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Buying a car in Canada can be a relatively pain-free process if you know where to start. Learn more about how to buy a car in Canada – including where you can get financing and what steps you’ll need to follow to finalize your purchase.
The best way to buy a car in Canada is to follow this step-by-step process:
Before you begin your search, calculate how much you can afford to spend on your car. Ideally, the amount you spend on a car should be determined these three factors:
The best way to buy a car in Canada is to narrow down your options in advance. Think about the following features to get a clear picture of what you want in a vehicle:
When you’ve settled on the type of vehicle you want, the best way to buy a car in Canada is to compare prices across multiple sellers. You should also know what the base price (also called the Manufacturer Suggested Retail Price, or MSRP) of the car is on the manufacturers website and what it’s selling for on reputable sites like Canadian Black Book, Auto Trader Canada, and Kijiji Autos.
Doing this kind of research can also help you decide whether to purchase your car directly from a dealership or from a private seller.
If you’ve figured out how to buy a car but aren’t sure how to finance your purchase, you have the following options.
Check out reputable car loan providers in the table below and compare providers side-by-side by checking the compare box under each provider you’re interested in.
Before buying a car in Canada, you may want to get it inspected by a licensed mechanic. It’s also a good idea to test drive a vehicle before you buy it to find out if there are any noticeable defects. Some dealerships will offer an inspection or a 30-day warranty on the vehicles they sell. Private sellers can be a little bit more hit or miss when buying a car.
Look at the price of similar vehicles with similar mileage to get an idea of how much you should be paying for your vehicle. You can find this information by searching on sites such as the Canadian Black Book and autoTrader.ca.
In both cases, it helps to apply for car loan pre-approval with a lender so that you know how much money you have to spend before you start shopping.
Read through your purchase agreement carefully before you sign on the dotted line. Unless you pay for your car outright, you’ll usually have a financing agreement to sign as well. Double-check that you understand all of your rights and responsibilities before you complete your transaction, and know what red flags to look out for. If you have any questions, ask your dealer to explain the terms of your agreement before buying a car.
You may have to cover the following expenses and fees when buying a car in Canada.
Emily lives in Ontario and has been saving up for a new Toyota Yaris. She finds one at a nearby dealership for $19,800 and makes a 20% down payment. This means she needs to borrow $15,840 + 13% HST from her bank. She gets approved for $18,414 with a 4.90% interest rate and a 4% origination fee. This is what her loan will look like:
|Cost of new car||$19,800.00|
|Loan type||Auto loan|
|Interest rate (APR)||4.90%|
|Loan term||6 year|
|Additional fees||4% 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|
This summary shows that while Emily borrows $18,414 to pay for her car, she’ll need to repay over $21,000 by the end of her term. It’s important to factor interest rates and fees into your total loan amount to get a proper estimate of how much you’ll owe.
*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.
Adopting a car-free lifestyle can help you save money and reduce your carbon footprint. Consider the following alternatives to owning a car:
Procuring a vehicle can be easy if you know where and how to buy a car. Find out the best way to buy a car in Canada in seven simple steps, and compare lenders to find a financing option that suits your needs.
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