Auto Broker walks the walk, talks the talk for you

For people who find car shopping unnerving, there is an alternative: you can send a professional buyer into the showroom to wrangle a deal on your behalf while you relax at home. Auto buying by proxy offers savings in time, shoe leather, anxiety and, possibly, money. Independent brokers will find you the best deal on the vehicle you want in return for a fee. Like real estate agents, they shop the market with your needs in mind and are not tied to a maker. A broker is the intermediary between the auto dealer and the consumer. A good one will complete the paperwork, deliver the vehicle to the buyer’s home or office and explain its features. Such services mushroomed in the affluent ’80s. But Mohamed Bouchama, executive director of Car Help Canada (http://www.carhelpcanada.com), a consumer advocacy group, suggests that the need for a broker has diminished in recent years. “Competition is fierce in the car business now,” he notes. “Dealers are discounting $1,000 to $1,500 right off the top.” He believes that most consumers can negotiate a car deal just as well on their own and warns that the unregulated broker industry has attracted some unscrupulous operators. Some collect a fee, then disappear. Others double-dip: collecting a fee from both the client and the dealer. “I’ve always said that anyone who doesn’t have anything better to do gets involved in the car business,” says Bouchama. Automotive adviser and broker Mark Derry stresses that his job involves a lot more than negotiating a low price. “I learned really quickly that people hate car salesmen,” says the Mississauga native who now lives in Bloor West Village. He used to sell cars at a Mazda dealership in Rexdale, but today runs CarSense, an auto broker service (http://www.carsense.to). During his five years as a sales rep, Derry, 33, observed all kinds of consumers. While some researched their decision with care, many others seemed to buy on a whim. “I met a lot of people who were lost. People often spend more time shopping for a pair of pants than they do for a $20,000 or $40,000 vehicle.” Because automotive brokers eat, drink and breathe cars, he contends that they’re better equipped to find the vehicle that fits the client’s needs. It’s not that a consumer couldn’t replicate the research; it’s just that few people can devote as much time to the task and...
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Car broker does the dirty work

If buying or leasing a car makes you feel like you have been taken to the cleaners, you might want to try getting your next car through a broker. Mississauga car broker Mark Derry owns Mark Derry’s CarSense. On behalf of his clients, he helps choose the type of vehicle, negotiates the price and delivers it to your door. Derry has been brokering cars full-time since December of 1997 but he has been in car sales, on and off, since 1991. He was successful, but got tired working so hard to get past customers’ distrust. A 2003 Leger Marketing poll showed only 16 per cent of people in Ontario trusted car salesmen. After working for Bell Mobility for two years, he put together a business plan that would let him sell cars on his own terms and CarSense was born. “I found it frustrating to only be able to sell one kind of car when I knew that a different make and model had a better deal” said Derry. “The process was counter-intuitive. I had to get the most money from the client because that was how I made money. Now, with CarSense, I get to go against the dealers to get the best deal for my client.” Because he charges set fees, the only way negotiating a lower price affects his bottom line is by getting him more referrals. Derry estimates that, once consumers decide on the make and model, they spend about 20 hours in four dealerships negotiating for the best deal. “It’s an exhausting process,” said Derry, and at the end of the day, most consumers feel they have been ripped off.” Because there are so many dealerships competing against each other, Derry can broker a deal with dealership fleet managers that can beat the best price on the sales floor by up to $9,000. Fleet managers deal with him because of the volume of business he brings them and the fact that he does the work. It is an easy sale and keeps their numbers high. For Derry’s client, it means a better price and Derry does the paper work and the negotiating – all of the dirty work. Mark Horodezny of Mississauga figures Derry saved him between $600-$800 last year when he bought his new Toyota Sienna van and the process was easy and pleasant. “I’m not afraid to haggle, so I went out...
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Internet, rising loonie transformed used-car market

