Are CPO (Certified Pre-Owned) worth the extra money?

CPO

If you’re in the market for a used car and have been checking out your options online, chances are you’ve stumbled upon the term CPO which stands for Certified Pre-Owned. There are other terms and acronyms for the same thing, like “CUV” (Certified Used Vehicle) that Honda uses to distinguish its CPO program.

What is a CPO vehicle?

Not to be confused with a regular “certified” used vehicle that will conform only to the local motor vehicle department’s / ministry of transportation’s  minimum road-worthiness requirements, a CPO vehicle is inspected, re-conditioned and certified to manufacturer-established standards that are more rigorous than those of the government. Only certain used vehicles are eligible to be part of a CPO program based on their age, mileage and history. If eligible, the vehicle will go through a re-conditioning process (like refurbishing) and likely comes with an extended manufacturer warranty. So compared to a regular “certified” used vehicle that will meet only the local government’s minimum road-worthiness requirements by having attributes like a minimum tire tread depth and adequate brakes, a CPO vehicle has to be more rigorously up to speed in order to be deemed a CPO vehicle.

What are the benefits of a CPO vehicle?

The biggest advantage to a CPO vehicle for most consumers is peace of mind. Knowing that the used vehicle you’re buying has met certain quality criteria and has been re-conditioned is very reassuring – but it comes with a cost. The re-conditioning is not a free value-added service, and as such is built into the price. As with any pre-owned vehicle, each and every vehicle is unique so comparing CPO vehicles requires appropriate diligence.  And knowing the differences between each manufacturer’s CPO program is very important as the quality, terms and conditions differ greatly.

Where can I buy a CPO vehicle?

CPO vehicles are only found and sold by the vehicle’s corresponding manufacturer dealership. You cannot buy a CPO BMW, for example, at a “John Smith’s Auto Sales” type of independent dealership. You’d have to buy a CPO BMW from a Bimmer dealer, CPO Audi from an Audi dealer etc. etc. If you find a “CPO” vehicle at a small independent dealer, chances are they’ve created their own CPO program that might not carry the same weight and value as a manufacturer-backed CPO vehicle and any extended warranty would be provisioned by a third-party. So be aware that not all CPO programs and vehicles are created equal.

The merits of buying a CPO may be becoming obvious, but the big question that will undoubtedly arise is:

Is a CPO vehicle worth the extra money?

CPO vehicles are more expensive as they have been screened (typically they can’t have been used as rentals, can’t have had a big accident, can’t be over a certain age or km amount), have been re-conditioned (which may involve very little, or perhaps extensive parts and labour) and come with that sweet extended manufacturer warranty that makes buying a used vehicle so much more inviting. For non-luxury brands, CPO vehicles can carry a premium of very little: around $500-1,000 more than a non-CPO options. Luxury brands, however, typically command an additional $1,500-$3,000 for their CPO vehicles. Much of this cost is due to the dealer’s cost to participate in the CPO program as they have to pay the manufacturer (who provides the extended warranty) to register a used car as CPO. Non-premium dealers will pay roughly $400-700 to participate before costs of re-conditioning, and luxury dealers will pay closer to $1,500-2,000 to participate before re-conditioning expenses.

With this premium in mind, it is only worth the extra money if:

a) you have the budget for a CPO vehicle and won’t be over-extending yourself

b) the premium for a CPO is not exorbitant compared to non-CPO vehicles

c) buying a CPO still proves to be cost-effective compared to buying new. Sometimes the incentives on new vehicles can put the total pricing within shooting distance of a CPO (e.g. if financing a new car at 0% vs. a CPO at 5%).

As always, doing your homework will ensure you’re making the right decision when determining whether CPO is worth the extra money and the right decision for you. For many, the added peace of mind of the extended warranty can be worth the premium, but if you’re a value shopper and the lowest up-front price is the bottom line, then CPO is probably not for you. AutoTrader.ca has a tool to let you compare certified programs.

If you’d like any assistance finding a pre-owned vehicle, Car Compass is here to help.

Yours truly,

Angus McComb

http://www.CarCompass.ca

416-477-9328

How can a car broker save consumers money?

