Buying a car is a big investment, one you’ll be paying off for years to come. There are a number of steps that come with the purchase from finding the dealership, the car and the financing. Read our guide below on how to buy a car in Canada and take your time to make sure you’ve made all the right choices before signing the paperwork.
Start by determining how much you want to pay and the car models you’d like to look at. This makes comparing prices and features easier as you start to narrow down your search and come to a final decision.
Many people choose to go to a dealership or buy through a private sale, but you have more options to explore.
| Where to buy | How it works | What it’s good for |
|---|---|---|
| Dealership | Visit a car lot and shop for your next car | You can examine a large selection of vehicles, test drive a few and get advice from experts on your selection. Since there are both new and used dealerships, you should be able to find a car within your price range. |
| Online | Pick a model, secure financing and sign your contract from a car-buying website. Your car will be delivered to you. | Buying a car from the comfort of your home — especially if you’re worried about social distancing during the coronavirus. |
| Private seller | Buy a used car directly from a private seller, typically the previous owner | If you’re after the best price possible, buying from private sellers is often the way to go. Make sure you know how to check the car thoroughly before making your purchase. |
| Demo cars | Find a lightly-used car used for test drives and demos by a car dealership | This might be a good option if you want to buy almost-new car and want to get a good price on a recent make and model. However, the savings can vary and your options are limited. In addition, demo cars might be fitted with extras that you don’t necessarily want but will pay for anyway. |
| Imported cars | Import a car from overseas | It’s safe to say that this will never be the cheapest option as it involves a range of additional taxes and expenses. However, sometimes it might be the only way to get a vehicle not available in Canada. |
| Car auctions | Bid on car at an auction | This can be one of the most affordable ways of buying a car. In fact, car dealers often buy stock at auctions. The downside is that the quality of auctioned vehicles and the quality of their discounts vary, so research to find what that car is worth and inspect it to get a good price. |
To find a good price on the car you want take your time to compare dealerships, private sellers and other options.
There are a few financing options available and can depend on your financial situation. Often, deciding on your financing is just as important as deciding on your car.
Emily lives in Ontario and recently got a new job in another city, so she decides to buy a car to drive to work. She visits a dealership and picks out a 2020 Toyota Yaris priced at $19,800.00. Emily makes a 20% down payment of $3,960.00 and heads to her local bank to get an auto loan to cover the remaining $15,840.00 + 13% HST on the purchase price.
Because she has a solid credit history, Emily is approved for a $18,414.00 auto loan with competitive terms. Along with the cost of her loan, she also pays approximately $180.00 to register her vehicle with the province of Ontario – this includes the cost of license plates, a sticker and a vehicle permit.
| Cost of new car | $19,800.00 |
| Loan type | Auto loan (term loan) |
| Loan amount | $18,414.00 |
| Interest rate (APR) | 4.90% |
| Loan term | 6 year |
| Additional fees | 4.00% origination fee ($736.56) |
| Payment | $295.70 monthly or $136.35 biweekly |
| Total loan cost | $21,290.40 with monthly payments or $21,270.60 with biweekly payments |
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
Once you decide on what kind of car you want, its features and the price, consider the price, loan and amount of insurance you’ll pay.
Before you visit a dealership or contact a private seller, do your research. Resources like the Canadian Black Book (for used cars) and autoTrader.ca (for new and used cars) can help you determine the value any vehicles you’re looking at as well as the prices these vehicles are currently going for. Search for the make, model and year of a car to find its market rate.
Another way to be prepared is to apply for pre-approval online. There are a number of lenders that offer pre-approvals with competitive APRs and terms to bring into a dealership. If the dealer wants your business he or she may try to beat that deal.
The sticker price of the car is the main expense, but not the only one. When deciding whether you should buy a car, make sure you have enough to cover all of the related expenses — both during and after the purchase.
Probably not. A “cooling off” period refers to a window of time in which you can legally change your mind about a purchase and get a refund. While provincial and territorial regulations allow this for some purchases, such as door-to-door heater and furnace rentals, most provinces do NOT allow cooling off periods for new or used car purchases.
However, you may still have some options. For example, according to Community Legal Education Ontario (CLEO), if an Ontario dealer didn’t tell you something important about the car, like its total mileage, you might be allowed to cancel the sales contract if hasn’t been more than 90 days since the deal was made. If the dealer made false or misleading statements about the car, you have 1 year to cancel the contract. Check with the ministry of transportation in your province or territory to find out what regulations apply to you.
If you haven’t yet taken possession of the vehicle, you can try to ask your dealer to cancel the contract and refund your deposit. The dealer may do so at his or her discretion, although some of your deposit might be withheld to cover expenses like administrative and freight costs.
For used car purchases involving either dealers or private sellers, have an independent mechanic thoroughly check vehicles over before you make a purchase. Try to find anything you’ll end up having to fix yourself shortly after buying the car or anything that might indicate the seller has misrepresented the car’s condition.
Some of the important points reviewed may include the following:
The body (exterior):
The car should be checked from all angles, looking for dents and imperfections that you might be able to use to negotiate a lower price. There should be no signs of an old accident or other damage on the car, and the paint should be smooth with no chips. All body panels and doors should be flush, with none jutting outwards or curving inwards in an unusual way.
The inside (interior):
The radiator should be clean and free of oil, and the oil filter caps should be clean as well. A creamy white substance may indicate a cracked cylinder head or leaking gaskets.
Specifics:
Trying out a car should involve checking to make sure that:
Buying a car is a long process that can be stressful and confusing, but you can make it more simple by knowing what type of car you want beforehand. Check out our comparison of the best car loans to find out how to get the best deal on financing for your next ride.