Unless you have an affection for polyester suits, tinsel streamers and mouldy office trailers, you’re probably not missing the 1980s very much. Back then, searching for a used car often meant kicking tires on small lots up and down Danforth Ave. and other Toronto thoroughfares that had been overrun by motley clusters of used-car dealers hawking their wares with grease pencils and sagging balloons. Nothing says fly-by-night quite like a sales office on wheels. “We’ve come a long, long way from the Danforth, which was the street that typified the business then,” says Bob Pierce, director of member services for the Used Car Dealers Association of Ontario (UCDA). While small, independent used-car lots may be hanging on, the used-vehicle business has changed dramatically over the past 25 years — and much of it for the better. LONGER-LASTING VEHICLES Automobiles are lasting much longer today, a benefit every one of our industry observers mentioned right off the top. A used vehicle can have a lengthy second life and a third one, too. “Cars have improved dramatically both in terms of corrosion resistance and mechanically,” says George Iny, president of the Automobile Protection Association. “Today, a five-year-old used car can offer many years of good service and can easily make it to 12 years and 250,000 kilometres. In the early 1980s, it was likely ready for the scrap heap at 160,000 kilometres, mainly due to corrosion.” BETTER DISCLOSURE Mohamed Bouchama, of CarHelpCanada.com and host of CP24’s Auto Shop, says dealers today largely sell decent vehicles because the disclosure rules have shone a bright light on the bad practices of the past. “It was a jungle back then. Dealers used to sell junk and there was no protection for the consumer,” Bouchama maintains. He rhymes off a litany of complaints of the time: rolled-back odometers, undeclared vehicle writeoffs, cross-province trade of wrecks, and the usual deceitful tactics, such as plugging leaky radiators with temporary sealant. “There’s far better consumer protection today with disclosure,” Pierce agrees. “Some 75 per cent of cars at the wholesale auctions come with histories.” IMPROVED REGULATION Pierce cites the formation of the self-regulating Ontario Motor Vehicle Industry Council (OMVIC) in 1997 as a key step in the development of a more ethical and transparent dealer industry. It overhauled the Motor Vehicle Dealers Act, which came into effect in 2010, further strengthening disclosure obligations for both retailers and trade-in...
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Parts shortage will boost new car prices

Your new car is about to get more expensive, if you can buy it at all. Just as chaos theory suggests a butterfly’s fluttering wings may affect the weather thousands of kilometres away, a catastrophic earthquake on the far side of the globe has the ability to disrupt things right here. One-quarter of the world’s supply of automotive electronics comes from northeast Japan, the region devastated by the March 11 earthquake and tsunami. Because auto-parts supply networks are intertwined, few major car companies may be able to escape the effects of the Japanese disaster. Toyota, the world’s largest automaker, says there are approximately 150 parts — mainly electronic, plastic and rubber components — whose short supply is impacting its new-vehicle production. Its manufacturing plants in Japan are currently working at 50 per cent of capacity due to parts shortages, while those in North America are operating at 30 per cent of capacity. Other Japanese makers are managing similar challenges. “Expect the full impact of the Japan disaster to affect availability and thus pricing later this summer and fall,” warns Joel Cohen, president of the Toronto Automobile Dealers Association (TADA). “Shop early for best availability, selection and best pricing, especially popular compacts and subcompact cars. As the price of gasoline goes up, the availability of these cars will decrease proportionately.” Industry observers agree the old mantra — “there’s never been a better time to buy a new car” — may have finally run its course. “The earthquake has created supply issues; many models will be in short supply in the coming months,” reiterates Mark Derry, an automobile advisor who counsels clients on new- and used-car purchases in the GTA. “Already, I have a customer who’s been told he’ll have to wait until the fall to receive a Lexus CT 200h hybrid.” Toyota admits in its media release that it will be November or December before normal production levels are restored. Consumer advocate Mohamed Bouchama of CarHelpCanada.com reports that 2012 models of Canada’s favourite automobile are only trickling into Honda showrooms. Some dealers are just taking orders on the new Civic. Basic economics dictates that when supply is constricted, the price goes up. Bouchama says that while Honda’s sticker prices remain unchanged, dealers will be reluctant to discount their small allotments of cars. “The mark-up has gone up, not the sticker,” says Bouchama. “Civic buyers would be lucky to get a...
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The pros and cons of ending a lease

