4 Steps – How to Pick and Buy a Car in Ontario

If you are reading this blog, you’re someone who LOVES to research a product and price before spending thousands. Just as you would research the right laptop for you based on your needs like a gaming laptop vs. lightweight compact travel-friendly laptop. That same strategy can and should be applied to buying a new car.

I’ve created a super handy spreadsheet that helps you visually compare cars you’re interested in AND in the second tab there’s test-drive checklist. Download a copy for free and get started with the steps below!

PART 1: Let’s narrow down which vehicle is right for you

Nail down what matters to you. First rank the attributes in order of importance and the use it to arrange vehicles best to worst.

Attributes to consider:

  • Price
    • Think about your current monthly expenses, calculate your disposable income (this is what’s left over after all your expenses), consider expenses you can cut down if you need a larger budget and don’t forget to think about future expenditures
    • Trim levels: This divides vehicle models by their features. The higher the trim level, the more features the car model will have and cost
    • Dealer add-ons: These are additional charges for things like rust-proofing and are usually optional. Keep in mind it can cost up to $1000 and more
  • Size
    • Passenger capacity: Theoretically, five seats should indicate five people can fit in but that is not always the case. Sometimes rear seats may not have enough leg or head space, especially if you’re tall!
    • Overall length & height: Larger vehicles may not always fit into your garage or parking spot
  • Fuel Efficiency
    • Fuel efficiency is measured in litres per 100 kilometres – the lower the number, the greater the efficiency. E.g. 8 litres per 100 kilometres equals to more fuel savings than 14 per 100 kilometres
  • Features & Options
    • Heated seats? Sunroof? Premium sound system? What’s your must have?

Now that you know what’s important to you, plug it into this spreadsheet to visually see how cars rank to your parameters as you begin to search

PART 2: I know what I’m looking for, how do I find it?

The simplest way would be to hop onto www.autotrader.ca or https://ca.cargurus.com/ and plug in the information you find into this spreadsheet

If you’re looking into cars through a private seller (not my recommended approach)  – Facebook marketplace or Kijiji

  • The private seller owner will have a vehicle permit/title, which is proof of ownership. Make sure the VIN (listed on the seller’s vehicle permit) matches the actual vehicle’s VIN number.
  • Make sure the vehicle doesn’t have a lien registered against it – this is when the owner uses their vehicle as collateral for a loan from a bank. It could be repossessed if the previous owner doesn’t pay their debt
  • The seller is legally required to give you a Used Vehicle Information Package (UVIP)
  • The more detail the owner is willing to provide, the more likely it’s a legitimate car

Narrow down to your top three choices and check them out in-person. I’m not a fan of high-pressure sales at dealerships, BUT you can put pressure on salespeople too!

  • With the spreadsheet handy, you’ve already done your research. You’ll know when you’ve got a good deal or not. If they’re willing to give you a competitive price that’s awesome, if not, move on to the next.
    • Get a vehicle history report – CarFax, you’ll learn how many times the car was serviced or if it’s been in accident. NOTE: There is a possibility of an unreported accident which wouldn’t appear.
    • Take EVERY car you’re interested in for a test drive, I’d recommend taking someone has experience with buying used cars to help examine the car. Follow the Test Drive Checklist in the second tab here
  • Make sure to ask for a used car inspection – you can take the car to your mechanic to check if there are any minor issues which could be helpful to negotiate a better price

PART 3: I found what I like, how do I get it?

Negotiation: Your earlier research with the spreadsheet will be SUPER useful here. You can see the average selling price for the same year, make, model, and trim you can use that as a negotiating point.

  • If they ask you if you are ready to buy the car that day, tell them “Yes, if the price is right.” If they told you that you could get the car for $1, I am sure you would take it.
    • Make sure you go to the dealership with the attitude that you do not need to leave with a car. Tell them later in negotiation that you aren’t sure you can make that sort of commitment for that price.
    • Have a target amount you are willing to spend in your head in the WORST case scenario. Don’t reveal this to the dealer. Yes the price of the car overall is important, but you need to be able to take care of your monthly payment. Make sure it includes EVERYTHING. Don’t let them tack on taxes, tags, title, etc. after the fact.
    • Use the old dealership trick of “talking to a manager” against them.
      • Tell the dealer, “I am going to give my dad a quick call to see what he thinks”
      • Go outside and actually talk to your dad or friend. This allows you to take a moment and think out loud with someone before dropping a lot of money
      • Go back inside and say “My dad/friend/whoever would like me to take to a few more dealerships next week, I’m not sure I can a commitment”
      • Likely, you’ll be able to get the final price from the dealer that’s good for certain time. If this is price fits within your budget, go for it! Otherwise, walk away and think about it.

Payment Options:

  • My recommendation: Buying it outright! You pay upfront with your own cash and without any loan or lease.
  • Financing: Most common method where a bank or dealership loans you money to pay the full value over a period of time. Don’t get pulled into the payments game. Dealers focus on selling finance packages that to their profit. A low monthly payment = higher costs for you in the long run
  • Leasing: You only pay the amount that the vehicle has depreciated over the term of the lease so you pay less per month but you do NOT own the car. Leasing isn’t the best idea for the average person. Purchasing a car costs less than leasing it once total costs are taken into account.
  • If you don’t have the funds, re-evaluate your criteria. Go back to the spreadsheet. I recommend buying a car outright always!

PART 4: I got the car! But…

You got to complete some paperwork to finalize your legal ownership:

  • Insurance: By law, you need proof of insurance on your vehicle before you can register ownership. What insurance company you choose and how much you pay will vary, but in order for the policy to be valid in Ontario it must adhere to the following:
    • Your policy must be with a licensed insurance company in Ontario
    • You must have your liability insurance card with you in the car while driving
    • The policy must have third-party liability for $200,000 in case the driver causes injury or death
  • Register Ownership with the Ministry of Transportation (MTO), you will need:
    • Proof of Valid Insurance Policy – must come from a company licensed to provide car insurance in Ontario
    • Legal Ownership Permit – with all the vehicle’s information
    • License Plates – with current validation stickers
    • Driver’s License — should have a valid Ontario driver’s license already
  • License Plate & Sticker:
    • Every vehicle needs two license plates, one on the front and one on the back
    • The license plates are valid to the owner and not the vehicle so if you sell it you keep the plates
    • Validation stickers have to be renewed after one to two years
    • Typically, the validation sticker is placed on the top right corner of the rear license plate.

Now you can enjoy the benefits of all your hard work and go for a nice drive!

Feel free to share any tips & tricks you’ve learned in the comments.

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