A Guide to Buying a Used Car in Ontario

Shopping for a used car
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If you’re in the market for a vehicle you’ve probably asked yourself, “should I buy a new or a used?”. While buying a new car has its benefits, purchasing a used vehicle can save you money on car payments and insurance premiums.

Purchasing a used vehicle is a great way to get on the road without breaking the bank, however, there is a greater risk to you as a buyer. This is why it’s important to be diligent and do your research beforehand. To make your life easier, we’ve created this comprehensive guide to help used car shoppers in Ontario make educated decisions before purchasing a used vehicle.

Step 1: Plan

Do you want to make your life easier? Having a well thought out plan when shopping for a used vehicle can save you time and most importantly money.

Choose your vehicle

Do you live in the suburbs or do you live in the city? How far will I be driving daily? Will my car be used for work? Do I plan on going on a road trip? These are questions you should be asking yourself when you are shopping for a vehicle. If you are somebody who lives and works in downtown Toronto then you’ll want to consider a compact sedan with good fuel economy. On the other hand, if you’re living in the country and you plan on going for weekend trips to the cottage you’ll probably prefer an SUV crossover which is built to handle bumpy country roads.

Budget

After you’ve picked your ideal vehicle, it’s important that you set a budget. When setting your budget, these are the factors you should consider:

The maximum amount you can afford: If you are purchasing from a dealership, always use the final price to determine your budget. Do not budget based on monthly payments! This is how you end up paying more in interest. Remember to factor in taxes, licensing fees, and license plates.

Depreciation: As soon as you drive the vehicle of the lot it depreciates in value. Some vehicles tend to depreciate slower than others.

Fuel Economy: Understand your commute. If you’re doing a lot of highway driving then you may want to consider a Honda or Toyota.

Insurance: Your insurance premiums will vary depending on many factors including your age, driving experience and the type of vehicle you purchase.

Maintenance: An imported luxury vehicle will cost more to repair & maintain than a Honda Civic.

When deciding how much you want to spend on a used car make sure you keep these costs in mind before deciding to purchase.

Step 2: Research

If you’ve set your budget but still aren’t sure which type of vehicle you’d like to purchase, then you can start doing some research to see what used cars are available in your area.

The good news is, there are plenty of websites at your disposal that will help you make an educated decision before you purchase a used car. These websites provide detailed breakdowns and comparisons of all vehicles on the market so you can see which one fits your needs. They will also provide reliability scores, maintenance expenses, and depreciation.

Here are some great resources:

Using these resources you’ll be able to generate a good list of vehicles that suit your needs and fit your budget.

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Step 3: Shop around

Now that you have a list of vehicles you are interested in, you can start shopping around for the best deals! There are various different ways you can search for used vehicles each with their own pros and cons.

Where should you look?

Websites: Kijiji and autoTRADER are great resources that show used vehicles for sale in your area from both dealerships and private sellers.

Newspapers and listings: You can scope the classified section of your local newspaper or check out places like Craigslist or Locanto.

Car dealerships: Visit your local used car dealership’s website to see what they have for sale

Buying a used car in Ontario: private seller vs. dealership

What is a private sale?

A private sale is when you purchase a vehicle from another individual. This usually means no expensive add ons, no salespeople but you are buying the car “as-is”.

Here are some of the factors to consider when deciding between purchasing from a dealer and from a private seller:

Vehicle History

Private seller: Usually has a more accurate history than a dealer, however, it is up to you to trust a private seller.

Dealer: Can provide a report that has a thorough vehicle history, they can also provide a CARFAX report.

Condition

Private seller: The used vehicles come “as is” so if there are any pre-existing issues, you are solely responsible.

Dealer: The used vehicles are usually cleaned and fixed before they are sold.

Price

Private seller: If you’re looking for the best possible price you will usually find it with a private seller.

Dealer: Dealers sell their cars to make a profit so you will pay a little bit more, however, you have the option to finance through them making monthly payments an option.

What should you do?

This really depends on your situation. If you have the cash to purchase a used vehicle outright then that is definitely your best option as you avoid any interest. However, if you are strapped for cash and you find yourself in need of a vehicle immediately than financing through a dealer may be the best option.

Step 4: Get the vehicle inspected

This is arguably the most important step and where most individuals find themselves getting ripped off in the long run. Once you’ve found the vehicle you’d like to purchase it is extremely important you get it thoroughly inspected. We recommend you bring along a third-party mechanic to inspect the vehicle before you finalize the purchase.

