How to buy a car in Canada

Drive away in the right car for the right price with these 7 steps.

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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.

LoanConnect Car Loans

  • Min. Loan Amount: $500
  • Max. Loan Amount: $50,000
  • Interest Rate: 1.90% to 46.96%
  • Loan Term: 6-60 months
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  • Quick and simple financing
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  • All provinces

LoanConnect Car Loans

Get access to 25+ lenders through Loan Connect's brokerage, and receive pre-approval in as fast as 5 minutes, and financing up to $50,000 in as little as 24 hours from the time of your application.

  • Min. Loan Amount: $500
  • Max. Loan Amount: $50,000
  • Interest Rate: 1.90% to 46.96%
  • Loan Term: 6-60 months
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How to buy a car in Canada in 7 steps

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.

Where can I buy a car?

Many people choose to go to a dealership or buy through a private sale, but you have more options to explore.

Where to buyHow it worksWhat it’s good for
DealershipVisit a car lot and shop for your next carYou 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.
OnlinePick 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 sellerBuy a used car directly from a private seller, typically the previous ownerIf 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 carsFind a lightly-used car used for test drives and demos by a car dealershipThis 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 carsImport a car from overseasIt’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 auctionsBid on car at an auctionThis 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.

Best places to buy a car

How can I pay for my car?

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.

Compare car loans

Name Product Min. Loan Amount Interest Rate Fees Loan Term Min. Credit Score Link
LoanConnect Car Loans
$500
1.90% to 46.96%
Varies by lender, loan type and province
6-60 months
550
Go to site
More Info
Get access to 25+ lenders through Loan Connect's brokerage, and receive pre-approval in as fast as 5 minutes, and financing up to $50,000 in as little as 24 hours from the time of your application.
CarsFast Car Loans
$500
4.90% to 29.90%
Varies by lender, loan type and province
12 months - 8 years
N/A
Go to site
More Info
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.
Car Loans Canada
$7,500
4.49% to 29.90%
Varies by lender, loan type and province
12-84 months
300
Go to site
More Info
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
Auto Arriba Car Loans
$3,500
8.99% to 29.50%
Contract fee of $499.00
6-84 months
N/A
Go to site
More Info
Auto Arriba offers car loans starting at $3,500 up to $100,000, with as little as a 30 minute loan turnaround time. On a limited number of approved loans, Auto Arriba is currently offering a rebate of the amount of your first scheduled payment 30 days after it has been processed up to a maximum of $500.
Carloans411 Car Loans
$500
1.90% to 19.99%
Varies
Up to 84 months
300
Check eligibility
More Info
Get connected with suitable lenders through CarLoans411. Finance your next car, van or truck with loans available in amounts from $500 to $35,000. Check eligibility for this loan through LoanConnect.
Fairstone Secured Personal Loan
$5,000
19.99% to 23.99%
Varies by province
3-10 years
560
Go to site
More Info
Fairstone offers secured personal loans up to $35,000.
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Representative example: Emily buys a new 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 typeAuto loan (term loan)
Loan amount$18,414.00
Interest rate (APR)4.90%
Loan term6 year
Additional fees4.00% 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.

What should I keep in mind when buying a car?

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.

  • The price. Your price should reflect something you can afford either to pay for upfront, through your trade-in or with monthly payments.
  • Secured vs. unsecured financing. Secured loans tend to cost less and have lower monthly payments because the lender uses your car as collateral. Unsecured loans can be more expensive, but often allow you to use the money to cover other expenses besides buying the car itself.
  • Insurance rates. Car insurance premiums are based on lots of factors including the model of your car. Other factors that can affect your rate include your car’s safety features as well as your driving record, age, gender and whether you belong to an alumni group or club that offers discounts. You may also be able to score a discount if you go to driving school or take a defensive driving course.
  • Its history. Getting a used car? Check its VIN history or have it inspected by a mechanic to make sure you aren’t paying more than your car is worth. A VIN report will show you the car’s maintenance history, record of accidents, any existing claims to the title of the car and loads of other important details.
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Tips for haggling and paying less

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.

What extra costs should I budget for?

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.

  • Sales tax. A percentage of the cost of your car. How much sales tax you pay depends on where you live.
  • Documentation fee. The fee that the dealership charges for filing your contract, which also varies by province or territory.
  • Extras and modifications: The price you get at the dealer will depend largely on which features and extras are thrown in. This can turn the price thousands of dollars either way. If you don’t care about the modifications, skip them and avoid overpaying for something you won’t use.
  • Increased insurance premiums: When you add a new car to your policy, you should be prepared to pay more on your insurance each year. Contact your provider before you purchase a car to see how much the make and model might impact your premiums. Learn more about car insurance in our detailed guide.
  • Registration: For new cars you’ll have to pay a fee to register it. And if you’re buying used, you’ll need to pay a fee for the transfer of registration/ownership. The cost of renewing your registration or registering a new car depends largely on where you live.
  • Maintenance and fuel: It’s worth planning for operating costs. The cost of fuel and routine car maintenance depends on the type of car and how much you drive.
  • Car loan repayments: If you’re not careful these might become a major headache. You should know how much the repayments costs before taking on a car loan.

Is there a “cooling-off” period if I change my mind about the sale?

Man experiencing buyer's remorse over car purchaseProbably 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.

Getting your vehicle inspected

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:

Visual inspection

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 condition of all the upholstery.
  • Windows, air conditioning, audio and all other electronics are working.
  • All the lights are functioning properly.
  • Floor mats are lifted and the inside of the doors are inspected for any signs of damage or repairs.
The engine:
The engine may be tested by letting the car idle for a small amount of time (as permitted by local environmental laws), and then giving the accelerator a quick pump. If a puff of smoke comes out, then there might be a piston or valve stem problem. After the car has stood for a while, the surface of the engine and the underside of the car should be checked for oil drips or residue.

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:

  • Signs of painted-over imperfections, bubbles under the paint and mismatched paint on adjacent body panels.
  • Tires should also wear down evenly. If they’re not evenly worn, then there may have been a previous accident in which some, but not all, of the tires were replaced, or the car might have other problems.
  • Glass can be expensive to replace, so chips or cracks in the windows, indicator lights, mirrors and any other areas where glass is involved should be checked.
  • Rust underneath the car might indicate that there is corrosion or damage.

Test drive

Trying out a car should involve checking to make sure that:

  • The gears can be changed smoothly and quickly
  • The engine power is appropriate for the car
  • The car tracks are in a straight line and don’t drift
  • The brakes respond effectively
  • The electrics, dials and other interfaces are all working properly
  • The speedometer is working accurately
  • There are no irregular engine noises
  • The temperature dials, car engine light and all other indicators are functioning normally
  • The suspension and transmission are functioning properly
  • The exhaust emissions are reasonable and in accordance with the law, if applicable
  • All the headlights, tail-lights and interior lights work
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Bottom line

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.

Frequently asked questions

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