Tag: Car Corner

Why Cars From Canada Aren’t Worth the Risk

Our friendly neighbors to the north are many things, great hockey players, phenomenal makers of maple syrup, and a significant contributor to the world’s overall comedy output. One thing you should never count on Canada for though is used cars. That’s surprising to many people. After all, they’re the same cars sold stateside. What would cause Canadian cars to be such a bad investment?

As with many things, the answer boils down to multiple factors. In this case, there are three main drivers (pun intended) that lead us to recommend skipping that great deal from Canada.

Salty History

This one isn’t that surprising. It snows a lot in most of Canada, and like the Midwest, the salted roads can lead to a lot of corrosion and rust over time. This isn’t a deal breaker of course, just something to be on the lookout for. Remember, to really look at the bottom of any car or truck you buy. It’s worth it to bring it to a non-affiliated garage with a lift and plenty of light to make sure you don’t buy something with a well-hidden major problem

Carfox You Say

Many people are surprised to learn that Carfax is not as accurate on Canadian vehicles. It varies, but an (older) study found that while information from cars originating in some provinces had accurate information, but missed huge repairs from cars originating in others. Unless you have the capacity to do your own repairs, it’s not worth it to most people to take a risk on buying a vehicle that needs thousands of dollars in repairs just to save a bit of money up front.

I Don’t Recall

While the cars and trucks for sale in Canada are largely the same, there are differences. Sometimes that means you can get a trim or color not available stateside, but other times it means a part that is recalled isn’t available. There are also slight variations in the way some car companies handle recalls in different countries, which can potentially put you in an unsafe situation.

This of course doesn’t mean you should never buy a Canadian car, but it’s important to know the risks going in to it.

Buying Your First Car – What to Consider

Continuing our New Car Corner series, Norm Dufton joins us to talk about what to consider when buying your first car.

When buying your first car, it’s easy to find online calculators that help you figure out how much you can qualify for, and there’s always an unscrupulous lender who will give you more. It’s important though to determine how much you should pay for a new car, and that’s all in, not a monthly cost. Just as importantly, people need to take in the total cost of ownership, which includes things like repairs, and even gas mileage, when deciding on a car or truck.

Here are some of the main things to consider:

  1. What is the yearly all-in cost I can afford?
    1. What is the purchase price?
    1. What will maintenance cost?
    1. How much will fuel cost?
    1. What will insurance cost for the car I would prefer?
  2. What do you plan on using the vehicle for?
    1. Is fuel mileage most important, or do you need a work vehicle?
    1. Do you need a truck, or do you want a truck (i.e. could a car with cargo room work?
  3. What are my personal wants?
    1. Do you like a sporty vehicle enough to be comfortable with a car that is in the shop?
    1. Do you need cargo space? How much?

When you think of how much you should spend on a car, think in terms of the purchase price. Dealers will often make it about the payment. This allows for a larger purchase price. Let’s say you make $12 an hour and work full time. You will make about $25,000.00 a year. It is recommended that you spend about $12,500 on a first-time purchase. If you save 10% down you could buy a car that costs about $13,750.00.

As you begin to make more, and gain experience making payments you can go up to 75% of your annual income, so, if you make $50k a year, $37,500 would be a reasonable amount to spend, assuming you can afford the payment.

This may seem like a lot, or if you are looking to buy a truck, not much at all. For that $13,750 amount there are a few cars you could buy that are only about a year old and will have less than 50,000 miles.

This is a good place to start as you will have low maintenance and most of the cars in this range will get good fuel economy and last for many years, if well-cared for. Most folks have limited income when they get their first car and car loan.

What if you decide you’re going to get a truck? Since new trucks now are $50,000 and above, the market for, and the price of, used trucks has also increased. The more options you want, the more it will cost. If you just want a rear-wheel regular cab, you may be able to find one that is 2-3 years old. If you are looking for an extra cab or 4WD, trucks in this range will be older with higher miles.

If you buy an older truck with high miles, you will have the loan payment, fuel, insurance, and high maintenance combine with low reliability. We suggest a car to start, so you can get the cost of owning a vehicle to fit in your budget.

As far as trying to get a cheap car, (one you can buy for cash), it is possible to find one that is reliable, as long as you are flexible.

Norm Dufton leads Wauna Credit Union’s Consumer Lending Group. He has been an auto dealer and credit union advocate for more than 10 years.