December 8, 2023

Car Auto Finance

Car Auto Finance FOR Everyone

A money-saving idea for the can’t-afford-an-EV crowd

Buying an electrical vehicle is the obvious solution to the problem of high gasoline prices. But what do we do about the problem of high EV prices?

You can learn all about EVs as an answer to the high cost of gas in the latest episode of our Stress Test personal finance podcast for Gen Y and millennials. We don’t shy away from the fact that EVs can cost a lot more than vehicles with an internal combustion engine. But one of our guests is a 24-year old who owns an EV and is saving money.

Government subsidies for buyers of EVs can help reduce the cost of buying these cars and SUVs, and high gas prices help with the economics of owning them. But what if an EV is still out of reach, even as you’re getting crushed by high gas prices?

Here’s some sound advice from one of the guests in this podcast episode, Robert Karwel, an automotive industry expert at J.D. Power: Buy a fuel-efficient car instead of an SUV.

J.D. Power says the average price of a new vehicle was about $44,000 last month. Fuel-efficient cars can be had for $25,000 to $27,000 or thereabouts, plus taxes and sundry dealer costs. EVs are in high demand right now, which makes it tough for buyers to get a deal on price or financing rates. Cars may offer more leeway to negotiate the price down, and you may find more reasonable financing rates as well.

The auto industry’s answer to affordability is to allow customers to finance loans for seven years and up. For a tutorial on the financial risks of long-term vehicle loans, consult a recent article by my colleague Erica Alini that had the following headline: She had a $29,000 loan for a $16,000 car. How auto finance is driving Canadians into debt.

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Rob’s personal finance reading list

Down with starter homes

A critical look at the idea of buying a starter home and then moving up to something bigger. The author is Benjamin Le Fort, author of a book called The Financial Freedom Equation. Well worth a read as the real estate market slows.

Best metal cards

A new trend in premium rewards – credit cards are made of metal instead of plastic. Lots of points-earning power, but annual fees of up to $700 per year.

Buffet on bitcoin

Venerated billionaire investor Warren Buffett says he’d pass if offered all the bitcoin in the world for $25. Now for a balanced look at what’s described as Mr. Buffet’s crypto blind spot.

‘When you have kids, your house becomes a big toilet’

Advice on how to clean stains left by your kids on expensive items like carpets and couches.


Q: I’ve read advice to sell bonds and move that money into GICs to take advantage of increasing interest rates and deal with the bad bond market. As someone who is not retiring for 20 years and keeps 25 per cent of her RRSP portfolio in bond ETFs, does the advice still stand?

A: What you’re doing sounds sensible. Keep it up. The GIC alternative to bonds offers one big advantage right now: guaranteed investment certificates don’t fall in value as interest rates rise, as bonds and bond ETFs do. When interest rates come back down after peaking, bonds and bond ETFs will rise in price. Also: if you add money bond ETFs now, you’ll be able to lock in today’s higher yields

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

Top free retirement calculators, as compiled by the My Own Advisor blog.

The Money-Free Zone

I just came across this nugget: Ride Your Pony, by the 60s soul singer Betty Harris.

Watch this

Canada Deposit Insurance Corp. explains how it now offers separate coverage of up to $100,000 of deposits in registered education savings plans and registered disability savings plans.

Tweet of the week

The headline on a recent Globe and Mail editorial about raising the age for started Old Age Security: Sorry, Grandma, we’re cutting your benefits. A retired financial planner and commercial banker replies: “Yes (says Grandpa).”

In case you missed these Globe and Mail personal finance-related stories
  • Canadians are piling on credit card debt again
  • Some new landlords are losing money. With rates rising, tenants could see rent hikes
  • Politicians are selling us a myth on housing: that more supply will be our salvation

More Rob Carrick and money coverage

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