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What to consider when buying a used car

Learn how to shop and what to look for when buying a used car to lock in the best deal possible.

There are many questions to ask when buying a used car if you want to find the best fit for your lifestyle and budget. Find out more about how to buy a used car and what to look for when you shop. You can also consult our used car checklists for inspecting and buying a used car to make sure you have all the information you need before you settle on the right vehicle for you.

How to buy a used car in 6 steps

Follow these 6 steps to buy a used car from a dealer, private seller or online broker.

1. Figure out your budget

Make a list of your income and expenses to figure out how much you can reasonably afford to spend before buying a used car. You should also factor in the total cost of car ownership before committing to a vehicle since this cost may be much higher than the baseline price of a used car with a private seller or dealership.

As a general rule of thumb, you should aim to spend only 10% to 15% of your net income on buying a used car.

Expenses to consider when buying a used car

Consult the table below to make sure you can afford the total cost of buying a used car:

ExpenseTypical cost
Purchase price$1,000 to $40,000
Interest ratesAnnual APR between 6% and 47%
Sale taxFrom 5% to 15%
Car insurance$700 to $2,000 per year
Scheduled maintenance$500 to $700 per year
Emergency repairs$50 to $6,000
Gas$50 to $200 per month
Registration$30 to $150 per year

Actual costs will vary based on factors such as the type of car you drive, your driving record and your province of residence.

2. Settle on where to buy your car

Think about whether you want to buy a used car from a dealership, a private seller or an online broker. The route you decide to take will affect the process you go through when buying a used car. It’s usually more expensive to shop with a dealer because it’s safer and more convenient. You may save money with a private seller or online car broker, but you’ll usually take on more risk.

    Buying a used car with a dealership vs private seller vs online broker

    SellerWhere to findProsCons
    Private sellersSites like Kijiji, Craigslist or Facebook Marketplace
    • Better deals
    • More choice
    • Higher risk of fraud or a defective vehicle
    • More work to shop around
    • Harder to test drive
    • Difficult to get financing
    In-person dealershipSearch Google for local dealerships in your area and visit in person
    • Local offers
    • Lower risk of fraud with legitimate dealers
    • Easier to get financing
    • Test drive several cars at once
    • More expensive
    • Less choice (only what’s on the lot)
    Online car brokerSites such as Auto Trader, CarCostCanada, Carpages.ca and Canadian Black Book
    • Larger selection
    • Easier to get financing
    • Access used cars from across Canada
    • May come with hidden fees
    • Greater chance of fraud with online dealers

    Best places to buy a car

    3. Decide how to pay for your used car

    Think about whether you want to buy a used car with your savings or by applying for a used car loan. There are several different forms of used car financing you can choose from if you don’t have enough money to cover the full cost of your vehicle. However, you should aim to at least put a down payment on your vehicle to offset your expenses.

    It could also help to get pre-approved for car financing so you know how much you’ll have to spend on your used car before you start shopping.

    There are several ways to pay when buying a used car, depending on your circumstances.

    • Pay with your own savings. Use money from your bank account or borrow from family or friends to avoid taking out a loan.
    • Take out an auto loan. Apply for a used car loan from a private lender and secure your repayments with the vehicle you buy.
    • Apply for dealership financing. Get financing directly from the dealership when buying a used car to save yourself time and energy (but expect to pay higher rates).

    Compare used car loans

    Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
    CarsFast Car Loans
    $500 - $75,000
    4.90% - 29.90%
    12 - 96 months
    300
    Min. income of $2,000 /month, 3+ months employed
    Get a new or used vehicle delivered to your door.
    Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
    Loans Canada Car Loans
    $500 - $35,000
    0% - 29.99%
    3 - 96 months
    300
    Min. income of $1,800 /month, 3+ months employed
    Compare rates from multiple lenders.
    Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
    AutoLoanProviders
    $7,500 - $85,000
    3.99% - 29.99%
    12 - 96 months
    300
    Min. income of $1,800 /month, 1+ months employed
    Available in Ontario only.
    Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
    Coast Capital Car Loan
    $10,000 - No Max.
    Varies
    18 - 84 months
    650
    Able to service debt payment of $300/month
    Competitive rates and flexible terms.
    Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
    Splash Auto Finance
    $10,000 - $50,000
    9.90% - 29.90%
    24 - 84 months
    300
    Min. income of $2,200 /month, 3+ months employed
    Apply with any credit score.
    Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
    loading

    Compare up to 4 providers

    4. Compare your options and negotiate prices

    Compare car listings online to find the best deal and reach out to sellers to see if they can bring the advertised price down for the used car you want. Many may be willing to negotiate on price to clear out inventory or get rid of a car that’s not getting much interest. You can ask your seller to price match with similar cars (same mileage/condition) by sending them ads you find online.

    Check out our used car checklist for what to look for when buying a used car to make sure you find a car that suits your needs.

