Buying Your First Car in Canada

Buying Your First Car in Canada

 

Unless you are in one of the major cities like Toronto where public transport is very accessible, you would need to buy a car.

My Experience of buying cars in Canada:

So far I had Four cars:

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My First car was 2005 Toyota Echo, a small car that was very reliable and good on gas. I purchased it for $3000 and sold it for $3400 after two years of driving.

Second car I had was 2004 Hyundai Santa Fe,  it was a wrong choice, high on gas, the owner rolled back the odometer claiming the car was only 180,000 KMs and in reality it was 300,000 KMs, I lost over $1000 on this car when I sold it.

Third car is 2015 Honda civic, one of the best cars on gas and very cheap to maintain. My wife is driving it now, and I used to use it for UBER. The only mistake I made was taking it on lease.

  • Leasing a car is like renting, with opportunity to purchase it after the lease. At the moment of purchase I did not have my permanent residence status in Canada, and the dealership would not let me finance the car. After paying for this car for 5 years, I’ll have a chance to buy it out for $12,500. Not the best option, but if you drive the hell out of the car in five years and give it back without buying out, it could be a good option.
  • Financing the car is taking a loan to buy, I would be paying more money every month but in 5 years the car would belong to me.

Fourth car is 2012 Subaru Impreza: This car is hatchback and now my main UBER Car. It was purchased as preowned in 2017, it is not as good on gas as Honda Civic, but it is all wheel drive and one of the most fuel efficient all-wheel drive cars in the North America.  So far the best winter car I have ever owned.

Things you need to know when you are buying your first car in Canada:

1. Insurance History

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When you are buying your first car in Canada, you would need to get insurance. Insurance companies in Canada will need your insurance history from your home country. So, if you can get it before you come to Canada, it would save you a thousand of dollars in a year or more.

 

What is insurance history and how it works?

It is your driving history, how many claims you have made, collusions, premiums and all kind of things that insurance companies would need to assess the risk of insuring you.  It works in a simple way, if you do not have any insurance history – you will pay maximum money for your insurance in Canada.  It will take years to build your insurance history.

2. Credit History

Just like insurance history, are you paying for your debt?  Did you ever miss payments? How good are you in borrowing and paying back the money? No credit history is higher interest rates from the bank and a smaller chance of getting a loan.

How to build you credit history? Get a credit card and use it all the time, pay for it on time and over some period of time, your history will build itself. You can also build it buy taking mortgage or a loan from a bank and paying everything on time. Not missing any payments.

3. Challenges of buying your first car in Canada:

  • Taking public transport to see the cars, not having friends to take you around to help you find the right car.
  • Rush decisions, when you are in the new country you are more likely to take one of the first cars you see.

Buying Old VS New Car in Canada.

New Car:

 New Car

Positive things about having a new car:

  • It will be more reliable
  • You will spend less time and money on maintenance.
  • Less stress and peace of mind.

Negative things of having a new car:

  • The insurance will cost you more (Insurance history + price of the car)
  • Taking a loan in the bank will cost you more (No credit history will increase the interest rates, also the dealership will make you take a full coverage for the car if you take a loan, and if you do not have insurance history it will be double from what your friends are paying).

Q: When should I buy a new car?

A: When you have enough money, and you are fully settled in Canada.

Old Car:

Old Car
Old Car

Positive:

  • It is cheaper, you can get a car anywhere around $3000 to $5000 in good condition.
  • Insurance will be cheaper.
  • If you buy it for cash, you do not need a loan.
  • It will not lose much resell value.

Negative:

  • The car may be not reliable.
  • Maintenance costs are higher.
  • You can buy a lemon.

Buying a car from Dealership vs Private sell in Canada:

Private sell will be cheaper but there is no one to go back to if the car is not good.

Dealership, there is a place to go back to if the car is not what you agreed for.

Something you should know: In Canada, most provinces, if you buy a car it is yours. Meaning it is yours and there is no going back. If the dealership does not want to help you, you are on your own. You can do this, before you buy it:

  • Get a Car Proof – It is a report that will help you see the entire history of the car, the collusions, insurance claims, car services and odometer readings. It will cost you $40.
  • Get a mechanic – Buying a car from the owner or the dealership, spend extra $100 before you buy a car and get it inspected by an independent mechanic. It will help you lower the price if the car is not good or it will save you the money that you would end up losing from buying a bad car. It will also give you a piece of mind knowing you got a good car.
  • Call a friend – Best thing you can do when buying your first car in Canada is bring your friend and ask him to help you.

Websites to you can buy your first car on:

Ask me any questions in comments below.

If you are looking for a part time or a full time job while you settle down in Canada, consider driving for UBER. It is a good temporary job that will pay you at least $20 per hour, driving your car. Get up to $1000 of signup bonus.

 

 

 

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