In Canada, depending on where you live, having a car to get around can be essential to your way of life. Generally, city centres and suburban neighbourhoods are well-connected by public transit, and you may not experience difficulties while travelling to work or going to the grocery store. However, if you live further away from the city centre or if you need to transport items or people for work, owning a car can be a necessity.
|Looking for more information on how to get your driver’s license in Canada?|
See How to get a driver’s license in Canada for information on driving laws, converting your foreign driver’s license to a Canadian one, how to pass a driving test, and details on buying, leasing and renting a car in Canada.
Buying or leasing a car requires a substantial financial commitment as there are many one-time and recurring costs with car ownership. One of the things that can help you stay within your planned budget is to get a used car. In this article, we will share some tips to assist you with the buying process.
|If you’re considering buying or leasing a new car, see How to buy or lease a car in Canada for tips about the buying/leasing process and to learn more about the cost of car ownership.|
8 tips to ensure you’re getting a good deal on a used car in Canada
1. Consider your needs and wants while deciding on the type of car
As you decide on the type of car, take the time to think about factors such as the size of your family, the purpose of buying a car, and the budget. Outline must-have and good-to-have car features, fuel consumption or mileage, trunk space, safety rating, size of the car, and resale value – this will help save time and assist you in narrowing down some options.
2. Browse options online before going directly to a dealer or a private seller
Once you identify the type of car you want to buy, it’s worthwhile to look up a few options online for various makes/models before approaching a dealer or private owner. Car listing websites and individual dealership websites can serve as a good starting point for your research.
Tip: Sign up with Spotto to browse all dealership listings in one place and get listings that match your search criteria, right to your inbox, daily.
Look at options available for the same make and model in a specific area/neighbourhood and compare costs. Read consumer reviews, check comparisons, and identify the sellers that have the best value and pricing for the vehicle of your choice. Also, be sure to investigate the seller’s reputation and look into exchange policies, warranties, etc.
If considering offline options, you can look at your local newspaper’s classified section, buying guides, used car sales, public auctions, and your local car dealerships.
Note: Buying from private sellers can be risky as you could be scammed. If you’re spending more than $3,000 CAD on a used car, it’s recommended to go to a dealership. Additionally, when buying from a private seller, hire a mechanic for a full inspection before paying any money or signing any paperwork. Private cars are generally sold as-is, and there are no refunds and no guarantees.
3. Plan your finances: Budget for car ownership costs
Beyond the ownership and maintenance costs, used cars can call for a little extra attention from time to time. Budgeting for these additional expenses will help stay on top of your finances.
Tip: Use the Canadian Automobile Association (CAA’s) Driving Costs Calculator to calculate the fixed cost, variable cost, and the environmental cost of the vehicle based on your driving habits and the current fuel price.
Key costs to consider for the purchase price of a used car:
- Maintenance: Usually, an older car will be cheaper to buy, but over time you may incur more maintenance costs. If the car you’re planning to buy is out of warranty, it might be a good idea to set aside some funds to cover any unexpected repairs.
- Fuel: A car with a good fuel consumption rating or mileage is usually expensive, but in the long run, it will save you money on fuel costs.
- Insurance: Compare insurance quotes from different providers for each vehicle you’re considering buying. Some cars (such as sports cars) attract a higher insurance premium. Remember, insurance quotes are also dependent on your total driving experience – a novice driver may have to pay a higher premium. Learn more about insurance in Canada.
- Sales tax: This cost is usually added to the price of the vehicle at the time of purchase. Sales tax varies by the type of sale (dealership or private), is provisional, and depends on the value of the vehicle being purchased.
Tip: Drive is an app that keeps track of your car maintenance needs and helps you schedule important maintenance appointments with your dealership.
4. Decide your mode of payment and explore car financing options
You can make the payment for your car in cash or use available financing options from a dealer or a financial institution. If you’re paying cash, it’s helpful to set an upper limit, so you don’t overspend. If you’re using financing options, you have some flexibility because you won’t be paying a lump sum amount. While considering financing options, look for any hidden or extra fees and ask for a detailed breakdown of costs.
Factors affecting the interest rate on your car loan
- Your credit score – A good credit rating can fetch you an attractive interest rate.
- Age of the vehicle – the newer the car, the better the interest rate.
