Tips for buying a new or used car in Canada

When you buy a new (or used) car from a dealership, you can usually expect the dealer to help you every step of the way, including doing most of the paperwork. In terms of effort, it's your simplest option for buying a car, with everything from financing to vehicle registration often handled for you by the dealership. 

 Asking the right questions when buying a new car can lead to better deals—and fewer surprises, such as hidden costs or features you don't need. Here are some sample questions to help you dig into key areas before you buy:

• About the car. For example: What's the real-world fuel economy? What safety features does it have? What about tech features such as Apple CarPlay or Android Auto? What kind of warranty does it come with?
• About the deal. For example: What's the full cost (including taxes and fees)? Are there any dealer incentives or manufacturer rebates I can take advantage of? What financing deals do you have available?
• About ongoing costs and upkeep. For example: What's the service and maintenance schedule? Are there any common repair issues with this model? What's not included in the warranty? What's the resale value like?

While you could, technically, buy a car with your credit card, most dealerships have a limit on the amount that can be charged, so you probably won't be able to put the full purchase price on your card (but you may be able to charge the deposit or a partial payment). And some dealerships might not even accept credit cards at all. So if you'd like to buy a car using your credit card, it's best to check with the dealership first.

Understanding dealer lingo can help you shop smarter. Here are some common terms you might encounter on your car purchase journey:

• Test drive: Driving the model you want to buy, to see how it feels and if it's the right fit for your driving needs.
  
• Demo car: A car that's been used for test drives and other dealer uses.
• MSRP (Manufacturer's Suggested Retail Price): The recommended selling price set by the manufacturer (also called a "sticker price").
• APR (Annual Percentage Rate): A percentage that combines the interest rate plus certain lender fees to show your yearly cost of borrowing.
• Extended warranty: An optional warranty plan that extends the standard warranty period and/or coverage.

If you’re buying a used car from a private seller, you'll need to do more of the legwork, such as checking into the car's history and getting a mechanic to inspect the vehicle. You'll also need to manage most of the paperwork yourself, including the title transfer and vehicle registration.

When buying a used car from a private seller, start with the basics. For example:

• Check the condition of the car. Make a note of its mileage and look for rust or corrosion, leaks, uneven tire wear, and signs that it may have been poorly repaired.
• Take the car for a test drive. Be on the alert for odd noises and strange odours, and make sure everything—from brakes to wipers to heat and AC—works.

It's also important to do the following checks/inspections before buying a used car from a private seller:

• Vehicle ownership
• VIN checks and recall check
• Pre-purchase inspection and vehicle history report

Vehicle ownership

Ask to see the car's registration and ownership documents and the seller's photo ID. The name on the seller's ID, the vehicle's VIN (vehicle identification number) and licence plate, and the vehicle's description (for example, it's make, model, and colour) should match the information on these documents.

VIN checks and recall check

Do a VIN check, which is offered free by services like Carfax. VIN checks give you more info about the history of your car. Other checks you can do include the Insurance Bureau of Canada's VIN Verify, which tells you if the vehicle has been reported as non-repairable, and the Canadian Police Information Centre VIN search, which lets you know if it's been reported stolen.

It's critical that you ensure the VIN is valid. Learn more about auto reVINing fraud, and the risks involved if you buy a reVINed vehicle.

Make sure to also see if there have been any recalls issued for the vehicle's make and model. To check for recalls, search Transport Canada's recall database.

Pre-purchase inspection and a vehicle history report

Get a reputable mechanic to do a pre-purchase inspection. (While the seller isn't required to let your mechanic look over the car, their refusal to permit this might be a red flag.)  

The RCMP also recommends you purchase a vehicle history report from a reputable service. This report provides important information about a car, such as whether it's been in an accident or if it has a lien placed on it. Some provinces require sellers to provide this kind of information. For example, in Ontario, the seller of a used vehicle must give the buyer a used vehicle information package (UVIP), which includes information about the vehicle's registration history, the existence of any liens against it, and whether it's been registered as unfit or reported as wrecked.

