Saving Money

Cutting Car Costs

Driving is no longer something to pass the time with the family in the back seat. It is expensive to drive, but it is usually necessary! According to the Canadian Automobile Association, the driving cost per kilometer for a Dodge Grand Caravan SE 4 door passenger van, 3.3 litre 6 cilinder is 69 cents. That sounds like just pennies, right? Add your ownership costs over a full year and you are spending over twelve thousand dollars after driving an average of 18,000 kilometres for the year. Need 4-wheel drive or leather seats? (Source: caaica)

The dreaded topic of fuel for our vehicles is one that seems to constantly be in the news. According to Statistics Canada, our country consumed 39.8 billion litres of gasoline in 2005. The use and cost of fuel increases in the summer months of July and August due to the increase in holiday travel. Don’t blame your local gas station owner for the price fluctuation. Taxes, both federal and provincial, comprise 40-50% of the overall cost of gas.

The following are a few strategies for saving money on your vehicle cost:

Payments: When shopping for a car, ensure that you don’t immediately ask what your payment is going to be. First talk to the dealer about the sticker price and work that down. Then, talk to the dealer about financing if that is how you are going to pay for the car. You do not HAVE to finance with the dealership. Many banks will finance the loan for you without working through the car dealership. Your payments are solely determined by the amount you are financing (the price you are paying for the car less down payment and trade-in value) and the rate at which you are financing. Do not accept an offer the first time you are in a dealership. If you are told that the car will not be there or the deal will not be good after that day, call their bluff and sleep on the decision. If you are planning on leasing your vehicle, still work on the sticker price first. Your lease payments are based on the price of the car, the depreciation of the car over the lease term, a lease rate, and taxes. You have control over the price of the car so make sure that you are getting the best deal.

Refinance: The average interest rate in Ontario for a new car loan on a $15,000 balance is almost 8%. This assumes that you have an above average credit rating. If you are paying a high rate on your current car loan, it pays to shop around and see if you can do better.

Know The Score: Your credit score is a determining factor in the interest rate you pay on any loan. This score is taken into consideration along with your income and job stability when the bank is looking to approve your loan. It is very easy to obtain a copy of your credit report from any one of the three credit reporting agencies in Canada.