Buying or leasing a vehicle

From: Innovation, Science and Economic Development Canada

Buying a new or used vehicle is a big decision and there are many things to consider before making a purchase.

Before you start looking for a car, van or truck, think about the vehicle you need. There are many things to keep in mind when determining the type of vehicle you should purchase, such as the distance you're likely to travel, the road conditions you'll encounter and the cargo you'll carry. You'll want to pick a vehicle that will be able to do the job you need it to do.

On this page

• Comparing vehicle prices
• Considering all vehicle expenses
• Leasing or obtaining a loan to buy a vehicle
• Buying a new vehicle from an automobile dealer
• Buying a used vehicle
• Choosing an energy-efficient vehicle
• Signing a contract for vehicle purchase

Comparing vehicle prices

Take the time to comparison shop. Each dealer may offer you a different combination of price and options on the same make and model. Options are generally sold in packages, which are often predetermined by the car maker. Dealers may also try to sell you add-ons like rust proofing, fabric and paint protection, theft deterrents and extended warranties.

Certain non-profit consumer organizations, such as the Automobile Protection Association, provide their members with important information and services, such as the list of prices that dealerships pay for new vehicles. This information may be helpful to you when negotiating the purchase price of a vehicle.

Consumer organizations may ask you to pay a membership fee to access these services but it may be money well spent if the information helps you to negotiate a lower price for the vehicle.

Consumer Reports and Protégez-Vous (in French only) are also good sources of information when shopping for a vehicle.

Considering all vehicle expenses

When choosing a vehicle, make sure to include expenses like maintenance and repairs, insurance, fuel and parking as part of your budget. The type of vehicle you drive can affect these costs. For example, your insurance premium and your repairs may cost more if you drive a luxury vehicle. The Financial Services Regulatory Authority of Ontario can help you better understand factors that might influence the cost of your insurance.

In major urban centres, many Canadians find that renting a car only when they need one is more cost-effective than buying or leasing one. A number of Canadian cities have car-sharing programs that give participants access to vehicles, as needed, for a fee.

Leasing or obtaining a loan to buy a vehicle

It can be difficult to determine whether to lease or purchase a vehicle. While you can't beat an outright purchase paid in full, few people today can afford to pay cash for their vehicle. This is why you may choose to finance your purchase or to lease the vehicle instead.

Whether you decide to obtain a loan or to lease, make sure to read the contract carefully. The difference in interest rates and down payments may surprise you. To help you decide which option is best for you, try to determine the total price you will have paid at the end of the loan or lease. Consider monthly payments and get the dealer to disclose all upfront charges. The Office of Consumer Affairs' Vehicle Lease or Loan Calculator can help you compare the cost of leasing a vehicle or obtaining a loan to buy one. The Calculator also offers helpful tips on things you should keep in mind when weighing your options.

If you choose to obtain a loan, you may opt to have a co-signer on your loan in order to purchase a vehicle. A co-signer is someone who shares the risk of the purchase. If someone asks you to co-sign or if you get someone to co-sign for you, think carefully about how this could affect your financial situation as well as theirs.

Buying a new vehicle from an automobile dealer

If you're thinking of buying new car, and your need for a vehicle isn't immediate, it could be advantageous to wait for promotional offers or buying incentives to make your purchase. When you buy near the end of the model year (typically in the late spring or summer), you may not be able to get your choice of vehicle colour and upgrades, but that might also mean that you can benefit from manufacturer incentives and rebates or negotiate a better price for the vehicle. As dealers are trying to clear inventory in preparation for the next model year, your negotiating power as a consumer will likely be greater.

Unfortunately, high-pressure sales tactics are still a problem with automobile dealers. Don't let yourself be talked into buying a vehicle that you don't want or can't afford. If you're not satisfied or if you are unsure, you can walk away.

Buying a used vehicle

When buying a used vehicle, you can choose to buy from a dealer or a private seller. In either case, there are steps you can take before you buy to ensure you are making an informed purchase.

1. Check the vehicle's past maintenance and repair history using the Vehicle Identification Number (VIN).
   • The VIN can be found on the dashboard on the driver's side of the vehicle. It is usually visible through the windshield.
   • Some vehicle history report websites will generate a limited report of the vehicle's maintenance and repair history for free using the VIN. Try looking up "vehicle history report" in a search engine on the Internet. If you wish to find out more information, a more detailed report can typically be requested for a fee. You may also hire a private firm to conduct this type of research on your behalf.
2. Check if the vehicle model was recalled for safety issues using Transport Canada's Motor Vehicle Safety Recalls Database.
3. Have an independent mechanic inspect the vehicle
4. Test drive the vehicle before you buy

Buying a used vehicle from a dealer

If you are buying a used vehicle from a dealer, ask if they can provide you with a copy of the report with the vehicle's repair and maintenance history.

In addition, be aware that dealers may still try to sell you add-ons like rust proofing, fabric and paint protection, theft deterrents and extended warranties, even on used vehicles.

Buying a used vehicle from a private seller

When buying a used car from a private seller, some provinces require that the seller provide the buyer with a Used Vehicle Information Package (UVIP). Contact your provincial or territorial ministry of transportation to see if these packages are required in your area.

The contents of the package may vary by province or territory. These are examples of what the UVIP package may contain:

• vehicle registration history, including all present and previous owners as well as their municipality of residence
• odometer information
• vehicle lien information (i.e., if there are any liens registered on the vehicle)
• fair market value on which the minimum tax payable will apply
• consumer tips
• vehicle safety standards
• inspection information
• retail sales tax information
• forms for the bill of sale

Additionally, you should ask the seller where they've had the car serviced and request to see all available service records.

Buying a used vehicle from a curbsider

Curbsiders are sellers who pose as private sellers, but are actually unlicensed dealers. They specialize in off-loading sub-standard vehicles with tampered odometers or undisclosed accident repairs.

One way to spot a curbsider is to watch out for multiple ads with the same phone number. There is no recourse against curbsiders so do your research and don't be afraid to ask questions. If a deal seems too good to be true, it might be because there is a problem with the vehicle.

Choosing an energy-efficient vehicle

By choosing an energy-efficient vehicle, you can save money in the long run and help protect the environment. Natural Resources Canada's page on Energy efficiency for transportation and alternative fuels offers tips on choosing a fuel-efficient vehicle and information on fuel-efficient driving practices and vehicle maintenance. To compare the energy-efficiency of vehicles, download Natural Resources Canada's Vehicle Emission Comparison Tool.

You might also consider purchasing a zero-emission vehicle (ZEV). While the high upfront purchase cost of ZEVs can make it more difficult to adopt this clean technology, the Incentives for Zero-Emission Vehicles (iZEV) Program is helping to make it more affordable by offering point-of-sale incentives for consumers who buy or lease a ZEV vehicle. Find out which vehicles are eligible for the incentive.

Signing a contract for vehicle purchase

Remember that the contract you sign with a dealership or used vehicle seller is binding. As soon as both parties have signed, the seller is not usually obligated to let you out of the contract if you change your mind. There may not be a cooling-off period.

If you have questions about vehicle purchase contracts, contact your provincial or territorial consumer affairs office to check what the policy is in your province or territory before you sign on the dotted line.