It can make sense to get out early but the new lessee must watch out for some curves. Bert DeSouza enjoyed driving his 2006 Subaru Legacy GT wagon until a job change that allowed him to work at home meant his expensive Subie would languish in the garage. It was time to part company — a formidable challenge when you’re leasing. “I had 11 months left on the lease at $606 per month. Returning it early would have required paying a penalty in the thousands,” says DeSouza. Like a growing number of Canadians, DeSouza advertised his car and his lease on a lease-takeover “remarketing” website and found a willing second lessee. To help grease the transaction, he offered the new lessee $1,250 cash and paid the transfer fee (about $400); in return, DeSouza was released from his contractual obligations. “For the original lessee, it represents an alternative to the tyranny involved with early lease termination where it sometimes feels like the dealer and automaker want a pound of flesh,” says George Iny, president of the Automobile Protection Association. “Typical cost for an early lease return runs in the $2,500 to $5,000 range — with $10,000 not unheard of for a prestige vehicle or for someone ending a lease in the first year.” At the same time, used-car shoppers are turning to lease-takeover services to find late-model used cars and trucks as an alternative to scanning the classifieds and looking online for used vehicles to buy. “Savvy people are using the site,” says DeSouza. It’s especially useful if you’re looking for luxury vehicles or hard-to-find specialty models, he notes. Mississauga-based Leasebusters.com pioneered the lease takeover concept in 1990 and dominates the market today, but there’s no shortage of competition. Rivals include Easyrelease.ca, Leaseexperts.ca, LeaseTakeOvers.ca and Ontarioleasing.com, among others. All the sites function the same way: vehicles and leases are advertised to draw present and future lessees together; all that seems to differ is the service fee. Leasebusters charges $295, while newer firms tend to undercut that price to build traffic. In reality, anyone can advertise their lease in any classified listings, such as Craigslist and Kijiji, often at no cost. It’s no secret leasing will get you into a new automobile at a relatively low monthly payment, since you’re essentially renting the car. A lease takeover is attractive because the original lessee may offer a cash incentive — it’s cheaper...
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What’s the best way to pay?

It’s a whole different game when you’re buying used. Here’s how to have the edge if you need a car loan The financing options available to new-car shoppers are well advertised but what’s out there for shoppers of pre-owned vehicles? Unlike new-car dealerships, whose low, low financing rates are subsidized by the manufacturers to keep their assembly lines humming, used-vehicle dealers remain at the mercy of the lending market. And despite the fact interest rates are at historic lows, used-car lots are borrowing at 5.99 per cent right now – a good rate, but not a great one. Yet consumers won’t be seeing that number on their loan agreement. The dirty secret of the finance world is that your chartered bank would rather loan the money to dealers than to their own customers. In fact, auto dealers earn a cash incentive from the banks to loan that money out at the highest possible interest rate. “Banks pay a flat commission for a base rate loan, and incentives if the borrower has good credit and can be bumped to a higher interest rate,” explains George Iny, president of the Automobile Protection Association (apa.ca). “For a $10,000 loan, the best rate from the small dealer I contacted is 7.25 per cent; the dealer can get a commission of about $150 (from the bank). By bumping the rate by 1.5 percentage (points), the dealer will collect $400.” “It incentivizes the dealer not to give you the best rate,” says Iny. As a general rule, car loans valued at less than $10,000 are levied a higher interest rate, while larger sums are cheaper to borrow. Car loans are almost always negotiable. When pressed, most dealers can shave a half-per cent off the quoted rate to win your business, but to really get their attention, utter the two most hated words in the car business: credit union. “A credit union can offer car loans at 6 to 6.25 per cent to their best customers,” Iny says. “Dealers hate that. It’s like showing a crucifix to a vampire.” The best bank rate for a larger loan on a more recent model can be as low as 6.5 per cent. But to qualify for their lowest rates, banks want to see substantial money down: about 15 to 20 per cent of the vehicle’s transaction price. The banks’ dealer plans are available for vehicles as old as...
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