Buying a car in Canada in 2023, in particular in the province of Ontario, has a number of nuances that you need to know in order to avoid possible problems. In particular, you need to know that car insurance is mandatory.
Buying a car in Canada
In order to buy a car, you must have a driver’s license. Certificates issued outside of Canada are valid for 90 days after entry into Canada. During this period, you can buy a car with your driver’s license.
After 90 days you must have an Ontario driver’s license to purchase the vehicle. Once you’ve passed the written test and obtained your G1 driver’s license, you’re eligible to buy a car (but you can’t drive it until you’ve obtained your G2 or G driver’s license).
Car insurance
Just because you’re eligible to buy a car without a G2 or G class Ontario driver’s license doesn’t mean you should. It should be remembered that all cars in Ontario are subject to mandatory insurance, and without insurance, they are not allowed to hand over the car to you where you buy it.
You also need to consider the fact that car insurance in Ontario is very high, especially for those who are just starting their insurance history.
In the event that you do not have an Ontario driver’s license, you will either not be insured at all or will be very expensive. Therefore, before buying a car, find out the cost of its insurance, and ask whether you will be issued insurance at all.
The same should be done if you already have a G2 or G Ontario driver’s license, in order to decide which model of car is best for you and choose the lowest rates among those offered by different insurance companies.
Where can you buy a car in Canada
If we are talking about buying a new car, then it can be purchased only in a specialized store authorized by the manufacturer, which is called a dealership. When buying a used car, you have a much wider choice:
1. In a dealership (specialized store) that sells new cars, since almost every one of them has a department that sells used cars. As a rule, cars in dealerships are in fairly good condition with low mileage. These are either cars that the dealership took as a trade-in for a new car, or cars that were returned to the dealership after the end of the lease term. In the dealership, old cars are usually more expensive than in other places, but there are much more guarantees that the car does not have serious defects that have been hidden from you. This is the most reliable place to buy, although not the cheapest.
2. In companies specializing in car trade. As a rule, such companies are created on the basis of garages and have all the possibilities for high-quality preparation of a car for sale. Prices in such companies are quite moderate compared to dealerships, although higher than elsewhere. How much you can trust a particular company should be based on the company itself, its level, and what plan of cars it sells.
3. In garages. Most garages, in addition to car repair and maintenance services, also sell used cars. These are usually inexpensive and well-used cars, many after an accident. If you are looking for something inexpensive, you should start with garages.
4. At car auctions. You yourself will not be able to buy at the car auction, since a license is required to participate in it. However, there are many car dealers who have such a license and will help you buy a car there for a fee. In general, you can make a profitable purchase at auctions, because the prices there are quite low, despite the fact that the cars are mostly in very good condition. However, the difficulty is that you (or your companion) must be well versed in cars so that you do not buy a known defective one that you may have problems with in the future. That is, this option is quite profitable, but somewhat risky.
5. In private persons. Now there are a large number of sites on the Internet where car owners put them up for sale. While buying from private individuals can be profitable, especially if you know how to bargain, you need to be careful that you are not sold a problem car. Although in Canada it is considered a criminal offense to twist the speedometer and hide that the car has been in an accident, sometimes the desire to sell at a higher price forces its owner to take illegal actions, and this should be remembered.
Forms of purchase of a new car
There are three main forms of purchasing a car.
Car leasing (lease)
We are actually talking about renting a car for a certain period, from 2-3 years to 5-7 years. You pay a downpayment, which varies within several thousand dollars, sign a lease agreement and get full use of the car for the specified period. During this period you must make regular payments (monthly, fortnightly or weekly). You cannot terminate leasing early.
It should be taken into account that when leasing, you do not buy a car, it is bought from the dealership by the financial company with which you enter into a contract. Therefore, for the duration of the lease, although the car is registered to you, the finance company remains its owner.
After the expiration of the leasing contract, you have the option to either return the car to the dealership or buy it back.
In the first case, you simply return the car and that’s the end of your relationship with the dealership. At the same time, a number of conditions specified in the leasing contract must be met, such as limited mileage (no more than a certain number of kilometers), no damage, etc. In the second case (buying the car), you pay the residual value, which can be up to 50% and above the initial cost of the car.
Purchase on credit (financing)
You conclude an agreement on financing the purchase of a car with a financial organization with which the dealership has an agreement. Buying on credit is in many ways similar to leasing, but after the end of the contract, you become the owner of the car, since you have paid its value up to that point.