A good car broker can potentially save you money, and if they’re good they’ll also save you lots of time. It should be a broker’s job to represent your best interests to help you find the most suitable vehicle in an efficient and effective manner. But how can a broker save car shoppers money? Generally speaking, car brokers are knowledgeable about the automotive marketplace and should have a strong idea of what prices are achievable. But given the amount of information available to consumers, the broker may not necessarily have proprietary information that isn’t already available to consumers. And it is possible that with some time and effort a very savvy negotiator could end up with a deal almost as good or equal to what a broker could achieve. But the difference is that a broker has a great deal of experience negotiating vehicle prices (both purchase and lease) and knows how to structure an offer the dealer is likely to accept. The broker may even have a relationship and good rapport with a sales or fleet manager at the dealership that allows him/her to cut to the chase more quickly and obtain a great deal with no messing around. If the broker works efficiently and frequently with a dealer to minimize the dealer’s workload (internal admin and resources) then the deal can be even sweeter as the dealer won’t have to build a sales rep’s commission into the selling price as the broker can help alleviate this workload.

Numbers matter

Consumers typically buy a vehicle no more than once every three years. Brokers, on the other hand, facilitate a number of purchases every week – often with the same dealership. In an effort to retain the broker’s business the dealership will often make price concessions to the broker that aren’t available to the public. As number of sales count toward a dealership’s quota and corresponding bonus from the manufacturer, the dealer will be willing to offer deeper discounts to a broker who helps them increase their volume rather than an individual consumer who will only be contributing a one-off sale that leaves the dealership focusing on the individual transaction’s profit margin.

Invoice pricing

We know the “invoice price” – the amount a dealership pays the manufacturer for a vehicle. And this info is becoming more readily available to everyone. But just knowing the invoice price doesn’t necessarily mean you’ll be able to get a great deal. You have to structure offers the dealership will be willing to accept. By knowing the invoice price you have a good baseline but knowing is only half the battle. At Car Compass we share the invoice price and any available incentives with our customers to help set expectations and ensure we’re shopping around an offer to achieve the most competitive price on our clients’ behalf.

To learn more about how a car broker can help you buy a car in the Toronto area, contact Car Compass at 416-477-9328

Angus McComb

How to spot and avoid flood damaged vehicles

The purpose of this post is to help you protect yourself against and avoid flood damaged vehicles, as an influx are expected to surface in Canada following Hurricane Sandy.

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Hurricane Sandy submerged a great number of vehicles. And Hurricanes Katrina and Rita water damaged more than half a million vehicles. Perhaps you’re asking yourself “so what? Why is buying a flood damaged car bad?” Well, in Canada flood damaged cars are viewed to be so problematic that they are to be titled “non-repairable” and never used on public roads again, regardless of their apparent condition or any repairs that have been performed. Basically, they’re only good for scrap or parts after being flood damaged as they cannot be legally registered for use on public roads ever again… So is it then a safe assumption that consumers are protected, given that flood damaged cars are titled as non-repairable? Unfortunately not. There are ways that unscrupulous individuals and dealers can dodge or “clean” / “title wash” a non-repairable title in order to make the car appear road-worthy so that they can sell it for more than it’s worth as scrap or parts. And part of the process of evading or cleaning the non-repairable title often involves vehicles crossing state boundaries and ending up in Canada. So Canadian consumers need to be aware of the “flood” of flood damaged cars heading north of the border (sorry, couldn’t resist!) to avoid becoming a victim with a worthless vehicle.

So what should you do to protect yourself from unknowingly purchasing a flood-damaged vehicle?

First and foremost, if you’re purchasing a vehicle imported from the US it’s important to buy from a registered dealership as you are likely protected from flood damaged cars. In Ontario, dealerships operating legally that are registered with OMVIC are required to disclose any flood damage. And if you buy a car that turns out to have flood damage that wasn’t disclosed, then the dealership will be on the hook as it’s their responsibility to identify the damage regardless of whether or not they were aware of it. If you’re buying from a private seller, however, and end up with a flood damaged car, then you’re SOL. So ensure you’re protected and buy from a registered dealer.

Here are some tips to help you identify flood damaged cars

(because the vehicle history reports don’t always contain flood damage info – like when an insurance claim isn’t made against the flooded vehicle):

  • Follow your nose! Use a “sniff” test to smell for mould or mildew odours inside the cabin. Or perhaps there’s an overwhelming smell of cleaning product or air fresheners that have perhaps been used to cover-up tell-tale smells. Run the fan, AC and heat to help check for smells.
  • Test all electrical systems. Flood damaged vehicles typically suffer electrical problems when water has gotten into the electronics. So check the lights, wipers, turn signals, cigarette lighter, radio, A/C and heater.
  • Ask! Ask the seller if the car has been damaged (flood or otherwise) or has anything other than a “clean” title. It’s not so much the answer that you seek, but the delivery of the answer. If your gut is telling you something is fishy, it’s often wise to trust it and walk away.
  • Get it inspected by a mechanic you know and trust. Any half-decent mechanic should be able to spot a flood damaged vehicle. If the seller won’t let you get the car in question independently inspected, then that might be a warning sign something is not right.
  • Check for rust and water lines where they wouldn’t normally occur. Check the trunk, glove box, centre console, seat brackets, floor mats, under the floor mats, engine compartment and door jambs. Are there dirt, rust or water marks in suspicious places?
  • Are the floor mats discoloured, mismatching or oddly shaped? Or suspiciously clean? This can indicate that water made it into the cabin.
  • Is there any moisture in the headlamp or tail light enclosures? How about the instrument panel? Do they appear foggy? It can be very difficult to get water out of these areas.