    5. Schedule test drives and inspections

    Test drive your used car before you buy to make sure that essential components such as the engine, brakes, steering and gear shifting systems are working properly. You should also look for visible signs of wear and tear or damage. As a last step, you may want to schedule an inspection with a licensed mechanic for added peace of mind.

    It’s also a good idea to check the vehicle identification number (VIN) with a company like CARFAX to make sure the car hasn’t been stolen or involved in a crash. You can usually find this number on the driver’s side dash or door jamb.

    Used car checklist: What to look for when inspecting a used car

    Learn what to look for when buying a used car by consulting this used car checklist for inspecting a vehicle.

    Body of the car
    Check for scratches, dents, windshield cracks, broken mirrors and other physical damage.
    Vehicle interior
    Look for rips or burns in the upholstery or broken plastic on the doors, manifolds and dash.
    Vehicle undercarriage
    Inspect for leaks or rust under the car.
    Tires
    Make sure the tires aren’t bald and still have a decent amount of tread.
    Engine, brakes and steering function
    Check for funny noises or smells and make sure the car idles and brakes smoothly and turns easily.
    Electrical systems
    Test the proper functioning of electrical parts, including lights, power mirrors, heated seats, sunroof, power locks and more.
    Heating/cooling systems
    Make sure that air conditioning and cooling systems work.
    Miscellaneous parts
    Confirm that miscellaneous parts, such as wipers, gas gauges, speedometer, odometer and radio, are in good working order.

    6. Sign your contract and organize the paperwork

    When you find a car you want to buy, you’ll need to pay the seller and sign all of the paperwork. You should ask the seller to come with you to get your registration and insurance documents processed so that they can sign the title of the vehicle over to you. All you need to do then is pay your fees and hit the road (provided you have a valid licence!). If you’ve borrowed money to pay for your used car, you’ll also need to begin to repay your loan.

    Used car checklist: What to look for when buying a used car

    You can consult this used car checklist to figure out what to look for when buying a used car to get the best fit for your circumstances.

    • Low mileage. Look for low mileage (anything below 120,000kms) to avoid dealing with wear and tear repairs after buying a used car.
    • No issues on vehicle inspection. Get an inspection and price out what repairs might be needed if any issues are identified.
    • Has maintenance records. Ask if the last owner kept maintenance records so that you can assess whether the vehicle was well taken care of or neglected.
    • Listed at market price or lower. Check sites like Kelley Blue Book and Canadian Black Book to find out how much your vehicle should cost and avoid paying more than the market price.
    • No short-term owners. Avoid buying a used car that has had several short-term owners as this could indicate a serious issue with the engine or other integral systems.
    • Passes a VIN check. Use a site like CarMax to check the vehicle identification number for the car you want to buy to make sure the sale is legitimate.
    • Performs well in test drive. Take the car for a test drive and reference our used car checklist for inspecting the vehicle to make sure it’s in good working order.
    • Eligible for financing. Make sure the car you want to buy is eligible for financing if you plan to borrow money for buying a used car.

    Questions to ask when buying a used car

    There are several questions to ask when buying a used car, including the following:

    1. Can you tell me more about the accident/ownership history of the car?

      Find out how long the seller has owned the car and ask if they’re the first owner. If you’re buying a used car with a dealer, ask for more information about how the previous owner maintained the car and whether it’s been in any accidents.

    2. Does everything work or are there any issues I should be aware of?

      This is one of the most important questions to ask when buying a used car. Most people will answer you honestly and give you a rundown of any issues you should be aware of. Make sure to consider how much repairs could cost before buying a vehicle that may need work.

    3. Can I have the car checked by a mechanic?

      It can be a red flag if a private seller or dealership isn’t willing to let you get the car inspected by your own mechanic. This is true even for a dealership that has its own in-house mechanic. Look for another vehicle if the seller won’t let you do an inspection.

    4. Can I take a test drive?

      If the seller is unwilling to let you test drive the car, don’t buy it. The test drive is one of the most critical components of buying a used car because it allows you to make sure the vehicle works properly before you put money down.

    5. Does the vehicle have service records?

      Ask if the dealership or seller has service records for you to browse. Not only does this show that the car has been serviced and maintained, but you’ll also be able to note if there have been any mechanical issues in the past.

    6. Is the car still under warranty?

      If you’re picking up a newer used car, ask the seller if it’s still under warranty. Some manufacturers will allow you to transfer a warranty to a new owner. If you’re buying a Certified Pre-owned (CPO) car, it will likely come with its own warranty.

    7. Are you willing to go to the registration office with me?

      Your seller’s name should match the car title, and it’s best if they accompany you to the registration office or let you take documents there prior to payment to make sure ownership can be transferred. A dealer will usually be able to help you with registering your vehicle on the spot.

    Bottom line

    Learn more about how to buy a used car and what steps you can follow to lock in the deal. Find out what to look for when buying a used car and get the low down on what questions to ask before you buy. You can also consult our used car checklists to tick all the boxes you need to find the used vehicle that best suits your budget and lifestyle.

    Frequently asked questions

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