandmother, an encourager, Friend & Confidante!!! I have been blessed with a positive perspective (for the most part…a work in progress in others), with a glass half full attitude and a sense of humour that has held me up in good times and bad. I have always appreciated being able to reach out, seek information, surrounding myself with women who believe in supporting one another, encouraging, sharing & mentoring. As I enter another season in my life I feel led to share some of the things that I have gleaned in my life so far on a larger stage. We will talk about Family, Friendship, Relationships, Children, Leadership, Compassion, Work, Food, Empathy, Responsibility, Menopause, Marriage, etc. May you be encouraged…laugh often! Ours is not a solitary journey. We women are relational creatures. I believe that we are the best support for one another! Here’s to a Beautiful New Friendship!!!

Nov 02,2016

I started my automotive career in 2004. I’ve always had a love affair with vehicles; Trucks (big), Cars (coupe), Fast (Corvette), Lumbering (Lincoln), Hot (Aston Martin), Throaty (Mustang), Technology (Tesla)…you get the picture!

For as long as I can remember, I loved working with people, helping them with needs and wants, balancing the love with the pocketbook. My goal was to always keep in mind that the reach should never extend beyond the grasp.

When customers come into the dealership, they often say “I’m not interested in leasing, I want to own my car/truck”. Here’s the thing; unless you pay CASH, not line of credit, not a personal bank loan…until that lien is paid in full, you don’t own the vehicle.

Do you want to date, or is it love at first sight?

If you’re a high km/mileage driver (ie 30-50/km/m/year) financing a vehicle over 5-7 years can create economic/budget hardships. With most new vehicle/powertrain warranties at 60,000/100,000 km/m you’re out of pocket maintenance expenses will grow exponentially in stride with your payments.

The break-even stage in a finance contract is approximately 4 ½-5 years. If you’re in a 7 year contract, the value of the vehicle should be close to the amount owing. If you’re a high km/mileage driver, no such luck. This is where the term upside down or negative equity comes into play.

Not a good place to be. If you’ve been maintaining your vehicle, it will treat you well, if not, then value isn’t part of the discussion. It becomes a “what will the current market tell us it’s worth”.

I often explain leasing like dating…you take the girl out, you date, you woo! It’s an experience. After 2-4 years, if you’re absolutely smitten, you can purchase for the predetermined amount, set at the outset of the lease based on the number of years/km’s/mileage and amount put down.

Let’s say that at the end of the lease, the truck can be purchased for $15.000.00 You’ve had the truck 4 years, and you’ve paid for 25,000km/m/year. At the end of 4 years, you can drive up to 100,000 kms/m in total. You’ve only driven it 80,000kms/m. The current appraised value is $19,500.00. Great news, you still purchase for $15,000 and realized the equity value of $4,500.00

Conversely, let’s think back to 2008 when everything crashed. That same truck that had a predetermined value of $15,000 was only worth $11,000. Why would you exercise your purchase option with $4,000 in negative equity and no remaining warranty?

When you lease, you only pay tax on the monthly payment amount, you pay No tax on the buyout amount of $15,000 and you still have the options to purchase should that be in your best interest.

If the dating experience isn’t everything you thought it would be, you can walk away. Perhaps you’ve entered a different season in life (ie kids/different job/a move) and the vehicle no longer serves its initial purpose…you can transition into something that does without damaging you financially.

Whether you lease for 3 years and then spread the remaining payment over 2-4 years depending on how much you drive, the option to control your budget is still yours.

Do I believe in financing…Absolutely! If you’re payment driven ($400/month) and you want to finance for 5 years, DO the math. $400 x 60 month (5 years) = $24,000 without any interest. Back out the taxes (ie 13%) and other charges = $20,000 (some consideration for interest). Ideally with a budget of $400/month I would recommend a vehicle in the $15-$18,000 range.

If you’re a rate shopper, be careful. When you get caught up on rates, you can miss opportunities. While aggressive rates are attractive, they shouldn’t be your only consideration. Low rates on pre-owned vehicles can mean either a promotion being offered by a manufacturer’s financial institution for specific vehicles or it (the rate) is being bought down. If the latter, then you’re still paying for it.

Be wise; get on your computer and look at different models that suit your needs. Narrow it down it down to a number that you can test drive in one day. Take notes and set your boundaries before you step out of your car. Don’t go hungry, tired, or sick. You want to be sharp, know your stuff…what you need, warranties, roadside assistance, is there a dealership close to you that you’ve heard great things about their level of service.

Anyone can sell you a vehicle…the main question is do they have a customer centric  focus? Buying the vehicle is the easy part. The relationship is cemented in service where they take care of the most important part…YOU!

Happy travels!!!

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