Hopefully these tips on how to spot water damage will help you avoid buying a flood damaged vehicle. Be diligent and trust your instinct. If it sounds too good to be true, it likely is. Don’t try to convince yourself that it’s just a really, really good deal!

As always, I’m here to assist in any way possible when it comes time to purchase or sell a car,

Angus

www.carcompass.ca

10 money-saving tips for buying or leasing a car

Pagani Zonda vs Smart Car

  1. Set a budget and exercise self-discipline to stick to it. Don’t get tempted by more expensive models or bells and whistles you don’t need. It’s very easy to lust for higher trim levels that aren’t a necessity. And skip the aftermarket products and accessories. Remember that a car is a depreciating asset and spending more on options won’t proportionately increase the residual value of the vehicle (with the exception perhaps of an automatic transmission).
  2. Don’t focus exclusively on just one vehicle. Having a couple of choices you like and could happily live with will help keep pricing near the forefront of your decision-making.
  3. Explore different ownership methods. Don’t make any assumptions about one method being cheaper than another. Leasing – despite often providing the lowest monthly payment – is usually a more expensive method of ownership in the long run. And don’t assume that promotional “0% financing” rates are the least expensive way to own or finance your vehicle (I cover this in-depth in this post). The least expensive way to own is usually by purchasing a well-maintained pre-owned vehicle and driving it to the end of its useful life.
  4. Perform your due diligence. There are many free or inexpensive resources on the internet that will tell you the invoice price (that’s the price a dealership pays for a new car). With this info, you can make an offer at a reasonable mark-up of around 3-5% above the invoice price. If buying used, you should be able to find average asking prices for a specific make and model online by examining used listing sites which you can use as a baseline.
  5. Shop around. Not all dealerships and salespeople are created equal. And the largest and most lavish dealerships aren’t necessarily the most expensive (as moving larger volumes can help keep individual unit prices down). But sometimes being willing to travel to a dealership that’s more eager to move a unit could save you money, so don’t limit yourself to the nearest dealerships.
  6. Considering using a car broker. A car broker is to vehicles what a real estate agent is to homes. Finding a trustworthy car broker in your area that can provide you with reliable advice about cars and dealerships can prove invaluable. They might even be able to help you get a better deal with their dealership contacts and expertise. Just make sure you’re engaging a car broker whose revenue model aligns with your best interests (i.e. you pay for their services rather than allowing them to collect undisclosed commissions from the dealership).
  7. Gas and insurance costs are part of the expense of owning and operating a car. Once you’ve got a short-list of cars you’d be happy owning, call your insurance provider to find out how much each will cost to insure. And call a few different insurance companies or brokers as the rates can vary greatly as can the coverage. Calculate the amount of gas you’re likely to use every year based on your annual driving and the estimated fuel economy. Factor this into your decision-making.
  8. Say “no” to the aftermarket add-ons and accessories. The dealership will probably try and sell you a plethora of extra services or products like special wax jobs, rust proofing, extended warranties etc. to increase their revenues on your transaction. Most of these aren’t worth the premium, but if you feel something would be of great benefit to you, shop around! Chances are you could save hundreds of dollars if you buy the product or service elsewhere. Or negotiate with the dealership on price of the product or service; knowing how much other providers sell the item for will help with your negotiating leverage.
  9. Maximize the value of your trade-in. If you have a vehicle that will be part of the transaction, ensure you’re getting the best possible price for your vehicle. The dealer’s first offer on your trade-in may not be their best. Shop your vehicle around to a few dealerships to be sure the price you’re being offered is fair, otherwise you might be paying more for your car than necessary. Read this post for more info on how to determine your car’s value.
  10. Take care of your investment. Stick to the recommended scheduled maintenance. Never neglect oil changes and filter replacements or your could be driving your vehicle to an early grave. The better you take care of your investment, the longer it will last, the better it will treat you, and the greater the resale value it will achieve. This can be especially true if leasing as many car manufacturers impose costly penalties for failing to adhere to the maintenance schedule. If leasing and you require bodywork or painting done, check with the dealership or car manufacturer for preferred vendors as inferior paint jobs could cost you thousands at the end of your lease – so saving a few bucks to get the less expensive bodywork or paint job will likely cost you much more when you return the car at lease end for inspection.

