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Buying a New Vehicle

New vehicles generally come with a pretty high price tag and many people will also pay to finance the cost of the vehicle over a number of years. Determining whether or not it is a good investment for you often depends on taking the time to do the research and make an informed decision.

Pros and Cons

The big difference between buying and leasing is that when you buy a vehicle, even on credit, by the time you finish making payments you will own the vehicle.

In addition, a loan-financed purchase may give you greater flexibility to deal with certain situations than a lease agreement does. One example might be if you come into some extra money and want to pay off your vehicle early. With a loan, you can pay out your obligations early, likely without a penalty. Another could be if you run into financial difficulties and cannot make your payments. If you have trouble making payments, you can arrange to sell the vehicle and pay off the loan.

However, there may be some drawbacks to a new vehicle purchase...

  • you will be responsible for maintenance and repair costs that are not covered by warranty while some leases cover these costs
  • your monthly payments will likely be higher than for a lease
  • you may not have the same income tax deduction benefits as with a lease
  • while you will own the vehicle it will be worth much less than you paid for it even after only a few years of ownership

Before you Buy

Before you decide on a vehicle...

  • research the vehicle you are considering buying to get information about things like the frequency of repairs and safety records for particular models
  • check with other consumers to see if they are satisfied with their new car choices and the service they are receiving from the dealer
  • shop around for the best price for the vehicle
  • look for incentive deals that are generally only available for a limited time
  • if you are financing, shop around for the best rate - compare the rate you would get at your own bank with the rate a dealer is offering

Making the deal

Dealers are required to tell you about anything they know or should know about the vehicle that could reasonably affect your decision to buy.

  • confirm that the dealer is licensed (you can check this here)
  • ask if the price was advertised and if so what the advertised price is (dealers must stand-by these prices)
  • ask if the vehicle was damaged during transit or on the lot costing and if so the amount of damage (if it is more than 20% of the purchase price this must be disclosed)
  • discuss each transaction separately starting with the value of your trade-in (if you have one), then the purchase price and finally the cost of financing
  • find out the total cost including taxes, financing and any add-ons (dealers cannot charge for add-ons above an advertised price unless you can decline the add-ons)
  • read the contract (including the fine-print) and make sure it has all the required information in it as well as any other terms you and the dealer have agreed on

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About PLEA

PLEA gratefully acknowledges our primary core funder the Law Foundation of Saskatchewan for their continuing and generous support of our organization.