With a loan, the monthly payments will be much higher than with a lease, because you pay the full value of the car, and not a part, as with a lease.
Purchase with full payment (cash)
In this case, you pay the full price of the car by issuing a money order or another bank document for payment. After payment, the car becomes yours. Often, with full payment, the dealership offers a significant discount (approximately the amount of interest payments when buying on credit).
At the same time, you should not expect that by offering cash, you will receive an additional discount. The dealership does not care how you buy, because with each of the sales options, it receives the amount due to it – it is paid either by you or by the financial company with which you enter into a leasing or financing agreement.
When buying a car through leasing (lease) or buying out a loan (financing), you have to pay interest for using the loan. At the same time, most often the interest on a loan for leasing is much higher than when buying on credit. In some cases, off-road models or as part of a marketing campaign offer very low interest rates on leasing or financing, sometimes as low as 0%.
New immigrants who do not have a credit history in Canada and a steady income, in most cases, cannot count on buying a car through leasing or buying on credit, so it is wiser to focus on the purchase option with full payment.
It is also worth saying that when buying a used car, leasing (lease) and buying on credit (financing) are practically not used, only buying at full cost.
Buying a new car in Canada
Usually, when buying a new car, you can count on a discount of up to 5% from the quoted price, depending on the class of the car, the year of its manufacture and how much the dealership wants to sell it for. Sometimes special prices are set for some cars. In this case, you don’t have to count on a discount, because the special price is the minimum price that the dealership can offer.
When buying a new car, you are told the base price of the car, which does not include additional costs. If you want to put additional accessories on the car, their cost will be included in the final price of the car.
In addition, the final cost of the car, in addition to the base price and the cost of accessories, includes various taxes and the cost of delivering the car from the factory to the dealership. Therefore, when choosing a car at a dealership, ask for a calculation of its final cost, which you will have to pay, including taxes.
The purchase of a new car takes place according to the following scheme:
- you sign a contract with the dealership that you buy the car and the dealership sells it to you.
- usually you make a deposit – usually around one thousand dollars, depending on the model.
- after receiving the contract, you must insure the purchased car.
- you should inform the dealership about the issued insurance.
- the dealership contacts your insurance agent and asks to confirm that the car is indeed insured.
- your insurance agent confirms the fact of taking out car insurance.
- you make the final calculation and receive your car.
- as a rule, the dealership issues license plates for you and pays the annual fees for owning them.
It is important to remember that before taking the car from the dealership, it must be insured. The dealership has no right to give you a car without insurance. You also do not have the right to drive a car if it is not insured.
Buying a used car
When buying a used car, it is recommended to do a thorough inspection, especially if you are buying a car at auction or from a private person. For this, it is best to invite a professional mechanic from an independent garage. Most garages provide this service.
The car seller must provide you with an old vehicle information package (UVIP). This package contains important vehicle information such as a list of all previous owners of the vehicle in Ontario, records of loan payments, records of whether or not the vehicle has been in an accident, etc. It is illegal to sell a vehicle without a UVIP.
When you buy a car from a dealership or a garage, the seller usually takes care of all the formalities. When you buy a car from a private person, as a rule, all the formalities are carried out by the buyer, that is, you. After you have paid for the car, the seller must provide you with the following documents:
- filled by UVIP
- signed contract (is part of UVIP)
- a completed and signed application for transfer, located on the back of the “transport part of the vehicle registration certificate.
After receiving the above documents, you become the owner of the car. Your next step is to obtain a Safety Standards Certificate. It can be obtained at licensed vehicle inspection stations. Most garages are licensed to issue a certificate of compliance with safety requirements.
You can buy a car without a safety certificate, but you can’t register a car without one. After you have bought a car, you are obliged to register it within 6 days after the purchase. To do this, you need to appear at the nearest office for issuing driver’s licenses and car licenses (Service Ontario Office) with a completed application for the transfer of car ownership rights (Application for Transfer). There you have to pay the sales tax (Retail Tax) and cash fees.
You must also provide the following documents:
- old vehicle information package (UVIP)
- completed application for transfer of ownership rights (Application for Transfer)
- certificates of compliance with safety standards (Safety Standards Certificate)
- information about the issued insurance
- driver’s license
- license plate certificate – if you have one.
It should be remembered that buying a used car in dealerships and garages with a good reputation gives you a guarantee of buying a quality car. When buying a car from a private person, you are not insured against any surprises.
More detailed information about the vehicle registration process is available on the ServiceOntario website .