A young woman who approached her step-brother seeking financial advice about selling her vehicle turned sour in just a matter of minutes.
In a silly way before we ask a question many of us have a preconceived notion of what we want the answer to be.
It’s as if we are cheering in our mind in hopes someone says what we are thinking. I suppose it’s a reaffirmation of what we think we already know but just want to find out for sure.
If you are close with your siblings you may turn to them for financial advice and everyday tips in hopes to make the right decisions on topics you might not be too familiar with.
I often find it interesting when people ask for financial advice yet when they don’t hear what they want to hear they get defensive. Then I have to wonder why they asked for advice in the first place?
I read a quote this morning that went something like this…..
You can’t save everyone. Some People are going to destroy themselves no matter how much you try to help them- Bryant McGill
I have in the past given advice to a friend about buying cars but I’m pretty sure it went in one ear and out the other. We need to understand that the only people we can save are the people who WANT to be saved from financial ruin and have a vested interest in making things right in their financial lives.
If you think that having a simple conversation with someone is going to rock their financial world, you are sadly mistaken. People have to make mistakes in order to learn it’s called “experience”.
It might not be until that pinnacle moment in their lives that they might look back and understand why something was said or done and hopefully they make changes moving forward.
No TV program that offers people money to change or parents who place a bet on the table will change a person’s financial mindset except for the person themselves.
It’s not rocket science to understand that many people will say and do anything for money, especially if it’s offered for free and all they have to do is conform.
Almost all vehicles depreciate from the moment you get inside and drive away. We all know this, or do we?
For the most part you won’t make what we would call a ‘profit’ from selling a used vehicle unless you bought it for $500 and sell it for more than you invested into it. That’s simple math.
You may make a profit if you have an antique car or a car that is in demand that someone is WILLING to pay you more than what you bought it for.
This is how the story goes……
Someone I know had his step-sister who is in her early thirties, no kids, working contract full-time (she hopes to move next year closer to family) with student loans and consumer debt call him to get financial advice about selling her vehicle.
I don’t know her exact financial history but she has struggled to get ahead of her finances for years and from what he said she has done well paying off debts. He’s proud of her and wants to see her succeed.
The idea of selling her car was so she could move away from the 2-door 2008 Honda Coupe and get a 4-door while she can still make a ‘profit’ on the car. She hopes to find a car that is equal or lesser in value but 4-door even if it’s older.
She currently is driving one of those so-called popular Japanese vehicles, the Honda in which started out as a 2008 brand new lease. She realized years later how silly of an idea it was to lease car but it was the only way to get a vehicle with her credit history at the time.
Ok, sure it might make sense if you are desperate for a ride but there likely could have been other means of transportation which could have been used until she saved up money to buy a used vehicle i.e. public transportation. With a used vehicle comes pros and cons as well though.
Getting back to the story…
What she wants to do is sell the car for x amount of dollars and apply that money to a used car so she has the same or similar car payment.
She bought out the lease on her car which means that she paid x amount to the dealer to keep the car and call it her own. Leasing a vehicle is not for everyone and it’s important to do research on this topic before jumping into this situation.
She is in the final year of paying off the car loan which means she will own the vehicle free and clear. Great you would think! She knows what the car has been though and the vehicle maintenance that has been completed on the vehicle.
You won’t likely get all this lovely information when you are buying a used car in Ontario unless the seller provides you with this information or you pay to see if the vehicle has been in any accidents. A vehicle information package is a great way to learn more about a used vehicle but don’t hold your breath getting one.
Her first conversation with her step-brother consisted of “How much should I sell my vehicle for?” Of course we all know that this depends on many factors.
He asked her if she’s done a vehicle inspection and some other simple questions about the vehicle so he could go online at Auto Traders to see what other vehicles in her year, make and model etc. were selling for.
Upon doing research he realized that the vehicle value she drummed up at $14,000 will likely on boil down to about $8000-$9000 realistically. It’s a case of someone thinking their stuff is worth more than it really is in order to justify another purchase.
Her idea like I mentioned was to sell one and slide into another paying the same payments. Sure, it sounds great but is it realistic? He has her best interests at heart because they are related and wants her to make sure she does her homework first including examining her finances. She looks up to him because he has done very well in his life financially for his age but wants what she wants I guess.
Here are some questions he asked her….
- Why would you not just pay this vehicle off in full and enjoy being debt free from paying a vehicle?
- Do you have financial backing to purchase another vehicle?
- Do you have emergency savings just in case something were to go wrong with the vehicle or even your current vehicle?