By following these tips you should be in good shape to keep your long-term vehicle ownership costs down. Never over extend yourself or buy more than you can afford.

If you decide a car broker is your preferred route, I’d be happy to assist in finding you your ideal car for the best price.

Angus McComb

416-477-9328

www.carcompass.ca

Choosing the safest vehicles for your teen

On occasion, I’m tasked with helping a client find a suitable vehicle for their teenager(s). And from what I’ve learned, this is no easy task – mainly because of the stakeholders involved and their rather polar priorities. Parents obviously want something that won’t endanger their children with too much power or a high centre of gravity that might make it more prone to rollovers. And their kids want something cool and quick. The boxes parents (should) look to check are: safety, reliability and low operating cost. But at the same time they don’t want to end up being the lamest parents ever in the eyes of their kids because they’ve come home from the dealership with something like a PT Cruiser (if this offended you, congrats – your kids think you’re lame). And although I’m told by parents that safety, reliability and operating cost are the three most important search criteria, the desire not to be lame always seems to pervade their decision-making; probably more so than it should.

Whatever your shortlist of prospective vehicles may end up being, call your insurance company for quotes. This might be a huge determining factor when selecting the right vehicle for the kids and is a better place to start than to finish. Chances are, the more expensive to insure, the less appropriate for your child. The reason a vehicle is more expensive to insure is a greater propensity to be involved in a claim. So it’s likely faster or more powerful, or is more desirable to a higher-risk demographic. That said, actuaries never cease to amaze me and there will always be exceptions to the rule. But in general, the lower the cost to insure the more likely it’s a suitable option for teenage transportation as probabilities (and actuaries) are telling you it’s less likely to be involved in a claim. Don’t get me wrong, I’m not saying simply choose the cheapest to insure – but there often is a correlation between insurance cost and suitability.

Something like a Toyota Corolla won’t be a teen’s first choice (unless your teen is far more responsible than their age states they should be), but it’s efficient, reliable, safe and inexpensive to operate. And being a lame parent whose kid has survived an accident is way better than the alternative. If you feel a mid-size sedan will be a safer choice (greater mass and larger crumple zones), stay away from 6-cylinder engines. Most mid-size sedans can be configured with either 4- or 6-cylinder engines so pay close attention to the trim level that indicates the number of cylinders. The last thing you want is to enable your offspring to go fast. 4-cylinders are capable of overtaking on the highway, so “needing” a 6-cylinder is moot when it comes to being a “safety” issue.

Now let’s get down to the meat of it. What should you look for?

Shop pre-owned. Insurance premiums for new cars will be more than pre-owned, and pre-owned doesn’t necessarily mean less safe or suitable.

Don’t go too old – ESC is a MUST. You can go a handful of years back and still have a very safe vehicle with modern safety features. Airbags have pretty much been standard since before 2000. Same can be said for ABS except on the most basic of cars with base trim levels. But one feature you should make a “must have” is ESC (electronic stability control) or some manufacturer-specific variation of the term which will help prevent roll-overs – a deadly type of accident. ABS (anti-lock brakes) are also great for emergency situations and in icy or snowy conditions.

Don’t rule out SUVs. In fact, do the opposite: put them near the top of your list. Once upon a time, SUVs were considered more dangerous because of their high centre of gravity that made them more prone to roll over. But with ESC-equipped SUVs that aren’t prone to roll, you’ll be placing your teen in an elevated vehicle that proves safer. Basic physics can’t be defeated, and the greater the mass the better. Even when compared to cars of similar weight, SUVs have lower death rates (IIHS via Globe & Mail).

Use season-appropriate tires. This may not affect your vehicle decision-making, but leave yourself a few bucks to purchase a decent set of winter tires. They’re one of the best safety features money can buy.

So what vehicles are the best bets for your teens? Here’s a list of vehicles (in no particular order) I believe to be worthy of consideration:

  • SUVs
    • Honda CR-V
    • Toyota RAV4 (4-cylinder)
    • Hyundai Tucson
    • Kia Sportage (2011 or newer)
    • VW Tiguan
    • Honda Element
  • Mid-size sedans
    • Honda Accord (4-cylinder)
    • Toyota Camry (4-cylinder)
    • Nissan Altima (2010 or newer 4-cylinder)
    • Ford Fusion (4-cylinder)
    • Mazda6 (4-cylinder)
    • Hyundai Sonata (4-cylinder)
  • Compact sedans or hatchbacks (note: compact cars aren’t the safest option due to their smaller mass and crumple zones. But sometimes they’re the only option within budget or due to garage / parking constraints.)
    • Mazda3 (2010 or newer)
    • Honda Civic
    • Toyota Corolla
    • Hyundai Elantra
    • Ford Focus
    • Kia Forte
    • VW Golf / Rabbit
    • Mazda2
    • Honda Fit

Whatever type of car you decide on, don’t forget that your kids learn from you (even passively when in the back seat) – so set good examples behind the wheel.
Best of luck with your search. If you’d like assistance, I’d be happy to help!

