Category Archives: auto loans and leasing

The myth about warming up your car on a cold day

Since modern cars have fuel-injection systems their engined don’t need to be warmed up. (Stefan Redel, / Getty Images)

The Stegosaurus disappeared more than 100 million years ago, doomed by its tiny brain and a changing world. Then we come to the carburetor, a crude fuel-mixing device that once ruled the automotive universe.

Today, the carburetor is largely extinct, kicked aside by the modern fuel-injection system. Yet millions of drivers still seem to be stuck in the Jurassic Period. I thought of this recently when I watched a man spend 10 minutes warming up a fuel-injected Toyota that could have been driven seconds after it was started.

Few processes are as poorly understood as the cold-weather start. Back in the days of carburetion, a car couldn’t be driven until it was warmed up. Today, warming-up is a counterproductive exercise that wastes fuel, harms the environment and damages your car. Let’s have a look at the science, history and flawed folklore behind the automotive warm-up:

Virtually every car on the market today is equipped with a fuel-injection system that adjusts gasoline delivery based on temperature, throttle setting and engine load – because of this, your car can be driven almost immediately, even at low temperatures.

Even in extremely low temperatures, most fuel-injected cars can be driven away less than 30 seconds after start-up. The best way to warm an engine is to drive away as soon as possible and keep the load low until it reaches ideal operating temperature. Accelerate gently and use small throttle openings. Driving loads the engine and warms it more quickly than extended idling.

Engines are most efficient when they operate in their optimum temperature range. Running an engine when it’s cold causes increased emissions and engine wear. The goal is to get the engine into its preferred temperature range quickly.

Using a block heater can dramatically reduce the wear on your engine by improving oil flow on initial start-up. According to tests by Environment Canada, a block heater can improve overall fuel economy by as much as 10 per cent – you get zero miles per litre while idling and fuel economy is best at optimum engine temperature, so you should reach the target zone as quickly as possible. Environment Canada tests also showed that warming up an engine with extended idling leads to sharply increased emissions.

Although driving away as soon as possible is optimum, you may be limited by visibility requirements – the defroster system in your car won’t work until the engine generates enough heat. This can be offset by the use of a plug-in interior heater. Some manufacturers offer windshields with embedded heating elements, which speed defrosting.

The science and engineering that govern engine performance are relatively simple. Metal parts expand and contract with temperature and are designed to work best within a specific range. The efficiency of fuel combustion also varies with temperature – a cold engine burns extra fuel.

The catalytic converter unit installed in your car’s exhaust system is less efficient when it’s cold. This is another reason why short warm-up times reduce emissions.

Many drivers base their warm-up practices on outmoded technology and outdated thinking. When cars had carburetors, engine warm-up was essential – trying to drive a carbureted car when it was cold was like waking up a temperamental senior citizen from a deep sleep. Modern fuel injection systems automatically adjust themselves to deliver the correct amount of fuel, and are ready to go almost immediately.

Extended-idle warm-ups were once encouraged due to lubrication technology. Old-school oils didn’t work well in low temperatures. Modern synthetic oils can flow well at temperatures as low as – 40 C.

Use remote starters wisely. Many drivers start their engines far ahead of time so their car will be toasty warm when they get in. This extended idle has a high cost. According to the Oak Ridge National Laboratory (a division of the U.S. Department of Energy), excessive idling shortens the life of your exhaust system and spark plugs because a cold engine creates more damaging combustion byproducts than a warm engine. Carbon and soot buildup also reduces the effective lifespan of engine oil.

Source:  PETER CHENEY The Globe and Mail Published Thursday, Feb. 26, 2015 5:00AM EST

 Read more questions and answers from Peter Cheney and Globe Drive here

Since modern cars have fuel-injection systems their engined don’t need to be warmed up. (Stefan Redel, / Getty Images)

Tagged , , ,

Canadians don’t save like we used to, and for good reason

Megan Coady is paying a student loan and Toronto rents and finds it hard to save.

Megan Coady’s salary doubled overnight, but the 29-year-old says she’s still not saving any money.

Coady moved from Prince Edward Island to Toronto a year ago, to take a host position at Flow 93.5, a popular local radio station.

