What Was the Average Purchase Price on New Vehicles in 2018?
As you shop for a new car, knowing what’s going on with the market is definitely a good plan. After all, knowledge is power, and buying a new ride is a big financial commitment.
The average price for new cars in Canada has been rising at a fairly good rate in the past few years. For 2018, we’re at an all-time high.
Several factors have pushed the average price up, and you need to understand what they are. This doesn’t mean you have to spend a large sum on a new car, and in fact knowing what’s happening can help you keep your auto financing situation in Toronto under control.
Doing the Research
When you’re looking to get car financing in Toronto, it’s actually a wise idea to do some research about the vehicle market in advance. As they say, knowledge is power.
A car loan is a big commitment to make. Aside from getting house, vehicle loans are the biggest financial investments most people make in their lifetime. That isn’t something you should take lightly. The risks are real if you get in over your head and can’t keep up with the payments. By doing through research now, you can feel good about car financing in Toronto and be prepared for the responsibilities which come with it.
After reading this post, you’ll not only know the average purchase price for new vehicles in 2018, you’ll have a better understanding of what’s happening in the market currently. This will help you make an informed, educated decision you can feel good about, instead of just hoping you’re making the right choice when purchasing a new car.
Average New Car Cost
Across the automotive industry, prices have been on the rise. This has been true for all brands, although some have accelerated more than others. This isn’t really great news for anyone who’s on a tight budget or has limited financial means. It most definitely affects car financing in Toronto, possibly making some options you would’ve considered before out of reach.
For 2018, the average purchase price for a new car in Canada is $36,100. That’s pretty high, especially when you consider that back in 2013 the average new car price was $33,500. While a few thousand dollars might not seem like much to some people, again it squeezes anyone with limited means.
Factors Affecting the Average
As is the case with any market, the reasons for this increase in the average purchase price for a new car are many. To figure out exactly how much effect each factor has had on the situation is quite difficult.
Just as challenging is trying to figure out where new car prices will be in five years or more. Changes in the global economy, new developments, and shifts in government policies could either accelerate price increases or cause prices to fall.
One of the biggest changes has been a shift in demand for big trucks and SUVs. Several years ago, subcompact vehicles were the popular wave in the auto industry. Thanks in part of cheap fuel costs, people have been scrambling to buy new full-size SUVs and trucks. These models cost more, and so they’ve helped pull that average purchase price up.
Consumers are pushing for trucks and SUVs with more luxuries included, and automakers are obliged to meet that demand. This can include heated steering wheels, ventilated seats, and advanced rear entertainment systems. The result is more expensive models on the market today than even a few years ago.
Inflation is another cause for the increase. While nobody likes inflation, it’s a fact of life, affecting everything from the cost of buying a car to what you pay for groceries each month. It’s anyone’s guess what will happen in the coming years with this factor.
People write entire books on this topic, if you want to explore it in depth. Just know that as the Canadian economy shifts, there’s an effect on car prices. Some changes in other countries’ economies can also have an effect on what you pay for a car.
Another thing driving up the cost of new cars is technology. While it’s great to connect your phone to your car, have onboard navigation, mobile WiFi, and all kinds of safety sensors, that equipment comes at a cost.
The sad result is as cars become more advanced, all that cutting-edge tech makes getting car financing in Toronto even more difficult. For example, taillights which contain sensors for blind spot monitoring systems can cost several times more than regular taillights. When a car has numerous advanced technologies, the result is an increased sales price.
Automakers say consumers really want all these technologies. While that may be true, more and more shoppers are feeling the pinch as a result, even if they don’t know why.
Over time, most technologies become more affordable as automakers learn how to produce them for less cost. Lately, the push towards advancing car tech at a rapid pace could mean car prices continue to climb.
What You Can Do
If you think $36,100 is a little much to pay for a new car, you have options. Nobody will make you pay that much just to secure car financing in Toronto, so you don’t have to go that high.