Angus McComb
CarCompass.ca

0% financing vs. cash incentives – which is better?

zero percentIf you’re in the market for a new car, chances are you’ve noticed promotions within ads offering motivators like 0% financing or cash purchase incentives. The key word in the ads is often the word “or” – e.g. “0% financing or cash purchase incentive”. This means you can only have one or the other. And if you’re going to maximize your available savings, you need to know how to analyze the best option to pursue as it might not be as clear cut as it seems.

Let’s quickly cover the basics. 0% financing is, in theory, free money as you can finance your vehicle purchase with no cost for borrowing the money. However, like communism, what’s good in theory isn’t always good in practice – as is sometimes the case with 0% financing. If there’s a “cash purchase incentive” being offered in lieu of 0% financing, then the financing isn’t really free, is it? You’re foregoing the cash purchase discount by financing, thus making the cost of borrowing not 0%, but the amount of the cash incentive. Misleading? I think so, and I really believe manufacturers should be prohibited from this kind of misleading advertising. But I digress…

In order to decide whether taking 0% financing or the cash incentive is best for you, you need to know what interest rate you can attain from your financial institution for an automotive loan, as the dealership will — perhaps surprisingly — regard this as a cash purchase as they’re being handed a cheque from your lender. So with financing from your own bank rather than the auto manufacturer’s financial services arm you can cash in on the “cash purchase discount/incentive”, even though you are in fact financing your vehicle purchase. And in some cases, paying your lender an annual interest rate of roughly 5% can work out to a lower monthly payment by capitalizing on the cash incentive instead of the “0%” financing (which we now know isn’t really free if there’s an alternative cash incentive at play). So do your homework. Call you bank to find out your interest rate on an auto loan. Then use an online financing calculator to determine whether it’s cheaper to borrow from your bank or the manufacturer’s financial services arm at “0%”. You might just be surprised at how much money a tiny bit of research can save you!

Angus McComb

www.carcompass.ca

855-STEER-ME or 416-477-9328

“29% of vehicles listed on Kijiji and autoTRADER.ca were actually posted by curbsiders”

ImagePer a recent release by OMVIC, the UCDA (Used Car Dealers Association of Ontario) has completed a study that has determined nearly one-third (29%) of all online vehicle postings on Kijiji and autoTRADER.ca are posted by curbsiders! What’s a curbsider? “Curbsiders are unlicensed dealers who pose as private sellers to sell damaged, misrepresented or stolen vehicles.” – OMVIC curbsider website

This is a rather astonishing and frightening figure if it’s accurate. Given that the UCDA is a dealers association whose interests lie in selling cars to consumers and that online listing sites like Kijiji and autoTRADER.ca provide great competition to dealers within the pre-owned vehicle market, I can’t help but be a little skeptical of this 29% figure given their vested interest. Don’t get me wrong, there are undoubtedly a lot of curbsiders lurking on these sites as I’ve discovered from my own searching, but 29%?! I applaud OMVIC for their efforts to thwart curbsiders and wish them continued success as curbsiders “flout the law, damage the industry, rip off car buyers and put all Ontarians at risk.” I agree with this sentiment and wish nothing more than for all curbsiders to be eradicated as they are often attempting to sell cars that have been poorly fixed up and may have fabricated safety certificates. They leave consumers highly exposed to not only unsafe vehicles but financial loss as consumers wouldn’t have access to the Compensation Fund like they would should they have bought from an OMVIC-registered dealers and the vehicle turns out to be worth less than paid due to past use as a taxi or rental vehicle for example, or being a flood-damaged vehicle or insurance write-off.

There are many legitimate online sellers out there looking to sell their own vehicles privately, but it can be very difficult to distinguish the legitimate from illegitimate. Be diligent, and don’t be afraid to enlist the assistance of a broker to help buy from a dealership, as negotiated savings can often make buying from a dealer comparable in price to buying from a private seller. And don’t forget the benefit of buying a “CPO” (certified pre-owned) from a dealer which may carry an extended warranty already included in the asking price.