“I jumped at a chance to work in the biggest market in Canada,” says Coady.  “And I’m making twice what I was in P.E.I.”

Canadian household savings

Canadian household savings rates have been declining for 30 years. (CBC)

But as a single mother with a young son, she rents an apartment, and has instalments to pay on a car loan and a student loan.

“I don’t have a stash of cash just for a rainy day,” she admits. “My cost of living has also doubled.”

Coady is hardly alone with her lack of savings. Close to half of Canadians would have a tough time paying bills if their paycheque came even just one week late, according to the Canadian Payroll Association’s 2015 survey.

The survey also showed that although more of us say we are trying to save, fewer are able to actually do so.

Hard to believe that early in the 1980s, Canadians saved twice as much as Americans — an astonishing 20 per cent of our disposable income in 1982.  Nowadays we save less than our southern neighbours.

Falling savings rates

In the third quarter of 2015, Statistics Canada estimated the household savings rate at 4.2 per cent. That compares to 5.5 per cent for U.S. households, according to the Bureau of Economic Analysis.

But that’s not because we’ve become self-indulgent, undisciplined wastrels. Bank of Montreal chief economist Doug Porter says the change in behaviour is logical — and it’s all about interest rates.

Ron Thomson

Ron Thomson says he’s careful with money, looking for items on sale and buying things with points to make his dollars stretch. (Ron Thomson)

“Consumers ultimately respond to the incentives that are put in front of them,” he explains.  “Persistently low, low real interest rates have crushed savings. It’s not surprising.”

The 20-per-cent savings rate only lasted a year at a time when interest rates were sky-high and Canadians got a good return on their savings. Yet, since 1982, the household savings rate in Canada has been in decline.

Those high interest rates also damaged the economy, as businesses and consumers with debts struggled and even collapsed under the cost of their borrowing.

“So I’m not sure we really should see that episode as some kind of golden era,” says Porter.

Saving in the good old days

Ron Thomson remembers those days fondly. He was a heavy-equipment operator in Linden, Ont., until his retirement last year.

“I remember having a one-year savings bond and getting 18 per cent,” he marvels.  “Hard to bloody believe, isn’t it?”

Thomson. 62, is a champion saver. His parents split when he was 10 years old. “Because of the separation neither one ever had much money,” he says.

‘I remember having a one-year savings bond and getting 18 per cent’– Ron Thomson, 62

Growing up on a farm, he says he learned the difference between needs and wants, spending his hard-earned dollars only when absolutely necessary. And he married a woman who shared the same values.

Together they were able to save a down payment for their second home, a detached house, without selling their first home, a townhouse. They kept the property and rented it out.

Thomson still counts his pennies. He says he’d never buy a greeting card anywhere but the dollar store, for example.

“I watch for sale items,” he explains. “For instance, I have a Canadian Tire Mastercard and it builds up points. The last snowblower I got, I used my points. And of course it was on sale, too. I’m not paying $1,000 for a snowblower when I know I can wait a couple months and get it for $700.”

Thomson says young people don’t seem as concerned about finances the way he was at their age.  “My son and his wife live just up the road — they seem to go out for dinner a lot.  And my daughter, she says she doesn’t need to worry. Her mother and I do all the worrying for her!”

Eat out or save money?

Newly better-paid Megan Coady says she spends a fair bit on restaurants as well — perhaps too much.

“I don’t buy groceries,” she says. “I’m on the go most of the time, so I eat out a lot.”

She admits though that she’s not too busy to head to the pub for a pint or two after work on occasion.

“I battle with myself over this sometimes, but I obviously enjoy spending my money socially,” she says with a laugh.

She takes comfort knowing that she has at least started a Registered Education Savings Plan for her son. And she intends to start an RRSP for herself this year, before she turns 30.

Ideally more Canadians will reconsider their dedication to saving, despite the fact that low interest rates don’t offer much incentive, according to BMO’s Porter.

He believes, as most economists do, that the Bank of Canada will be forced to lower rates yet again sometime this year, in another attempt to spur economic growth.

“We are punishing savers tremendously in this country,” he says, while also pointing out that everyone should have some sort of financial cushion, in case their fortunes turn unexpectedly.

