How to buy a used car in Canada

by Vlad Samarin

Buying a used car

How much should you spend? What car suits your needs the best? Where to look for a used car, what to look for when buying a used car? - There are many questions come up when it comes to buying a used car. In this guide I will try to answer these questions and make the used car buying process easier for you. There are many essential facts you should consider before buying your next car so you won't regret your decision for a moment afterwards.

How much you want to spend?

I guess this is the first question you should ask yourself to decide what car to look for. Let's take a look at some price categories:
For $1500-$3000 range (All prices are in Canadian dollars), you may be able to buy something that can serve as simple transportation to get from point A to point B. Keep in mind that a car that sold for such a low price will most likely need some repairs that may cost you another few hundreds or may be thousands dollars. Yes, it's possible to find something more or less drivable for this price, but it will take some time. Most likely you will be able to find such a car for sale by private owner - dealers usually don't bother selling a car in this price range.

For $5,000-7,000 you looking at some five to nine year old used car with relatively high mileage which still might be in good shape. Again, it may take a lot of time to find a good condition used car in this price range, but if you're lucky you may get some fairly reliable vehicle that may last for another three - four years without major problems. Cars in this price range sold mostly by used car dealers or private owners.

$12,000-$18,000 - this money you would need to spend if you want premium three to four years old used car in good condition. American cars are usually at the lower end of this bracket while Japaneese or European brands like Honda, Toyota or Volvo at the top. This type of a car should last for another few years relatively trouble-free if properly maintained. You can find a car in this price range from a new car dealer possibly with full service history and manufacturer-backed extended warranty - this type of used car is a best choise.
Used car dealers also have variety of three - four years old cars but they don't provide same type of warranty, which still may be good if it's very reliable car such as Toyota or Honda. Sometimes you may find such a car from a private owner.

If you want to have better idea what is available for certain price range, or price for a certain model try to search Trader.ca setting price limits or selecting the model you want. Don't forget that aside from the sticker price you may need to pay taxes, registration fee, etc.

For example, I want to know how much I will have to pay for a three years old Honda Accord in Ontario. The Trader.ca search result gave me more than 200 vehicles with the price ranging from $12,000 to $22,000. Realistically, I know that a car for $12,000 won't be in good condition. 22,000 seems to me too high. But there are quite a few cars for 17,000 - 18,000 price range. I also know from experience, I can get 1,000 to 3,000 CAD discount using proper negotiation strategy (read below). So, in our case with three years old Honda Accord, I probably will be able to buy one in good condition for $15,000 - $16,000 plus tax, depending on mileage, options, etc.

Word of advice: Don't look for cheapest car or a "best deal". Your goal is to find a car in good condition for a reasonable price. The actual vehicle value big time depends on its condition. Two same-model cars may only look the same. If you choosing between a cheaper mediocre-looking car with unknown past and more expensive one that was well-maintained has clean history and is in excellent mechanical condition, pick the more expensive one. You will simply save on repairs and will enjoy driving it.
Don't think they sell it cheap because they don't know the price or they simply want to clear their inventory. If it's cheap, in most cases there is something wrong with it.

How to choose the right car

OK, you decided how much you want to spend, what is next.
I hope you have already in mind the type of a car you are looking for (a minivan or a family sedan or an SUV, etc.), but now you need to narrow your choice to a particular make and model, or at least maybe to two - three models. It will be much easier to shop if you are looking for a particular car rather than browsing from dealer to dealer without knowing what you want. In addition, when you test-drive few cars of the same model, it will be a lot easier for you to spot some problem. Here are just a few things you should consider choosing between different makes and models:
Availability - check used car sales website if the particular model cars are available in your area. Try to search Trader.ca or other used car sales website (look in the Links sectoion at the bottom of the page)
Reliability rating - since it is a used car, the original warranty coverage is probably over and you want the model that is more reliable. There is a number of resources where you can check reliability ratings of certain models:
MSN Autos - follow the link "Used cars" in the left navigation bar.
J.D. Power and Associates (look for Long Term Dependability Ratings)
ConsumerReports.org (A paid subscription is required to view the ratings.)
Safety concerns - there is no vehicle that is perfectly safe, but some models can protect you better in case of a crash than others. Some models may handle better or offer more features (e.g. ABS, traction control) that will help you to avoid an accident.
Follow these links to compare crash-test ratings:
SaferCar.gov Five Stars Crash Tests and Rollover Ratings.
IIHS/HLDI: Crash Testing & Highway Safety
Fuel economy - remember, the difference in annual fuel costs could be as high as $1500 - $2000 between different models.
You can compare fuel consumtion data at
Canada Office of Energy Efficiency or FuelEconomy.gov
Insurance costs - get the insurance quote before buying a car - some models might be costly to insure. Few on-line resources where you can get an instant insurace quote:
TD Insurance
RBC Insurance
Kanetix
PC Financial Insurance
State Farm