You can also search for a lien yourself using your province or territory's Personal Property Security Act (PPSA) search database.  (Depending on your province or territory, fees may be charged for PPSA searches.)

When it comes to buying a used car from a private seller, you need to be thorough in your research. Questions to ask the seller include:

• Why they're selling the car
• Has the car been regularly maintained and serviced? Has it been in an accident or undergone any repairs? (Ask to see documentation of maintenance, servicing, and repairs, such as mechanics' invoices.)
• Where did they purchase the vehicle? How long have they owned it?

In Canada, you can buy, insure, and register a car without a driver’s licence, but no matter which province or territory you're in, you’ll need to have a valid driver's licence to drive your newly purchased car.

You'll need to register your car before you can hit the road. One perk of buying from a dealership is that they usually take care of this for you.

But if you'll be registering the car yourself, it's important to follow your province or territory’s registration process. For example, in Ontario, you must visit a ServiceOntario centre to register your vehicle. 

Be sure to also check with your province or territory to see what documents you'll need, such as proof of ownership, valid identification, and (for a used car) a safety inspection certificate, as each jurisdiction will have specific requirements.

Before you can drive your new vehicle, it needs a licence plate:

• Buying from a dealership. Dealerships will usually take care of this for you, whether you need a new plate or want to transfer an existing one you already own.
• Buying from a private seller. If you’re buying a car privately, you’ll have to get the licence plate yourself (or transfer over existing plates) as part of the registration process.

While you don't need insurance to buy a car in Canada, you do need to have insurance to register your car and to drive it.  

So, before driving away in your newly purchased vehicle, you should have at least the mandatory minimum level of liability coverage required by law (the specific minimum coverage amounts you'll need will vary depending on your province or territory). And, if you're financing or leasing your new vehicle, make sure to check with the dealership to see what optional coverage is required as part of your financing or leasing arrangement.

Basic coverage will get you legally on the road, but sometimes you need more than mandatory minimum insurance.

Optional coverage helps you customize your insurance to meet your needs. Think of it as building a safety net that’s tailored just for you and your car. Whether it’s shielding yourself from the costs of theft or accidents, optional insurance can make a big difference down the road.

When deciding on the right coverage, think about things like:

• Your car’s value
• Your driving habits
• Weather conditions in your area
• Frequency of use
• Financing or leasing requirements

First time driver or never owned a car before? Check out our handy guide on how to get car insurance.

Whether you’re finalizing your purchase at a dealership or with a private seller, you'll need to provide proof of insurance—plus, you can't legally drive your car without it. (And if you’re financing or leasing your car, the dealership will usually also require confirmation that the vehicle has physical damage coverage.)

Your insurer will give you a print version of your proof of insurance (commonly referred to as a "pink card") along with your policy documents. In provinces and territories that permit digital proof, most insurers will also offer a digital version of your pink card  when you purchase your insurance. Be sure to check the specific laws in your province or territory to make sure you’re carrying the right form of proof.

Choosing the car you want is just the first step when purchasing a car. Here are some tips to help make your car buying journey go more smoothly:

• Know your budget
• Ask for a total cost breakdown
• Leasing vs. financing
• Do your research
• Don't be afraid to negotiate

Whether you're buying new or used, make sure you have the best car insurance coverage to suit your needs—and with over 30 ways to save on your insurance with us, getting a good deal on your insurance has never been easier. 

If you're in Ontario or Quebec, be sure to check out the MyAdvantage driving program. MyAdvantage lets you earn a personalized premium on your car insurance based on your driving habits, plus you'll get a one-time activation discount when you enrol.

Are you an existing TD Insurance customer? You can easily update your policy with your newly purchased vehicle through MyInsurance. Or, if you're looking to purchase your first car insurance policy with us, get a quote online in minutes.