In certain cases, ordering a new vehicle may cost less than buying a used one.Fahroni/iStockPhoto / Getty Images
Good morning. This week, I wrote about outdated financial advice for car buyers. I’ve purchased cars outright for years and, like my family, followed the tried-and-true financial gospel of buying used.
While I never sought to purchase a brand-new car, that’s what happened recently. My decision came down to economics.
The manufacturer’s suggested retail price for the new vehicle was $3,000 less than the three-year-old used counterpart (yes, same model) with 50,000 kilometres. Just one catch: I needed to order the car and wait “just a few months” for it to arrive. Would my current 18-year-old vehicle survive until then? The answer was, thankfully, yes, even as three months turned into 10 long months.
“We’ve entered a weird space in which used vehicles may not make as much sense to buy because they’re demanding a higher price in the market now,” says Tristan Blackwood, certified financial planner at IG Wealth Management Inc. in Ottawa.
Of course, not everyone can wait that long for a car – hence the higher used car prices from specific, in-demand manufacturers. These particular vehicles are known for their reliability and may command more dollars.
New vehicles also mean avoiding wear and tear from the outset. Harry Sale, financial advisor at Raymond James Ltd. in Toronto, says that’s appealing to those with heavy commutes due to return-to-office mandates announced this year.
“Reliability matters when you’re driving 20,000-plus kilometres a year,” he says. “You can’t afford breakdowns when you need the car daily for work. New cars also may have better fuel efficiency or hybrid options which may add up substantial savings over time.”
Mr. Sale notes that some people started avoiding public transit during the pandemic and never returned, preferring their own ride. He says this shift also played a role in rising car prices during the past five years.
Here’s some advice that will never be outdated: a car purchase is just the starting point of your budget. Insurance, gas and regular maintenance all need to be factored into what you can afford, Mr. Blackwood says.
Banking on AI: If you thought Canadian financial institutions were conservative when it comes to technology, think again. Canada’s top five banks are global leaders in AI adoption – all ranking in the top 25 of the latest Evident AI Banking Index – and are focusing their attention on boosting advisor productivity. Danny Bradbury has more.
Banking on a fall federal budget: The federal government will walk a tightrope in its fall budget, with little room to raise taxes without further compromising Canada’s economic competitiveness, and limited flexibility to cut taxes and still fund spending, tax experts say. Rudy Mezzetta has more.
Banking on CE: U.S. financial planning guru Michael Kitces is entering the Canadian continuing education space for financial advisors. Starting in November, members of the Financial Planning Association of Canada will have access to his content on Kitces.com. Read more here.
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With the federal budget looming, there’s growing concern in the charitable sector around recommendations and legislation proposed last year. The concerns are significant enough that a letter signed by 34 of Canada’s top charity lawyers was sent to Finance Minister François-Philippe Champagne last month. Tim Cestnick explains.
Ontario accountants advocate for tax system overhaul
Recommendations from the Chartered Professional Accountants of Ontario include boosting tax incentives that support research and development, lowering personal and corporate taxes while raising sales taxes and simplifying the tax code. Erica Alini reports.
Why you should tell your kids how much they’ll inherit
For parents who expect to leave money, surprising offspring with it after they are gone, doesn’t give children the maximum benefit. Talking about it ahead of time is better, writes Anita Bruinsma.
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