Word of advice: If all you need is an inexpensive reliable transportation, look for Toyota Corolla or Honda Civic preferably not older than 10-11 years old. For as low as 4,500 - 6,000 you may find one in good condition that will easily last for another four-five years without major problems, and they cheap on gas too.

You picked the model, what's next?

Now, search your local used car website for a model you want and make a list of few cars of your interest that are available in your area. Try to avoid very old and high-mileage cars, I would say, scratch out anything older than 12 - 13 years or with more than 250,000 km from your list.

Who sells used cars?

New Car Dealers, Used Car Dealers and Private Owners will have used cars or "re-sale" cars. Personally, I would suggest that the best buy for you would be to purchase a car that has been very well maintained (preferably at a dealership) and has never gone through an accident or other major problems. Most likely you'll be able to find such a car sold privately by the original owner or at a new car dealership where it was traded in. The price for a used vehicle is usually higher at a new car dealership. However, paying a higher price may provide you with all the service records for the car. Most likely, the previous owner may have taken the car specifically to the dealership because he/she felt it was maintained very well, instead of taking it somewhere else to be traded in. You're more likely to find a well maintained car through a dealership because previous owners have taken care of their car very well because they value it, and the dealership is more than likely to be particularly about the condition the car is in to ensure it has a high quality.
Now let's discuss other places to buy a used car. Independent used car dealers will offer used cars at a less expensive cost but more often than not, you'll find a cheaper car but it will have been less maintained. A word of advice: try to avoid dealing with curbsiders. Here's what happened to someone who contacted me and then went on his own to buy from a curbsider: A person contacted me and in an effort to save on taxes, arranged the deal as a private sale. Later the buyer checked the history and found the car was written off in a different State in the USA due to an accident and the mileage was noted to be a lot higher than the curbsider stated to him. After repeated attempts this person cannot even locate this "dealer".
On to the private owner… Quite often you can find a good car for a reasonable price from a private individual, and usually they will be more flexible in terms of price but keep in mind that they do not offer any warranties.

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Making phone calls

It may be a good idea to take the time to make phone calls and enquire to confirm all vehicle information that is important to you: mileage, color, transmission, Air conditioning, ABS or for any other options that may be in your interest. You may find a car to suit your purpose but it may not have all the essentials you really need. For example, you may find a car without air conditioning (A/C) but it will meet your needs in all other aspects. Similarly, you may find a car that is a two-door but you have a family of four and it would be much more suitable if your purchase was a four-door.
Who is the Owner? How long has she/he owned this car, and how many owners were there before of this same car?
Answers like: 'This is a friend of mine's car', or 'I bought it a couple of months ago' may indicate something suspicious. You need to deal with the actual vehicle owners and he/she has to sign the bill of sale. If one sells the car after just a few months, this may indicate that this car has a problem or the seller is in the 'curbsider' business.
Did the car have any accidents, major repairs done? Where has it been serviced and are there any records available for you to review?
Don't expect the seller to provide you with complete information. He/she may be unaware about previous accidents or other problems. Refer to the vehicle history report and the result of mechanical inspection. I wouldn't recommend buying a car after an accident or after a major repair, e.g., a re-built engine or transmission.
Is the car drivable now? Does it have any problems or concerns that need to be solved? The car may not have valid license plates or insurance or have some mechanical problem at the time you are conducting your search. Therefore you won't be able to test-drive it.
Here is the short list of questions to ask:
- When did you buy the car? How many previous owners? Current mileage?
- Any previous accidents? Major repairs? Any repair needed now?
- What's the mechanical condition? Any concerns?
- General condition of the car? Interior? Exterior?
- Any rust? Scratches? Any other damages?
- Where the car has been serviced? Are the service records available?
- What is the reason for selling the car?
- Any liens?