Faithfully yours,

Angus McComb

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carcompass.ca

855-STEER-ME or 416-477-9328

Car broker compensation

car broker compensationHow are car brokers compensated? Well, there are a couple of methods that can be employed (and a third, illegal option sometimes used by unethical, unregistered brokers). The car broker can either be compensated by the client who has commissioned them to assist with their vehicle search, or they can be compensated by the dealership that is selling the vehicle. Car brokers cannot, however, legally be compensated by both their client and the selling dealership. This is highly illegal in Ontario and absolutely prohibited by law. But that doesn’t mean all brokers play by the rules!

Car brokers that collect from the selling dealership may offer what appears to be a “free” service to their client, but in reality their fee is still being paid for by the client; just in a round-about way. The car broker’s fee comes from the vehicle’s negotiable profit margin – an amount that could have otherwise been passed forward to you as savings. For example, if a broker negotiates a potential discount of $3,000 on a vehicle with the selling dealer, they could pocket $2,000 paid directly to them by the selling dealer allowing you to realize only $1,000 of negotiated savings. And it’s possible you’d never know how much you’ve actually paid for their services!

Those that are compensated directly by their clients (provided they’re not double-dipping!) should be acting on behalf of their client rather than as a commissioned salesperson on behalf of the selling dealership. I personally find this the more appropriate way to ensure consumers’ best interests are looked after. But of course, not all brokers are created equal.

Remember to perform your own due diligence to ensure you’re commissioning an OMVIC-registered and regulated auto broker who will not double-dip by collecting from both you and the selling dealer. Use OMVIC’s online search tool or call OMVIC (800-943-6002) to check if the broker is indeed registered – don’t just take the broker’s word for it or believe their website! It’s your hard-earned money, so ensure you’re not unwittingly giving it away! Be sure you’re hiring a registered broker operating within the confines of the law.

As always, I’m available to help with your vehicle needs. Don’t hesitate to get in touch!

Angus McComb

CarCompass.ca

416-477-9328 or toll-free at 855-STEER-ME

 

Admin fees, etching and Nitrogen – are these fees legal?

I’ve come across a lot of discussion recently from disgruntled car shoppers regarding dealer-added fees and extras such as admin fees, theft recovery etching / stickers like Globali, and nitrogen filled tires. Consumers are often surprised when they are about to purchase a vehicle only to find hundreds (or even thousands) of dollars of extra fees tacked on to the selling price. And understandably they are not too happy about it! Without properly understanding what these fees are or if they’re even legal, you could end up paying much more than necessary. So being informed and well-equipped before going to buy a vehicle is essential.

If you’ve ever looked at a vehicle’s bill of sale, you’ve likely seen fees for line items described as “admin fees”, “theft recovery etching”, “freight”, “PDI”, “nitrogen filled tires” etc. These charges aren’t necessarily illegal, but they can be. Due to ambiguity and a general lack of transparency regarding extra fees and “value added” extras (I use quotation marks as not all consumers will perceive added value), I’m going to share my understanding of the subject in hopes of helping others understand their rights as consumers and what the dealer can and cannot charge.

First and foremost, I’m not a lawyer and this is not legal advice. I’m just sharing information based solely on my understanding of various laws and my experiences as a car broker.

The first piece of powerful information to be aware of: “all-in pricing laws”. Per the Ontario Motor Vehicle Industry Council (OMVIC – the regulatory body responsible for administering and enforcing automotive law within Ontario) and the MVDA 2002 (Motor Vehicle Dealers Act, 2002 – the automotive legislation OMVIC enforces), if a dealer is advertising a unique vehicle with its own VIN (vehicle identification number) at a specific price, the price stated must be the all-in price except for HST and licensing if the ad illustrates this in a clear and comprehensible manner (e.g. “price excludes HST and licensing”). This means any and all charges associated with selling the vehicle must be built into the advertised price, including freight, inspection charges, safety inspection and emissions testing (unless there is a disclosure stating the vehicle is being sold “unfit” or “as-is”), and any administration fees, other fees, levies and HST. So, if you’re looking through Trader.ca or a similar vehicle listing source and a price is advertised by the selling dealer, by law it should be the all-in price, save perhaps HST and licensing if clearly specified. But be aware if the price you’re looking at is in an ad attempting to sell a specific unit within a dealer’s inventory, or if the ad is simply promoting a make and model and listing the MSRP. If it’s just a generic manufacturer ad promoting a make and model, the stated base MSRP may not accurately reflect a dealer’s current inventory which may have value added extras already equipped (more on this in the next paragraph). But if you’ve done your homework, you won’t be surprised by any extra fees.

