In my previous blog post, I gave a breakdown of the public transport system in Vancouver, Canada. Despite all the public transport options in Vancouver, their availability and viability depend on where in the city you live. Some areas of Vancouver are more easily accessible by train or bus than other parts. For this reason, public transport is probably a good option for commuting to work and back, but it does not solve all your travel challenges. Travelling from the Superstore with your groceries for example, is probably best done with a car unless you can take friends along on the train to help you carry all your bags – which is difficult to do if you are a newcomer with no friends. Furthermore, for road trips out of the city or across the US border, a car is probably a better mode of transport.
So if you have to or want to buy a car, how do you go about it and what are the pitfalls you need to be aware of?
Start off by investigating your options online. Most dealerships and private sellers advertise online. The best sites to visit are Autotrader or Craigslist Vancouver. Yes, Craigslist. It is very popular here for almost anything from cars to rental properties and anything in between. Decide whether you want a brand new car or a pre-owned vehicle. Craigslist gives you the option to search either by private owner or by dealership. One key thing to keep in mind, is that the advertised price you see online, is BEFORE tax. So add 15% tax to the price to know what the car is actually going to cost you.*
Before you go into the dealership to test drive and possibly purchase a car, practice your negotiation skills, because you are going to need them! In Canada, the advertised price is not the final price of the car. When you indicate that you want the car, they tell you that they have to consult with their “manager”. They then leave the room and enter a small office for the “negotiation” that they are supposedly conducting on your behalf with their “manager”.
After a while they emerge with a suggested offer to purchase. You then have to decide whether you want to accept the offer or not. Ideally you should not accept their first offer. Always ask if they cannot make you a better offer. This starts the process again. They excuse themselves to “consult” with their “manager” and once again emerge with a “better” offer and so the process goes until one of the parties concedes.
In an ideal world, you want to buy the car cash, because it saves you from the second round of negotiations which is for finance. Note that if you are a foreigner, they will try to convince you that buying a new car is better than buying a second-hand car – even if you have done the math and know that this is NOT true. They will “appeal to reason” by telling you that applying for finance on a new car, means zero percent interest, whereas finance on a second-hand car will result in higher premiums since you will be charged anything from 5% to 10% interest!!! (They obviously have not spent time in a country with a failing economy where interest rates can elevate to levels much higher than their “extreme” 10%.)
What they forget to mention, is that if you are buying a new car, you are also applying for finance on a car that is much more expensive than the second-hand car – in this case an additional $9 000 for a new car! So in reality, for you to end up paying more on a second-hand car than a new car when you are financing it, you would have to be paying interest that exceeds the amount of the new car. Do the math. Even at a 10% interest rate, you will still not get there. Suffice to say, their “scare tactics” did not work. We simply held our ground and insisted on buying the second-hand car. Mr. Money Mustache would be proud! Or so we thought. But boy were we wrong!!
Even if you emerge from your negotiations victorious, the battle is far from over, because what you did not consider is that your visa places a restriction on the loan term, since no bank is willing to lend you money for a period of time that runs after your visa has expired. So never calculate your monthly premium on a four-year or five-year term, since the longest you are probably going to get, is 18 months if you are on a two-year visa.
If and when your finance is approved – which is an easy process if you are lucky enough to be employed by Amazon – they will phone you to let you know when you can collect your car. What they do not tell you, is that you will be entering the battle grounds again…
When you arrive to collect your car, you first have to negotiate the terms of your finance. So they give you the premium amount over the phone. But this is not your final premium. This is BEFORE your extended warranty and tire insurance that they try to convince you you MUST have. So before you even have the keys in hand, your budget for your car instalments have suddenly quadrupled! So you become a little hysterical and kindly inform the finance lady that you simply cannot afford that premium and so ensues the next round of negotiations; where she worst-case-scenario’s every possible event that you could ever imagine happening in your life while she tries to convince you that you should ensure your car for more than it is worth “just in case, God forbids something terrible happens!”