Test Drive

Once you’ve given the vehicle a thorough inspection of the exterior, interior, and engine, it’s time to take it for a test drive. This is your chance to get behind the wheel to see if it’s comfortable and how it runs. If they don’t let you take it for a test drive, RUN! This is a huge red flag.

Check documentation

After the test drive and you feel like you want to purchase the vehicle, ask to see the proper documentation. This includes:

Used Vehicle Information Package (UVIP): The UVIP contains all the important details about the vehicle including its registration history and lien information.

Safety Standards Certificate: This shows the vehicle is safe to drive under Ontario’s legal standards.

Ontario Drive Clean Emissions Test: Proves the vehicle meets Ontario’s emission standards.

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Step 5: Purchase

Once you are happy with the condition and documentation of the vehicle after inspection, you can now begin the process of purchasing it from the seller.

Negotation

This is where your prior research comes in handy. Understanding the pricing for the same make, model and year of the vehicle will make sure you don’t get ripped off. If the seller is asking more, hold your ground, and make sure they understand the market value of the vehicle. Here are some of the tools you can use in your negotiation:

Pro Tip

Be willing to walk away. If the seller refuses to drop the price it's okay to leave. Often times they will call you back or you will find some offering a fair deal.

Selling price: Always negotiate the final sale price and not the monthly payments.

Trade-in: If you have another vehicle you can sell it to the dealer use its value towards the new vehicle. Most of the time you are better off selling it through a third-party website.

Down payment: How much are you willing to put down? This can help reduce monthly payments with a lease or loan.

Payment options

There are a couple of ways you can pay when you’re buying a car, each with their own pros and cons:

Financing: this involves getting a loan from a bank or the car dealership. You can pay this off over time but you are usually stuck to a long term commitment.

Leasing: rarely an option for used cars, this is primarily for when you purchase a new vehicle.

Cash: the best option when purchasing a used car, its more of an upfront cost but you save money in the long run.

If you are buying from a private seller you will most likely have to buy it outright in cash. If you are buying from a dealership you can use their flexible payment options.

Paperwork

Once the final price and payment have been settled, you will have to fill out some paperwork.

UVIP: you will receive this package after the sale is completed.

Vehicle permit: the seller and buyer must both sign this as it’s part of the application for transfer.

Bill of sale: the final step confirming the sale of the vehicle, both the buyer and seller must sign this.

Once the ownership is signed the full legal ownership of the vehicle transfer to the buyer.

Step 6: Registration

You’re almost there! There is one final step you must take before you can drive freely. You must register the vehicle with the government and get insured. One of the benefits of purchasing from a dealer is they will have most of the paperwork for you.

Insurance

Before you can register your vehicle with the government, you must be able to provide proof of insurance. The cost of your policy will depend on the company and your driving record, but if you are curious about your options you can compare insurance quotes.

To have a valid insurance policy in Ontario you must have:

  • insurance from a licensed company in Ontario
  • liability insurance card in your vehicle while you’re driving
  • third-party liability insurance for $200,000

Register your ownership

When registering your vehicle with the government, you will need the following materials:

  1. Safety Emissions Test Certificate
  2. Driver’s License
  3. UVIP Forms
  4. Proof of Purchase
  5. Original Vehicle Permit

License plate & stickers

In order to drive your vehicle legally, you must have a valid license plate and validation stickers. Here is what you need to know:

  • You need two license plates, one on the front of your vehicle & one on the back
  • Plates are valid to the owner and not the vehicle
  • Stickers must be renewed annually and usually expire on your birthday

Step 7: You now own a vehicle!

Congratulations, you have the vehicle you wanted, you paid a good price for it and now you can drive it legally! All that’s left is for you to hit the open road and enjoy the great scenery Ontario has to offer.

Frequently Asked Questions

If you purchased the vehicle from a dealer, you will be required to pay the provincial-federal Harmonized Sales Tax (HST). If you purchased from a private seller, you are not required to pay HST but you will have to pay a provincial retail sales tax (RST) of 13%.

If you've lost, damaged, or are looking to transfer your car ownership you can get a new one at Service Ontario for $32. You must have your driver's license and proof of insurance with you.

In Ontario, you can buy and register a vehicle without safety but you cannot put plates or drive one without it.

There are two ways you can buy a used vehicle in Canada: through a dealership or through a private seller. Both of their own pros and cons, however, it is recommended you buy the vehicle outright if you can.

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Compare car insurance quotes from 30+ insurance providers. In less than 2 minutes you will have a quote.