“That lack of a shock absorber is the big risk. We’re dealing with the oil shock right now, but there’s a risk that the shock becomes deeper than it needs to be,  because households have no protection to deal with it.”

Source: Dianne Buckner, CBC News Posted: Jan 16, 2016 5:00 AM ET

Tagged , , ,

How the bond market meltdown could push fixed mortgage rates higher

Rate hikes would occur as sales have dropped in Calgary and Edmonton. Prices have peaked in every market in the country with the exception of Vancouver and Toronto.

Financial Post

Garry Marr | May 14, 2015 6:42 PM ET

An increase in mortgage rates is likely just around the corner, a situation that might push some consumers to lock down their rates.

Given that five-year Government of Canada bond yields have climbed about 40 basis points in the last month, and mortgage rates track bonds, it makes sense to try to get a rate guarantee if you are shopping for a house, Rob McLister of says.

“There is an inclination to recapture some of the spread [between bond yields and mortgage rates],” says McLister, who expects up to a 15-basis point increase on the five-year.

Consumers might consider getting pre-approved for a mortgage before they buy a home – an option that offers a guaranteed rate for as much as 180 days.

“I got an email from one lender suggesting we may see something in the coming days,” said Vince Gaetano, a principle at “I think it would be very prudent [to get pre-approved]. The only reason people don’t is they are just lazy or don’t know when their mortgage is up for renewal.”

A pre-approval usually involves some sort of credit check, which can affect your credit score, but the impact is likely negligible for anyone with good credit.

A rate guarantee nets you a higher rate most of the time and it rises based on how long you want a financial institution to guarantee the rate. Gaetano says 2.64 per cent can be guaranteed for 120 days on a five-year fixed rate mortgage, which compares with today’s going rate of 2.59 per cent for the same term.

Rate hikes would occur as sales have dropped in Calgary and Edmonton. Prices have peaked in every market in the country with the exception of Vancouver and Toronto. And industry watchers say any upward movement will probably not be enough to slow those markets or lift Alberta sales.

Doug Porter, chief economist with Bank of Montreal, doesn’t think a small change will have much of an impact. “Every basis point matters but can it single-handedly cool markets? It will take something much more serious than that,” he says. “There is very much ‘the little boy who cried wolf’ story going on here.”

Porter expects yields to rise over the next year, and says over the long-term if there is sustained pressure on rates that will change some psychologically in the marketplace. However, a 15-basis-point increase only means about an extra $8 per month in mortgage payments and $700 in interest per $100,000 of debt based on a five-year term and 25-year amortization.

Phil Soper, chief executive of Royal Lepage of Brookfield Real Estate Services Inc., says there are early signs of a seasonal slowing in home sale volumes, even in Toronto and Vancouver.

“The battle for mortgage market share typically eases when that happens. Bond yields have been rising without a clear improvement in the economy, so the upward pressure on mortgage rates would normally be minimal. However, the timing may be right for our trend-setting banks to ease retail rates upwards as they look to manage profit margins,” said Soper.

McLister said there is no risk to getting a pre-approval from a lender because the consumer can always go back to the bank and demand a lower rate or switch to another financial institution, if rates drop by the time of purchase. Only 15 per cent of pre-approvals actually close but he says banks agree to the process to generate customers.

Home-Life-Auto: Community Education Session (the East-End Edition)

Home-Life-Auto: Community Education Session (the East-End Edition)

Home-Life-Auto: Community Education Session (the East-End Edition)

Home – Life – Auto Community Education Session

HOMELIFEAUTO new-page-001

Get the facts on:
– Buying and Financing Real Estate
– Repairing Credit & Mortgage Crisis
– Mortgage & Life Insurance
– Auto purchases, loans ad leasing
– Self Employed Individuals and borrowing
– Government Funded Programs
– Other options you may not know about
– Rent-to-Own and other home buying options

This event is sponsored by:
Barrington Lewis – Realtor
Jelani Daniel – Check List Auto
Andrew Stewart – Insurance Advisor
Ray C. McMillan – Mortgage Professional

Seating is limited.
R.S.V.P by email to or by phone to 905-813-4354