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Negotiating the deal

Often when you use a proper negotiation technique you can get a reasonable discount. Here are a few proven tips:
1. Start negotiating from the beginning. Try to get a discount from the very first time you phone about a car. If they ask for $15,000, ask them if it's worth to come if the $14,500 is your bottom line, considering that you are the real buyer. Usually they won't say "No", which means that when you come, you can start negotiating down from $14,500, not from $15,000
2. Negotiate the total price. Dealers always like to add something to the top of the sticker price. Ask for a total price "on the road" and use it for a negotiation.
3. Make a lower offer. Don't be afraid to make a lower offer. If they are asking $15,000, offer $13,000. If the salesperson believes you will really buy a car, he/she will go down in price, and maybe you will then get the car for $13,800 or thereabouts.
4. Be ready to leave if you feel any pressure or if you have any hesitations about the car - there are so many other cars available. You don't have to decide immediately. Do not give a deposit or sign anything until you are absolutely satisfied with the car and conditions.
5. Nothing works better than competition. Let's say you have two cars on your list that you're interested in. Show it to the salesperson and say you will buy a car from whomever gives you the better price. For example, if one of the salespersons offers you a $500 discount, phone to another dealer on your list and ask them if they can match it.
6. Whatever is promised by a dealer, ask to confirm in writing. Negotiate all the details of the deal. If the dealer promises to install new tires, make sure you agree on what kind of tires - cheapest available or of well known brand like Michelin or Goodyear. If there is some kind of warranty that comes with the car, make sure you understand all terms and condition. If the dealer promises to show you all service records, make sure you check them before you pay for a car.

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Legal aspects of buying a car

May questions may come up when buying a used car such as how to transfer the ownership, how to write a bill of sales, how to register the car from another province, what papers are required to register the vehicle, the owner's and buyer's responsibilities, etc. Because each province or State may have different laws and requirements for the sales transaction of the car, it is best to call your local vehicle registration office or Department of Motor Vehicles, or legal authorities. You can find respective website following the link: Vehicle Registration Authorities Websites for Canada and the USA.

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Do's and Don'ts when buying a Used Car

Do Check a used car history report This does not give you a 100% warranty that the car is OK, but may save you some money if it will show you some bad records, for example, if the car was written off after an accident or has had an odometer rolled back.
Do ask someone knowledgeable to inspect the car for you; it may save you a lot of money.
Don't buy a car after a serious accident - especially following a frontal collision. You wouldn't believe how many possible problems may arise later as a result of an accident.
Don't buy a car as soon as you see it. Take your time, test drive the car as long as you can. For example, some problems may only be caught when the engine is cold while other problems may only be discovered when cruising at highway speeds, etc.
Don't base your decision on what you have been told. "One Owner, highway driven" in fact, may be an ex-rental, heavily abused vehicle.
Don't buy a car if you have reservations or hesitate for one reason or another…if you don't have a good 'gut' feeling about it. If the engine seems too noisy or works as if it is in rough shape and sounds heavy, the transmission shifts harshly, some works needs to be done, something seems to be wrong with the papers, etc. - move on.
Don't buy a car if it needs some "minor" repairs. Often this results in spending big bucks for repairs that never seem to end.
Don't be rude to a salesperson at the dealership. Regardless of the many stereotypes we share, many salespersons are genuinely nice people. Be persistent but not rude; treat them well and they will be willing to help you...

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Vlad Samarin