For many of us, buying a new car is probably the second biggest purchase we’ll make in our lives. It’s expensive, it’s a long term investment, and you rely on it. Most of all, no one wants to get screwed.
Get informed…It’s free
Until recently, invoice prices were not readily available to Canadians. Some companies sold it, while most car dealers just wish they didn’t exist.
Invoice price is the number which the dealer essentially pays for the vehicle. If a shopper knows what the dealer paid, they go into the dealership more informed.
Now, a website like Unhaggle.com lets you access invoice prices absolutely free.
So what’s a fair markup on a new car?
It all depends on how good you are at negotiating, and how well the vehicle is selling. Generally a great price is around a 3 percent markup; 5 to 7 percent for luxury brands.
Related: Why I Bought Out My Car Lease
Manufacturer incentives are money offered by the manufacturer of the vehicle to help dealers sell cars.
It’s free money that’s generally passed on directly to the customer. Sometimes these incentives can be in the thousands of dollars.
Next, you’ll want to know the fees. There are four main fees (three in some provinces) that a consumer MUST pay.
- Freight is the cost of transportation of the vehicle to the dealership.
- Air conditioning and tire recycling levies are smaller government taxes that generally total to around $115 to $130.
- Finally Alberta and Ontario buyers pay a small regulatory levy for consumer protection purposes of around $5 to $6.25.
Any fees on top of this usually represent additional ways for the dealer to make a profit, admin or etching fees can be negotiated out.
Leave out your trade-in
The age-old negotiating trick is easily applied when a customer introduces the fact that they have a trade-in before the price on the new car is settled.
Essentially, negotiating a trade-in value is a completely separate negotiation. Don’t mention it up front.
Buyers who combine the two often get overwhelmed, which makes it easy for the dealer to take profit from one to apply to the other.
How to Get the Best Deal in your Pajamas?
Unfortunately, buying a car requires most shoppers to be organized and well researched. Then you’ll need to spend a few evenings and weekends negotiating, which isn’t as fun as going for a test drive.
For a small fee of $49, Unhaggle reaches out to your local dealers to get them to compete for your business – like a reverse auction.
Related: 10 Fees That Are Worth The Money
Dealers know they have to offer great deals for a chance to win the business. You can shop for the best price from the comfort of your couch.
Finally, select the best offer and walk into the recommended Unhaggle dealer to finalize the paper in a few short minutes – not hours!
For the more ambitious negotiator, Unhaggle offers free dealer cost reports on almost all vehicles in the market today.
As mentioned above, this is free information that gives the shopper a significant advantage in price negotiations.
Take a look at some recent Unhaggle deals:
2013 Ford Taurus SEL FWD
- MSRP – $33,799
- Manufacturer Incentive – $5,500
- Unhaggle Savings – $1,300
- Total Savings – $6,800
- Mandatory Fees (Freight, AC Tax, Tire Tax) – $1,680
- Total Before Tax – $28,679
- + $1,000 discount after tax for Costco Members
- Finance Rates: $5,500 + 5.69% up to 48 months
2012 Acura TL AWD Auto Technology Pkg
- MSRP – $46,990
- Manufacturer Incentive – $7,500
- Unhaggle Savings – $2,550
- Total Savings – $10,050
- Mandatory Fees (Freight, AC Tax, Tire Tax) – $2,080
- Total Before Tax – $39,020
- Finance Rates: $2,000 + 0.9% up to 48 months
Related: My Brand New Car
Final Thoughts On Buying A New Car
Buying a new car can be intimidating for many people. You walk onto the car lot and the sales staff jumps all over you with their high pressure tactics. All of the negotiating strategies you’ve read go out the window when you lose your nerve in the heat of the moment.
Related: How I Saved $300 On Cable And Internet
Unhaggle is one of Canada’s largest online market places for new vehicles. They make buying a new car easy because they strip away all the dealer jargon that’s designed to confuse you. They make the dealer’s compete for your business and offer their best price.
Best of all, Unhaggle offers a 100% satisfaction guarantee.
So if you’re in the market for a new car, or you’re reluctant to buy a car because you hate negotiating, give Unhaggle a try and save yourself some time and money.
Why can’t you expect financial prosperity after 40 years of working? If you’re concerned about your financial future, you’re not alone. Nearly half of baby boomers fear that their retirement will result in poverty.
As company pensions disappear, many boomers must rely on their RRSPs to generate retirement income but they’re uncertain how long their nest eggs will last.
How much can you spend?
It’s no surprise that your first priority is to prepare a budget. How much income do you need to fund both your basic living expenses and your desires?
How much can you expect from your fixed income sources – CPP, OAS, company pension, etc? Any shortfall will come from your retirement savings.
Related: How CARP Benefits Aging Canadians
To know how much money should be withdrawn from your retirement savings each year you’ll need to develop a withdrawal strategy.
Withdraw too much and you’ll likely outlive your assets and may have to rely on social programs. Take too little and you may unnecessarily sacrifice your standard of living. A withdrawal of 4% of your savings is usually recommended.
Assess your asset allocation and your risk tolerance. Holding too much in fixed income can erode your savings with increases in inflation. Market downturns can reduce your stock portfolio substantially when they occur just when you need the money.
Stick to dividend paying stocks and REITs rather than growth stocks for inflation protection for the long term, and bonds or other fixed income instruments for short-term withdrawals.
Related: Beat Inflation With Rising Dividends
Consider an annuity for a guaranteed stream of income over your lifetime, especially after the age of 80. This can give you a feeling of safety as long as you’re willing to sacrifice liquidity.