You do need to have a strategy to not end up paying that much. Sales professionals at dealerships are adept at convincing you that paying a high amount is actually beneficial, since what they earn is based on what you spend.
Have a Budget
First off, you need to know what you make and what you spend. Budgeting isn’t exactly the most entertaining thing to take on, but It’s absolutely necessary. People who fail to budget before making a significant financial commitment like buying a car are taking a tremendous risk.
Look at everything you need to spend each month. That includes basic living expenses like housing, utilities, and food. Add up what debts you have and how much you pay monthly. Also, take into account that you’ll want to spend some money for fun things, like eating at restaurants or going on trips.
Compare what you make with what you spend each month. While it may be tempting to say the difference is how much you can spend on a car, that’s not a wise move. Emergencies come up, and that extra is what you can use to address them.
Remember that there are expenses associated with the car you buy. You will need to pay for insurance, and that amount is affected by which car you choose. There’s also the cost of fuel, maintenance, and repairs.
Careful and thorough budgeting will hep you calculate the maximum you can safely spend on a car payment each month.
Identify Your Needs
We all want nice things, but you should first focus on what you actually need in a car. When you visit dealerships, the sales team will work to have you fall in love with the luxurious features in certain cars. They work on a commission, so the more you spend, the more they make.
You must watch out for yourself. Before you even start shopping for a car, sit down and list out everything you actually need. How many people will be riding in it at once? The car needs at least that many seats. Are these people tall? If so, legroom and headroom are important.
What items will you be transporting with the car? If you take along big pieces of cargo regularly, something that can accommodate that would be wise. Trucks are great for transporting large items, especially since they have an open payload and are able to handle a large amount of weight. If you have a boat, camper, etc. getting a truck or SUV which can tow that much weight is necessary.
Do you drive your car just around town, or do you take it out on the open road often? Comfortable seats, good cabin insulation, and other comforts can make a car more enjoyable for longer trips. If you’re driving it to and from work and that’s about it, something which doesn’t require much maintenance and consumes little fuel is ideal.
Think deeply about what else you do with your car. If you’re one to venture off the pavement for outdoor adventures, an SUV with high ground clearance, four-wheel drive, and similar features could be ideal. If you have small children, a rear entertainment system might be necessary for longer drives.
Only you can determine what you need in a car. Once you have a solid list, it’s time to start looking at options.
Focus on Overall Price
Car dealers have many ways they can get you to buy an expensive car, even though that’s not what you intend. One of these is to get you to concentrate on the monthly payment amount for a car. While it’s good to know what that amount will be, you need to pay attention to something else.
Always negotiate the overall cost of a car first, or you might end up paying too much. Once you have that figured out, then you can determine what kind of a monthly payment you want. Don’t try to do this the other way around, or you could easily find yourself with an expensive car.
To make an expensive car seem more manageable, dealers will try to sell you on a long loan term. Many Canadians have loans that will last for 62 months or longer. That’s a long time to be paying for a car. There’s a strong possibility that before you pay off the loan, if you use the full term, you’ll also be paying for some fairly large repairs because of the car’s age.
No Sudden Decisions
Another way to keep the cost of a new car low is to not make a sudden decision on buying a new ride. When you visit a dealership, they’re often masters at rushing you into buying right then. It’s a good way to trick you into not focusing on the price and what features you really need. They want you to fall in love with the car and decide you need it right then.
To counteract that strategy, go home and think about the potential purchase for a few days. You can have the dealer provide a written offer on the car, so if you go back nobody can change the terms of the agreement.
With that written offer in hand, you can also shop at other dealerships to see if you can get a better deal. Because buying a car is such a huge decision, not rushing into things is a wise idea. It’s a good way to avoid making a decision you later regret.
Knowing what’s happening in the car market before you go shopping is a great idea. The average purchase price of cars in Canada is going up, but for reasons that you might not expect. This doesn’t mean you have to spend too much on a new car, because you can make decisions which will keep your budget low. It’s a solid strategy when looking into car financing in Toronto.