One huge benefit of speaking a small unknown local language from South Africa (i.e. Afrikaans) is that you can converse in front of this lady about everything she is telling you without her understanding a single word you are saying. A little rude, you might think, but hell, it is just as rude to keep erecting hurdles in your path to acquiring what is simply put a small and cost-efficient car compared to the monster trucks everyone else on the road is driving.
As the day progresses though, you become more and more despondent and start wondering what the hell you were thinking in the first place. Luckily you remember that you read somewhere that you are legally required to take out insurance with ICBC, which is the Traffic Department of British Columbia. All vehicles on the road must be insured by ICBC. So you enquire about the need for additional insurance on top of the insurance you will have to obtain from ICBC. You are politely informed that it is for “God forbid, just in case you write off your whole car and can’t buy a new one.” They will then pay you $5 000 towards the purchase of a new car but ONLY if it is a Hyundai and ONLY if it is purchased at their branch. So you restrain yourself from bursting out laughing and kindly inform the finance lady that you are going to decline her kind offer. You watch her react in shock and then calmly smile and ask her if she could recalculate your premium.
Just as you think you have won this round, she informs you that without an extended warranty, you will not have road-side assistance or a rental car option if your car breaks down or needs to be repaired after an accident, because in Canada, road-side assistance and a rental car when your car is in the shop is considered a warranty-related matter and not part of normal insurance. So realising that you are planning on doing some travelling across the border to the US, you cry a little inside, and politely inform her that you would like the stupid warranty after all.
Two hours later, they inform you that you are now allowed to choose your new car’s license plate. They hand you a pack of license plates and you literally sift through them and choose the one you like/want. This license plate becomes yours forever. If you ever sell your car, it is removed from the sold car and put on your new car. So your license plate never changes.
After selecting your license plate, you are required to meet with the ICBC representative to discuss your insurance options. The ICBC representative informs you that the minimum damage amount you are allowed to be insured for in case of a third-party collision, is $2 000 000. So you sign up for the lowest package. Then you have to explain your driving and insurance history. Note, if you can provide a formal letter from your previous insurance company in South Africa that states your name, ID number, the number of years you were insured with them and you claims history, you can get 5% discount on your ICBC insurance, for each year you were insured in South Africa, for up to eight years. So make sure you obtain said letter from your insurance broker BEFORE you leave South Africa, otherwise you will have to make mid-night calls back home and beg your previous insurer for a letter.
ICBC insurance policy finalised, you are finally allowed to receive your car. The “joyous” occasion is a little less than joyous simply because you have been in negotiations for 2 hours and 40 minutes, you baby is irate from your insistence that she sit still and keep down the noise for all this time and your Sunday is ruined. You had planned roast chicken and vegetables for lunch, but since it is 14:30 in the afternoon, it will probably have to be roast chicken and vegetables for Sunday dinner. You drive off in your new car, completely overwhelmed with a screaming toddler in tow wondering whether you did the right thing…
Thinking of the quote at the start of this blog post, I am not sure what people would assume about our personalities or driving habits by looking at the car we chose to drive in Vancouver. The choice of car does not tell you as much about our personalities as it does about our own insecurities and our financial savvy or lack thereof. We bought a brand we were familiar with, simply because all the other options were too overwhelming. Even choosing between different second-hand Hyundai Elantras was tricky, because there are so many different versions of the same car! There is the Hyundai Elantra LE, Hyundai, Elantra GL Auto, Hyundai Elantra SE or Hyundai Elantra GLX each with their own special features.
The standard special features you would expect are also very different from what you would be looking for in South Africa. For example, a big thing here is heated seats and a heated steering wheel – a nice thing in really cold weather, but something you would never want standard in your car in South Africa. Sun roofs are also a big thing, despite the lack of sun hours in the winter and the fact that you could literally go for weeks without seeing the sun. I suppose it is more useful in summer time. We will have to wait and see…
For what it is worth, here are some photos of our new car…
*Everything in Canada is advertised with the price before tax, which is very different from South Africa where the advertised price already includes tax.