Unexpected events
We all think that we’ll live long and healthy lives. However, health issues are a major concern as we get older and can really decimate even a well-prepared retirement portfolio.
Retirement homes and assisted living facilities are a large monthly expense and prescriptions and medical supplies can be a drain on the budget.
Long term care insurance and critical illness insurance are two options to consider before you retire. Details vary but most will cover assisted living, medications and nursing care, upgrades to your existing home, and so on.
Related: Drug Coverage For Seniors
Premiums will be lower the younger you are, and some will reimburse some or all of your payments if the insurance is not required. It’s worth checking out.
Expenses caused by other unexpected events may be solved by keeping that old standby – the emergency fund, and by making sure some of your portfolio is liquid.
The family home
Unfortunately, many retirees still hold a mortgage on their residence. Not only is this an unnecessary expense, it will also reduce the equity in your home should you decide to sell or take out a reverse mortgage.
Many people are relying on the sale of their home to cover expenses should they be required to move into a retirement residence. A reverse mortgage can generate some income to enable you to remain in your home if your expenses increase substantially.
How confident are you about your retirement plans?
According to Sun Life, respondents to a survey are twice as likely to be confident when working with an advisor – 54% are satisfied as compared to 28% who are satisfied when doing their own investing.
A good advisor will consider your lifestyle, your goals and your expectations and provide you with a tax efficient savings and withdrawal plan that will meet your needs now and in the future.
But don’t put all your trust in the advisor. It is your responsibility to know what you are invested in and why. You don’t want to find out your portfolio has been mismanaged – even unintentionally – when it’s too late to do damage control.
Related: Can You Trust Advice From Your Bank?
If you prefer to manage your own finances, make sure you have the time, confidence and necessary expertise to make good decisions. Ignorance will not be bliss when your plan has failed.
Final thoughts
Every working person looks with longing towards retirement and, finally, a life of leisure. Sadly the majority will not be able to sit with their toes in the sand drinking a fruity cocktail on a tropical island.
Many unfortunately failed to plan. Many will likely have to go back to work – after retirement, or reduce their leisure expectations.
A thoughtfully prepared spending and withdrawal plan will help alleviate any worries you may have about retirement.
Learn From The Boomers’ Mistakes
“Inside every older person is a younger person wondering what happened.”- Jennifer Yane.
In a recent BMO survey 42% of Canadian baby boomers said that if they could go back in time, they would have started saving up for retirement much earlier in life.
Baby Boomer Mistakes
As they say, hindsight is 20/20 and many boomers regret their “live for today” mantra now that they’re trying to figure out how they’ll make ends meet.
The majority of boomers are woefully unprepared for retirement. In large part this is because they made too many critical financial mistakes.
As a result, boomers advise younger people to put more thought into what their retirement might look like and to budget properly for it.
Alas, much of the younger generation is just not getting it. A TD survey found that two-thirds of their respondents have no financial plan for retirement and 16% have no financial assets whatsoever.
Related: Why Your Financial Plan Sucks
What could be a true story
Jeremy is in his mid-thirties and is married to stay-at-home mom Jessica. They have two pre-school children.
He works at a good managerial position earning $85,000 a year. They have no prepared budget and spend his entire take home pay each month.
Jeremy and Jessica have never been able to save money for a down payment on a house, so they rent in an upscale neighborhood.
Related: Why Do We Save?
They lease two late model SUVs. They own several credit cards (look at the reward points they can earn!) and an unsecured line of credit.
Jeremy belongs to a pension plan at work so he doesn’t think he needs an RRSP or TFSA. He thinks his children are too young yet for him to consider saving for their post secondary education.
Because they have no emergency savings, whenever they’re in a financial bind he looks to his mom for help.
Mom is widowed and lives frugally on her CPP and some investment income, but she regularly gives Jeremy access to her credit card and often dips into her home equity line of credit to help him out.
Fast-forward twenty years (and they do go fast!). Mom has had some health issues and she, unfortunately, had to sell her house and move into an assisted living facility.
The proceeds from the sale are used for her rental payments and medical assistance.
Jeremy has been forced into early retirement. He receives a lump sum severance package, just in time to pay for his daughter’s lavish wedding to be held in Jamaica.
Since they’re now retired, they decide to take it easy and spend the remainder of the money on a luxury month-long cruise.
On their return they receive notice that Jeremy’s former employer must cut his proposed pension payments in half due to an underfunded pension program.
Meanwhile, they haven’t kept up with their debt payments while they were away and their creditors are demanding payment. What will Jeremy do?
Mom! Can you help me out? This is the last time, I promise!
Final thoughts
Boomers could be somewhat excused for being unprepared for retirement. After all, we had no model to follow. In general, the majority of us overspent and under-invested for most of our lives.
We never thought about retirement planning because we were too focused on living in the moment. Why worry about getting old?
The “hope I die before I get old” generation didn’t anticipate our longevity and the probability of spending about one-third of our lives in retirement.
Related: Are You Counting On An Inheritance?
Likewise, we didn’t realize that we’d likely have to take responsibility for much of our retirement income.
In the BMO survey, 59% of boomers urged young people to open RRSPs and TFSAs as early as possible and maximize their contributions.
They advised them to pay off their mortgages faster and control their debts.
The boomer generation has done an excellent job of teaching others retirement planning lessons using the “don’t do what I did” technique.
You now have a model to (not) follow. Younger retirement savers would be wise to learn from the mistakes made by the “buy now – pay later” bunch.
Sometimes the best way to prepare is to learn from other people’s mistakes.
It would be a shame to have the opportunity to look after your financial health – but fail to do so.