- Certified used vehicle – A certified used vehicle is a program offered by dealerships. These cars may be slightly expensive, but they provide you with access to various benefits such as a more comprehensive reconditioning program, an extended warranty, and they may even include a lower interest rate offer for financing.
|For more information on credit scores and their importance in Canadian life, download the free guide for Credit and Credit Scores in Canada.|
Tip: Check out RBC car loans for newcomers to Canada. RBC provides convenient and flexible financing options to help you purchase your first car in Canada without a credit history.
5. Get a detailed vehicle history report for the used car
Before buying a car, it is essential to get a detailed report (from sites such as Carfax or AutoCheck), which includes things such as accident history, services or maintenance history, and the number of previous owners.
A pre-purchase inspection report is also recommended. This report can inform you about the cosmetic, mechanical, and safety conditions of the car. You can then use this knowledge while negotiating the price of the car. However, note that these reports may not contain details on collision repairs if the previous owner chose to fix them without going through their insurance. Generally speaking, up to half of all collisions go unreported. You can get a mechanic to inspect the car for you. Inspections cost about $100 CAD but can save you thousands in unexpected maintenance.
Do a Vehicle Identification Number (VIN) check. It will tell you details such as the year, make, model, and manufacturing location of a car. The VIN can typically be found on the inside of the driver’s door jamb and windshield. There are a variety of free tools online that can help you decode a VIN.
Inspect the car for any visible dents, cleanliness, and other physical damage. Be sure to ask questions about service, warranty, and the reason for selling the car.
Tip: See RBC’s checklist for buying your first car in Canada for a complete walkthrough of the car purchasing and financing process.
6. Test drive the car before buying
No matter how perfect a car appears to be, always take it for a test drive before you buy it. Plan a familiar route and test actions that you would normally do while driving: drive the car at different speeds, check the breaks, see if you feel comfortable parking the car, and try using the car’s accessories.
7. Research market prices for the car make and model and negotiate accordingly
Before you negotiate, research the market value for the car you intend to buy and take into consideration other factors that may impact the price. Websites such as Kelly Blue Book and the Canadian Black Book are good places to look up average car values.
Depending on whom you’re buying the car from, there may or may not be room for negotiation. In comparison to dealerships, some car dealers and private sellers are more open to negotiating the price. Most of the major dealerships have their best price up front and do not negotiate. If the price of the vehicle is fixed, you can sometimes negotiate with add-on products such as rustproofing, winter tires, or other upgrades and accessories. Do keep an eye out for any extra fees in the sales contract.
At the end of the day, if you’ve researched thoroughly, you will know whether you’re getting a good deal. If the price seems way lower than similar cars in the market, there could be a good reason for it. Find out why before you proceed.
Lastly, as with any negotiation, be prepared to walk away from the deal; don’t give in to pressure. Make sure you understand exactly what you’re buying and how much it’s going to cost you.
8. Closing the deal: Read up and be aware of provincial guidelines for buying a used car and accessories
When buying a car through a dealership, the dealer usually completes all of the paperwork and can guide you on financing options. However, if you are buying a car from a private seller, make sure the title and registration are transferred to you.
The guidelines and process for completing the sale of a used car differ by province. Hence, it is essential to refer to the respective provincial and territorial websites for detailed information.
Newfoundland and Labrador
|Prince Edward Island|
Driving with children in the car:
Transport Canada recommends kids stay in the back seat until age 13. Each Canadian province/territory has certain guidelines for driving with children in the vehicle, and having car seats is part of the mandate. As such, it is not advisable to buy car seats second hand because they have expiry dates. Learn more about safety alerts and notices for child car seats on the Transport Canada website.
There are three types of car seats that you need to be familiar with:
- Stage 1: Rear-facing seat – legally required across Canada for all children from birth until reaching a weight of at least 20 lbs.
- Stage 2: Forward-facing seat – must always be installed with the rear tether strap in use so that it doesn’t lift away from the back seat of the car in a crash.
- Stage 3: Booster seat – it’s recommended to put this off for as long as possible because the seat is no longer doing any of the work to keep your child safe at this stage.
Moving to a new country is exciting, and each day can be a new learning experience. Whether you’re an experienced driver and/or a car owner in your home country or if you recently got your driving license, knowledge of local norms and financing options will enable you to find the ideal vehicle for you and your family.
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This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.