Vehicle in Canada

How to buy a car in Canada?

If you have recently moved to Canada as an immigrant, you are planning to buy a car, it is incredibly easy to have a car in Canada to help you or your family with everyday activities such as going to work, school, shop or longer trips. . But if you don’t know how to buy a car in Canada, you don’t know what to do or you don’t know how long it will take.

Step 1: What documents do I need to buy a car?

Documents you need:

  • Driving license from a Canadian city
  • Acceptable credit history 
  • Valid credit card e.g; visa or master card

You will need to provide each of these documents in the following order.

Depending on your country of residence as well as your driving experience, you may be able to replace your previous driver’s license with a driver’s license in Canada. If this is not possible, you may be able to verify your previous experience. To change your previous driver’s license and experience in driving, you will need Canadian legal documents, a previous driver’s license, and a summary of the original official driver’s license or letter, which must have been drawn up within the past six months including; 

  • A letterhead, logo, emblem or special mark issued by the certification body
  • Official and legal name and date of birth
  • Date of certification
  • Number, basis and current status of the certificate (valid or expired) and expiration date of the certificate

Date of document summary or record letter

You can get your referral letter from the Driving and Vehicle Certification Agency. Summary of the Driver’s records are not required to obtain a driver’s license in Ontario, but only if you want to claim that you have more than one year of driving licence in your previous country you will be allowed to immediately apply for G-based driver’s license. 

You must have a driver’s license before you can apply for car insurance in Canada (Ontario). To insure your car, you need the following:

  • Driver’s license number of each family member who lives at the same address.
  • Vehicle Identification Number 17 digits ( VIN).
  • Make, Model, Distance traveled and the car you want to insure.
  • Full certificate of any type of driving training in the last three years (this is optional and will reduce your costs).

You can also submit your previous driving records in Canada (driving experience records outside of Canada are not included). Canadians with previous insurance policies can provide them with official letters from relevant companies to record their records as efficient driving experiences, but you can not, as someone who has recently immigrated to Canada, since you do not have such experiences and records. 

To complete the legal ownership process for any vehicle you purchase, you must officially register it in Ontario. You will need the following to officially register the car:

  • Driving license and its 15-digit identification number.
  • Valid and legal insurance certificate
  • Sales and ownership certificate
  • The official number plate number

If you buy a car from a dealership ( corporate or private), they will usually do the registration and archiving for you. But if you buy the car from an owner, you should also have the vehicle’s information package, safety standard certificate, and Emission test certificate for registration.

Step 2: Buy a new car or a second one?

When it comes to buying a car, the biggest question to consider is whether to buy a new car or a used car. Comparison of the new and used cars in terms of advantages and disadvantages:

               Criteria           New car        Used car
PriceThey are more expensive to buyThe purchase price is more affordable
Payment TermsThey can be leased, financed or purchased by cash.They are not leased, it is possible to pay in installments, but the interest rate will be more than the new cars. 
WarrantyComes with standard warranties which is usually comprehensive , engine and transmission. ware and tears are not part not included but you have the options to buy an extended warranty up to 7 years.If they do not already have a warranty, you will have to pay for it up to 3 years but it mostly depends on the company.
ConditionsThe new condition of the brand and any defects are guaranteed.You probably won’t know much about the full history of the car, its wear, tear, and technical issues.
Purchasing referenceOnly from a dealer’s main websitesFrom a private dealer or the owner on the available websites 
AttributesThe latest features, facilities, technologies and safetyless features, facilities, technology and safety 
DiscountsPossible discounts depending on your conditions and negotiations The price is determined by the current market 

For those who have just entered in Ontario, discounts, finances or leasing may give you more control over the cost of the car, but most newcomers may not be able to get a loan or lease for a year or two for financial reasons. It’s easier to start with a cheaper or pre – owned car. 

Step 3: What’s the Difference Between Dealers ( Private Sellers and Corporate)?

There are two main sources in Ontario through which you can buy a car: either from a dealer or from someone who works as a licensed private seller. If you are planning to buy a new car, you can only buy one from a dealer. But you can buy a used car both through a dealer and through an authorized private seller:

When you buy from a car dealership, you will be involved in a complicated process. In this case, you are dealing with a business instead of a person. This means that they want to sell the car in such a way that they get the minimum amount of profit: 

Pricing: Manufacturer Suggested Retail Price (MSRP), freight and Pre Delivery Inspection (PDI) costs and taxes.