The next powerful piece of info? Being aware of “coercive” or “tied” selling. To my knowledge, our consumer protection laws cover coercive or tied selling: the act of tying one good or service to the sale of another. You cannot be told you must buy product or service X in order to obtain product or service Y. This is an illegal practice. So, it’s at this point we need to be clear about what constitutes tied selling and what does not. If a dealer already has a vehicle within their inventory and they’ve chosen to equip it with something like theft recovery etching, they have every right to price the extras accordingly and as they see fit (as long as it’s built into the advertised price). This is a value added option they’ve elected to install, much in the same way they could with other value added options like larger wheels, window tinting, a better sound system etc. and raise the asking price accordingly. And consumers have every right not to purchase that vehicle! However, if you’re placing an order for a new vehicle that will be factory built specifically for you, the dealer cannot tell you that something like theft recovery etching is mandatory, as this would constitute tied selling. The same would be true for a vehicle within inventory that you know does not currently have value added extras already equipped. Basically, it is tied selling if the value added extra is not yet installed but you are being told you must purchase it; and it is not tied selling if the vehicle already has the value added extra installed prior to you placing a deposit and/or signing a bill of sale. In either case, the advertised price must be inclusive of all of all fees and extras. You cannot be presented with unexpected extra fees at the time of sale.

So, the big distinction is: “is the vehicle already equipped with the value added extra, or not? If it’s not, you cannot be told it’s mandatory to pay for the extra. But if the dealer has already fitted the vehicle with value added extras, they can ask for more money accordingly. Odds are, if you’re going to walk away from a deal over a few hundred dollars, they’ll likely reduce or waive the fee altogether. If you feel they’re breaking all-in pricing laws or utilising tied selling, mention this to them and let them know that you intend to report the incident to OMVIC – this can be very persuasive!

Unfortunately, not every dealer is ethical, operating legally, or in compliance with all-in pricing laws or the MVDA 2002. A phone call to the selling dealer before going to see the vehicle in the flesh can prevent you from wasting your time if the advertised price is not inclusive or if their inventory already has undesirable or expensive value added options installed you do not want. And if the dealer isn’t registered with OMVIC, don’t set foot in the dealership as they’re operating illegally. The same goes for car brokers like me – we must be registered with OMVIC. Any business operating in the automotive industry within Ontario that deals with consumers must be registered with OMVIC, by law. This includes dealership salespersons, too. Don’t just trust the dealer’s or car broker’s website that they’re registered with OMVIC – call OMVIC or use their online search tool (and pay particular attention to the “status” of their registration within your search results) to ensure the dealer or car broker is indeed currently registered and operating legally. There are reasons (forty-five thousand reasons to be exact) you should want to deal exclusively with legally operating OMVIC registered dealers and brokers, but perhaps I’ll get into that in more detail in a future post.

As for nitrogen filled tires, their benefit for consumer application is dubious at best, as the air around us is about 78% nitrogen anyway! So is it worth paying for nitrogen filled tires? Well, do you believe the party responsible for filling the tires with nitrogen has managed to create a complete vacuum within the tire and successfully voided it so pure nitrogen can be pumped into the tire? I’m not so sure, and even if they could I doubt the alleged benefits warrant the price. If you drive on properly inflated tires you’ll be just fine.

I hope this helps clarify dealer added fees and value added extras. I’m always available to assist with your vehicle purchase and to help you attain the lowest possible price. Feel free to leave a comment or question below and I’ll do my best to help!

Angus McComb

Owner, Car Compass. 416-477-9328 or toll-free at 855-STEER-ME

Top 10 tips for buying a used car

Originally posted on Wheels
By: Mark Toljagic

There’s no St. Lucius, Patron Saint of Loose Tie Rods, looking out for you.

Finding a great second-hand vehicle shouldn’t be a matter of good luck or even divine intervention.

There’s an abundance of used cars and trucks in the GTA — Toronto has one of the highest concentrations of automobile dealers in North America — so scoring a good one is not an insurmountable task.

It just takes a bit of homework and some patience to locate the right model at a reasonable price. No good comes from rushing into things. Follow these steps and you’re bound to end up with a good experience and an even better vehicle.

Research your purchase

The proliferation of automotive websites that offer professional reviews and post owners’ experiences is a helpful trend, and an excellent way of gaining insight into the second-hand models you’re contemplating. Online forums frequently discuss reliability concerns, things like jerky transmissions and short-lived air conditioners. New-car reviews rarely mention these issues, but many owners aren’t shy about spilling the beans. Look for any angry buzz online regarding your model before you step on the car lot. If nothing else, documented problems can help you negotiate a lower price.

