Tag: interest rates

The New Car

June 7, 2024

My good friend, who happens to be the sales manager at a Honda dealership, recommended that we trade in our leased car for a new one before we drove 100,000 kilometers (60,000 miles) on it. We were approaching this mileage threshold when interest rates were high, so switching to a newer model was expensive. We decided to wait and see if interest rates would come down and if there would be any sales specials from the manufacturer that would make it attractive to trade up.

Used cars sold for almost as much money as new cars last December because of the shortage of new vehicles – one consequence of Covid when car workers were laid off and production slowed. However, the economy began to pick up last year, and new car production followed. So, a trade-in became urgent; used car prices trended down as new vehicles arrived on car lots.

To increase car sales, Honda introduced different lease rates for two-year, three-year, and four-year leases, with the shortest leases having the lowest interest rate. Also, Honda added four months to the leases as a bonus, so the total cost of a two-year lease was divided by 28 instead of 24 months (2 years) to get a lower monthly payment. For instance, my friend calculated that my monthly payment for a new car would increase by only $25 for a two-year lease, a small price for a brand-new vehicle.

We discovered that the new EV hybrid model we test-drove was not just a practical choice but also an exciting one. It offered the same comfort and reliability as our previous car but with the added potential fuel savings. That, coupled with the anticipation of rising gas prices, made the decision to trade up a positive adventure.

But beyond the financial and practical reasons for moving on to a newer car, there was another inspiring logic – the environmental logic. Who wouldn’t want to be part of the future, driving an EV car? We’ve all heard the dire predictions of what could happen if we don’t reduce our carbon footprint. I may not be a climate expert, but it’s empowering to think we’re joining the progressive crowd and doing our part for the environment with our new EV. The decision came with the bragging rights of being an environmentalist.

So, we confidently signed the papers for a new lease. Kathy picked the color, and my friend ordered a blue Honda CRV that rolled out of the Alliston, ON, Honda plant in mid-January 2024.

But picking up our new hybrid Honda came with a few wrinkles. First, our CRV model is the most stolen car in Ottawa, if not in Canada. Many insurance companies require the installation of a tracking device. Even with that gadget, the insurance costs are higher than those for comparable cars. My insurance broker quoted a price for the new year fifty percent higher than what I paid in the current year. So I went insurance shopping and found that the Canadian Automobile Association (CAA), of which I am a member, offers a twenty percent discount for its insurance provided I use a “club,” the locking device that fits across the steering wheel. I already have a club, so we switched our insurance to the CAA.

Second, I assumed that the bicycle hitch on my 2020 CRV would fit the new 2024 CRV. That was not the case; in their wisdom, Honda engineers changed the dimensions under the chassis, and I bought a new hitch. It was an unexpected cost, but it was essential if we wanted to go on biking tours.

So, we thought we were ready to rock and roll with the new car until I attached the Thule bicycle rack to the hitch and backed up from the garage. Some warning system alerted us that we were backing into some barrier. It turned out that the bicycle rack triggered the warning sound. The Honda engineers had not figured out that the warning system should not come on when an object is attached to the back of the car! No problem: I called my friend at the dealership, and the service people there advised me to turn off the “parking assist” system to avoid the racket that the warning system made when backing up the car with the bicycle rack on the vehicle.

I used to leave the bicycle rack on the car all summer, but now, I cannot do it unless I suffer the loud racket when backing up. The alternative is to attach and remove the bicycle rack during a bike tour. We decided to go with the alternative solution since Kathy uses the car ninety percent of the time, and the “parking assist” system” is helpful.

Dealing with the bicycle rack issue was an experience highlighting the new car’s adaptability and versatility. It introduced me to the various computerized systems in the new car, offering more conveniences than I had expected. For instance, I discovered the wireless iPhone charger on the middle console, a feature I now appreciate in the 2024 CRV (in the previous model, I had to plug in a cable to charge the phones). It also made me read the instruction book with fine print on hundreds of pages. I have never liked to read instruction manuals, but they are helpful.

Understanding this new hybrid model’s features is still a learning curve. The car’s advanced computerized systems, such as the various warning systems, require some time to get used to. However, once you’ve mastered them, they can significantly enhance your driving experience and make your life on the road more convenient.

Awkward Facts

April 17, 2024

The Covid crisis brought to my attention the Canadian Government’s recent flood of announcements to address the ‘housing crisis.’ To contextualize this ”crisis,” I delved into statistics. I discovered that sixty-five percent of Canadians own their homes (and therefore experience no housing crisis), and the income-to-house price ratio has skyrocketed over the last decade. This has created significant hurdles for young people, making stepping onto the property ladder increasingly tricky.

However, the billions of dollars announced to encourage home construction seem overkill. The demand for housing, which many studies concluded resulted from the recent surge in international migration, may be reduced by government policy, limiting future immigration flows. Mortgage rates may also come down soon, alleviating the need to solve a “crisis.” However, throwing vast amounts of money at a sudden “crisis,” which has evolved recently, reminded me of the pandemic’s beginning. Let me describe.

The Canadian Minister of Procurement ordered 419 million Covid vaccines at the pandemic’s onset, costing nine billion dollars. The experience of Italy and New York State with Covid was a stark reminder of the potential devastation without vaccines. However, with a population of 38 million people in 2020, Canadians would receive ten vaccines each. The Public Health Agency of Canada recommended two doses for vaccination and boosters every six months. So, the vaccines purchased would suffice for five years for all Canadians.

As a result of publicizing the dangers of Covid, over 80 percent of the population raced to get the first two shots. Although the vaccines kept coming, and booster shots were widely available, people decided that two vaccines were sufficient, and fewer and fewer people took a third or fourth dose. By the time the sixth shot, the XBB.1.5 Omicron subvariant designed to shore up protection against the SARS-COV-2 descendants came about in late 2023, only fifteen percent of the population decided to receive the dose.

By late 2023, people considered Covid more of a nuisance than a dangerous sickness, similar to having a cold. With all the vaccines ordered but not used, the British Medical Journal called Canada one of the most vaccine-hoarding countries in the world. The Director General of the World Health Organization, in 2022, remarked that Canada was hoarding vaccines at the expense of poorer nations. Of the over 400 million vaccines contracted, only 105 million were used by December 2023 in Canada.

It’s disheartening to note that policymakers seemed to overlook the fact that vaccines have expiration dates. They also seemed to disregard the reality that the virus mutates, necessitating the development of updated vaccines to maintain effectiveness. As a result, millions of doses expired and were unusable   However, the contracts for the original orders still have to be honored. For instance, Canada still owes C$350 million to Novavax, one of the vaccine manufacturers, for vaccines ordered. 

So, was Canada successful in avoiding Covid? Can we put some metrics to success? The Canadian experience with Covid indicates that Canada fared well among the G7 countries in handling the pandemic, with less than a thousand deaths per million people, second best after Japan. However, we did spend a significant amount of money, and much of it was wasted. It is astounding that Canada used only 25 percent of the vaccines purchased. I wonder if we could have been more agile and intelligent in our decision-making, considering people’s willingness to receive periodic shots over the years and the expiry dates of the millions of vaccines ordered.

I also wonder if the Government has learned anything from throwing so much money at the Covid issue that could be applied to their new “housing crisis ” so that Canada can avoid throwing good money away with minimal results.