  • Financing: Finance and Leas are determined by your financial credit.
  • Choice: Dealers have a wide variety of vehicles (new or pre owned, different brands and models, etc.) to choose from, which will allow you to do more research.
  • The used or pre owned category is valid and has a warranty: a pre owned car that you buy from a dealer, despite its higher price, has more quality and reliability due to documented and complete documents.

You can only buy a pre- owned car from a private seller, and here you are dealing with someone who sells the car based on the current market. Private sellers usually want to sell their car at the highest possible price, but since they are not worried about profit, this process is less formal than buying from dealers: 

  • Conditions: You buy a car whose owner has decided to sell it; good or bad!
  • Review: When buying a car from a private seller, it is more important to check it accurately and appropriately than when buying a car from a dealer.
  • Purchasing: You will buy the car in cash and it is recommended that you transfer the ownership to the name of the buyer in Ministry Of Transportation (MTO) office or car dealership.
  • Tests: If the private seller does not provide a valid certificate from the car’s safety and technical safety tests, you will have to pay a fee for these items or reach an agreement to pay 50-50.

Keep in mind that private sellers sell cars that they own and want to make more money than they could afford to deal with a dealership. Here, because it is not a related corporate business, they usually have softer policies and less procedures motivating you to be able to make a better deal, while unlike dealers, reputation and goodwill in sales are not so important to them and therefore less willing to disclose car problems and defects.

Step 4: How does the lease or loan work?

When you buy a new vehicle, there are several ways to pay for it. You can lease it, you can fiance or you can buy the vehicle in cash: 

You need a good credit score to get a loan or a lease. Credit scores are basically the amount of trust you have with banks and other money lending institutions; This means that you can trust the ability to fiance the vehicle or the money they lent you.

As a newcomer to Canada, you do not have a valid credit history, so it is difficult to get a loan or high rent to buy a vehicle. There are a number of ways you can get credit points for yourself as soon as possible, some of the most important factors are as follows;

  • Secure Credit Cards: These cards are a surefire way to build your first credit history as a trusted person.
  • Bill Payments: Always pay regular bills such as rent, energy, telephone, etc. in full and on time.
  • Less loans: Get low-interest loans and credit cards and repay them in full and on time.

However, even if you do all this properly with the goal of creating a good credit history, it still takes more than three months to get enough credit points to finance your vehicle purchase. If you can’t wait as required , you can save a few thousand dollars and buy a pre- owned in cash until you can get the deals you need to finance the purchase of a new one.

Financing and Leasing options are the most common method used by Canadians to buy a new car. Suppose you want to buy a car for $ 20,000, but you only have $ 4,000 in your account. You pay $ 4,000 in advance and borrow for the remaining $ 16,000: 

  • Duration: Longer loans mean less monthly payments, but the total interest you pay during the repayment period increases.
  • Interest rate: This rate depends on credit score and loan term.
  • Discounts: Sometimes manufacturers offer special discounts for smaller amounts of loans compared to normal terms.

The average loan term is 5 years, although you can repay it sooner with the goal of saving your money and not paying more monthly interest. When you receive a loan to buy a new car, you own the car and you can use it without any restrictions. 

When you lease a new car, you are not actually the owner but you have the options to purchase the vehicle at the end of the term( financing or in cash). Leasing is usually in shorter term and less payment than financing. in leasing you can also buy or return the vehicle at a cheaper price when the leasing period expires. If you don’t want it, it will be returned to the dealer and you can lease or buy another car. Monthly payments for leasing a vehicle are usually less than financing the same car which is a big advantage in comparison with financing. This is because instead of paying all the money for a vehicle , you only pay part of the cost, which is deducted from the original value during the leasing period: 

  • You lease a new vehicle for $ 20,000.
  • At the end of the third year of the lease, the vehicle will cost $ 12,000.
  • The monthly lease covers only the $ 8,000 that the vehicle has depreciated over the past three years.

There are other factors involved in how to lease a vehicle, such as interest rates, rental length, and other conditions, such as the annual distance limit (in kilometers) that you are negotiating.

Step 5: Are there any plans to help new Canadians buy a car?

Canadian banks and auto makers fully understand the issues that new comers are facing when buying a car, which will help them relax more in their new lives and work. Banks such as the Royal Bank of Canada (RBC or Scotiabank) have plans to help new comers who do not have the necessary credit history to take out a loan. In any case, if these options are one of your few choices, it’s a good option. Almost all auto makers in Canada that sell new vehicles offer a discount for newcomers or people who are planning to buy a vehicle for the first time.

A Final Word to make a decision …

Moving to a new country is really a very complicated process, and trying to find out what you need to buy is added to this complexity. Depending on the situation, it may not take long for most new Ontario residents to buy a car, but it will take some time. 

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