Shop the less popular brands

Everyone knows the leading brands that command premium second-hand prices. But why surrender to these unkind market forces? There are other, lesser-known competitors that for a variety of reasons didn’t sell well — models that can give you similar quality and features for less dough. Automakers such as Suzuki, Mitsubishi and Kia made some very good models that were undersold and overlooked. Keep an open mind rather than fixate on one model. Knowledgeable bargain hunters familiarize themselves with all of the segment models and are often rewarded with a great vehicle for a considerably lower price than the big-selling brands.

Word of mouth

Don’t underestimate the value of letting your friends and colleagues know you’re looking for a used car. Someone always has an elderly aunt who wants to sell her mint-condition Buick Lucerne to the right buyer. If you’re not picky, these often make the best deals, since sellers may not know the exact market value of their vehicle, or may not be motivated to go through the tedious rigmarole of prepping their vehicle for sale. That’s not to say these sellers are ripe for the picking — some may harbour unrealistic notions of what their car is worth, unaware of the precipitous depreciation than can ravage their net worth.

Have a budget in mind

It’s smart to know how much money you can spend on your next car. What is your trade-in worth? Unless your present ride is a recent model, chances are the dealer will be wholesaling it to another retailer, and the wholesale value is all you’re going to get. Consider selling your present car privately. With a bit of spit and polish you may get a couple thousand dollars more than the dealer would give you. That money can go a long way in helping you leverage your next automobile purchase. Having cash in your pocket gives you the upper hand when it’s time to negotiate.

Dealer or private sale?

New-car dealers are the best source for late-model used cars, since they have first dibs on lease returns and trade-ins. Notoriously fickle (and expensive), they’ll send anything dubious or with high mileage to a wholesaler or to auction. Independent lots buy their inventory at auction, which can be a hodge-podge of good and bad. If the price is low, chances are it’s had an accident repair. Private sales are the wild card: you could get a dud from a curbsider (who sells multiple vehicles posing as a private seller) or a creampuff from someone who was insulted by the dealer’s lowball offer on his trade-in.

Take a close look

Used cars are like snowflakes: no two are exactly the same, so scrutinize each one carefully. Look for paint overspray on door seals, mufflers and wheel-well liners — a sure sign of collision repairs. You may find shattered glass fragments under the seats. A mildew smell indicates a stubborn water leak. Fresh undercoating may be masking recent structural repairs. Lit warning lamps may be a portent of expensive engine repairs. Motor oil that resembles a frothy milkshake often means there’s a blown head gasket or worse. The transmission fluid should be bright red or reddish brown; any darker and there may be problems.

Drive it like you own it

Rather than a five-minute spin around the block, tell your sales rep you’re going to be on the road for a good 45 minutes. It’s usually enough time to take the vehicle on the highway as well as on some potholed roads where you can test the car’s structural integrity. Keep the radio off and listen carefully to various noises. Pay attention to how the transmission shifts and test the air conditioner. To assess it properly, drive it like you already own it; don’t baby it. If the rep isn’t agreeable to giving you the vehicle for a good hour, then take your business elsewhere.

Get a history lesson

CarFax, CarProof and AutoCheck history reports recognize rebuilt or salvaged vehicles, but beware: they may not disclose collision repairs if the previous owner chose to do them without going through their insurance — and up to half of all collisions go unreported. Avoid vehicles from out of province. Use the VIN number to search provincial records and ask your insurance agent to do a history search, too. While you’re at it, find out how much it costs to insure your model. A steep premium may compel you to look at something else.

Befriend a technician

Settled on the vehicle you want to buy? Have it mechanically inspected by someone you trust. Vehicles that have been repaired after a collision aren’t always easy to spot, which makes a professional inspection on a hoist all the more critical. A good technician can detect creases in the unibody and paint overspray. There are garages that only do vehicle inspections and do not perform repairs (vintage car collectors use them). Many shoppers won’t invest the half-day to take the car for a third-party assessment, which pretty well negates all the careful shopping they’ve done. It’s like dropping the ball at the 10-yard line.

Drive a hard bargain

New-car dealers love used cars. Profit margins on popular new models are razor-thin (luxury cars and SUVs are more lucrative), while used vehicles remain a bonanza for dealers who can lowball customers with trade-ins, recondition them, then “remarket” the vehicles for a lot more. The average profit on a used car is $1,800 to $2,200, while a high-volume new compact only earns $1,000 to $1,200 for the dealer. So don’t be afraid to play hardball. And watch for extra fees sneaking into the sales contract: administration fees are now part of the advertised price by law. If you’re not happy with the way negotiations are going, head for the door.

Source: Wheels