Are new-car frills worth it?
By Jim Middlemiss • Bankrate.com

When it comes to buying a new car, the manufacturer's suggested retail price (MSRP) is a good point from which to begin your negotiations.

But remember -- that price is for a basic, stripped-down version of the vehicle. It might not include features most of us would like, such as automatic transmission or air conditioning.

But adding those bells and whistles can add thousands of dollars to the final cost. Take a basic two-door Chevrolet Cavalier VL Coupe from General Motors Canada. The MSRP is $16,125. That will get you a 2.2-litre engine, power rack and pinion steering, front independent and rear semi-independent suspension, five-speed manual transmission and 14-inch tires.

If you want four-speed automatic transmission, it will set you back an additional $1,180, and air conditioning adds another $1,465 to the tab. And it doesn't stop there. An upgraded stereo system with CD player is $395, cruise control is $440 and an anti-lock braking system is $600. That adds a whopping $4,080 to the tab, slightly more than 25 percent of the MSRP.

So, are all those options worth the extra cash? Some are great investments, especially if you plan on selling your car on the used-car market one day, while others are not. Read on to figure out where your money is best spent.

Good options
"Air conditioning is a given these days," says Jamie Holmes, a licensed auto technician and vice-president of The Master Mechanic repair shop, which has 37 locations across Ontario. It will also serve you well when you decide to sell. "Automatic transmissions are also far more appealing than standard," he says.

Phil Edmonston, author of the Lemon-Aid Guides, which provide consumers with advice about cars, warranties and filing complaints with auto manufacturers, agrees with Holmes. He says the three options that will get you the best bang for your buck are automatic transmission, air conditioning and higher-quality tires. "They bring back between a third to half of their value (on resale)."

Holmes says power windows and door locks are also good options if they don't come standard, as they do now on many vehicles outside the economy range.

There are some options that, while expensive, are still good investments. Sunroofs, for example, have definite resale appeal and are "pretty darn reliable" today, compared to when they first appeared on the market, says Holmes. But they come at a steep price, costing about $1,000 for most makes and models.

Edmonston says leather seats are also worthwhile. "The cachet of leather is a powerful attraction and will add about $300 to used value," he says. "There's no reason for it except for luxo impression, since they are hot in the summer and cold in the winter and slippery most of the time."

Options to avoid
By and large, Edmonston says most options on new cars aren't worth the money you put into them. On top of that, the mark-up on them is usually between 35 percent and 65 percent, so savvy shoppers can often find better deals on their own.

"Better quality sound systems can be bought elsewhere," says Edmonston. On the other hand, Holmes says what he likes about a manufacturer's sound system upgrade is that it will likely fit better with a car's styling and you won't have to give up trunk space to CD changers and amplifiers.

But he has a caution for music aficionados: "If you buy a really top-end sound system, you're probably not going to get your money back. It's not something that attracts people who are looking to buy a secondhand car."

When it comes to options for making your car last longer or look better, most aren't worth it. "Rust-proofing makes cars easier to sell in some provinces with salt on the roads, but paint protection and seat sealant are a waste of money," says Edmonston. For the best deal on rust-proofing, he suggests finding an independent shop that will give you a cheaper price than the manufacturer.

As for tires, Edmonston says you can't lose by paying a little more for higher quality. But when it comes to bigger rims, Holmes suggests taking a pass. "Generally smaller tires are less expensive in the longer run."

To go from 15-inch to 16-inch rims will cost you 15 percent more, while a jump to 17-inch rims adds 30 percent to the tire price, says Holmes. For example, the sport appearance package for the Cavalier, which includes fancier rims and fog lights, adds $1,550 to the price of the car.

While colour is not technically considered an option, your selection can have an effect on your car's resale value. "People's preference is red and silver. Those are fairly popular," says Holmes. "You have to be careful about trend colours. Something may be popular today, but two to three years from now, it's out of fashion."

As for extended warranties, they're overpriced by about 75 percent according to Edmonston. He and Holmes also question their value. "Why are you buying a vehicle so doubtful as far as reliability is concerned that you have to pay over $1,000 to protect yourself from factory mistakes," asks Edmonston.

You should also watch for high transport fees. They should run no more than two to three percent of the purchase price, says Edmonston.

The bottom line when it comes to options is that consumers need to do their homework. "The Internet is a wonderful thing. Look and see what the stuff is selling for and know what the price range is," says Holmes. "Know what your budget is and stick to it. If you go in there (a dealership) and don't do your homework, you may be dazzled by something you may not need."

Don't be afraid to negotiate. Edmonston says "most option prices can be cut by 20 percent, and extended warranties by at least 30 to 35 percent," so don't hesitate to bargain for the best deal.

Jim Middlemiss is a freelance writer and lawyer based in Toronto. He's a frequent contributor to National Post, Investment Executive and Wall Street & Technology.