- What kind of used vehicle do you want to buy?
- Do you know the rules of buying a used car privately?
- What steps do you need to take when buying a used car in Ontario?
- Have you been to a dealer to see what they would offer you as a vehicle trade price on the car?
- How much would a used dealership offer you for your vehicle?
- Do you have an up to date maintenance package for your buyer?
- Why do you want to trade your car?
Buying and selling a vehicle
When you want to buy and sell a used vehicle in Ontario you should at least know the basics involved. She is sadly mistaken if she thinks it’s not going to cost her more money to slip into another vehicle unless it’s older than what she has or she gets lucky.
What her step-brother didn’t understand was why she would sell a car that was practically paid off? This would easily enable her to focus on building an emergency savings, pay down her OSAP loan and other consumer debts.
It would make more sense to pay down debt and once the debt is gone if she REALLY needs a 4-door vehicle (which she justified as wanting in case she gets married and has kids) then she could save up cash to buy one or a hefty down-payment for a newer model car or find one at a dealership for 0% interest.
Although getting back into the vehicle paying game is a bummer because it just adds to the budget even though it does happen.
There is nothing wrong with her current vehicle besides that it is a 2-door rather than the 4-door that she “wants”. In her words it’s in “mint condition”. She doesn’t realize that buying another car is likely going to cost her money so he recommended she do more homework and try to answer some of his questions above.
Her answer was, “I know what I’m doing”. Fine, he says but for someone who has bought a new vehicle, paid it off and is pretty much going to run it into the ground while keeping it in tip-top shape, he can’t understand. I suppose everyone has different ideas of “financial freedom” or ideas of “wants’ and “needs” in life.
The problem is we might never understand why people do what they do financially. Sometimes they have to hear it from outside sources rather than from family members because it’s easy to shut down a family member who has their best interest at heart.
Maybe her step-brother is way off base but judging by his success I’d say he has somewhat of an idea what he’s talking about however it’s his perspective on the situation, not hers.
They likely would have more success hearing it from someone they don’t know, hence those famous TV shows about debt, i.e. Til Debt Do Us Part.
Buying a used vehicle
There are no promises when buying a used vehicle nor are there any when buying new but generally speaking you can purchase a warranty when you buy from a dealer although it doesn’t cover everything.
When you buy privately that isn’t so much the case and if you get suckered into a lemon you are left with paying the bill. If you didn’t have the cash before you bought your lemon look out because paying a mechanic to fix your vehicle plus parts is costly. This is where it’s nice to have friends with benefits as long as you have a service you can offer them back one day.
There are laws surrounding the sale and purchase of used vehicles in Ontario and it goes further than just the E-Test and Safety inspection. You have to remember that the sales tax is collected when you go to change your plates to your new vehicle. For the full package of how, why and where visit the government website at the Ministry of Transportation.
I bought my vehicle used when I moved to Ontario and yes I took a chance buying it from a dealer but upon vehicle inspection I was happy with what I saw. I was still taking a chance and although it’s been many years now I’ve only had to replace the fan belt and idler, front brakes and that’s it.
I paid around $14,000 cash for my vehicle and it came with an accident report and full maintenance package history from the one previous owner with super low mileage. Yes I know people can hide things but having something is better than nothing when buying a used vehicle. You can also pay to look up online using the VIN number on the vehicle to see if the vehicle has been in any accidents as another option.
Now that we are having a baby I’d like to trade my vehicle in but there is no point because I’d be paying more money for a bigger vehicle, gas consumption would go up, insurance rates would go up so why bother.
My vehicle is in mint condition as I take very good care of it so I might as well wait until we can use it as a family instead of blowing more cash on buying another vehicle. Our main vehicle is big enough for 7 people, bought brand new in 2003, has low mileage, starts every morning without issue and runs like a charm.
Trading up vehicles can be costly but making sure you have your budget in check and you know what you are doing when buying and selling used vehicles is important.
I offered my two cents to my friend but we both agreed that she will have to make the final decision because it’s her money, her car and her life. The used car market will dictate the price that she can sell the car for as potential buyers will avoid hers in favour of the same vehicle for cheaper.
In these cases people will do what they want if they have it drilled into their head. We don’t always learn the easy way do we? No the hard way comes first and we draw from those experiences in hopes of never making the same mistakes twice. Is this a mistake? Only time will tell and only she will know because it’s her finances on the line.
Would you sell your almost paid off car to get another used vehicle with 4 doors to potentially take on more debt load?
Have you ever offered financial advice to a family member to only have them turn away from your suggestions?
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