This article has been updated from a previous version.
It’s a tough time to be in the market for a car. The average Canadian can still expect higher prices on a used vehicle now than before the pandemic — sometimes even higher than on a new vehicle.
According to the CBC, it could take six to seven years for vehicle prices to return to the pre-pandemic standard. A worldwide shortage of semiconductor microchips for new vehicles marked the start of production delays back in 2020 and made used vehicles the next best thing. Hence, the inflation of used vehicle prices we still see today.
However, buying a used vehicle still has its advantages. Despite an inflated used car market, the purchase price of a used vehicle is still generally lower than that of a new car. Also, your car insurance rate may be lower than what you would pay on a new vehicle. You may pay a lot less on financing, too.
There are also drawbacks to buying a used car. The vehicle might need to be repaired more often, and you won’t know the vehicle’s history unless you do some research. Also, the warranty period may have ended, which could mean certain safety and convenience features might not still be in the vehicle by the time you buy it.
Steps to take when buying a used car
There are a number of steps you should take before buying a used vehicle. Here are a few suggestions:
- Have a budget. Just like buying a home, you should have a budget to rein in your spending.
- Narrow things down. It’s best to have a specific type of vehicle (e.g. SUV, sedan) and brand and a specific model already in mind. If you don’t do that, you could be searching for a long time. Plus, different makes and models impact your car insurance rate differently. It could be worth comparing car insurance rates for the models you’re eyeing to see if there is a difference in premium.
- Read reviews. Other owners are your best source of information to learn more about the pros and cons of the vehicle you want.
- Find potential sellers. You may find a private seller on a website or at a dealer. Make sure to thoroughly vet your sellers and read reviews from previous buyers to gauge the seller’s trustworthiness.
- Compare prices. Once you’ve found a seller, compare the price with the industry average. The Canadian Black Book provides weekly updates for used vehicle pricing in Canada.
Should you buy a vehicle from a private seller or dealer?
There are two options for buying a used car: an owner (or a private seller) or a dealer.
You can find private sellers on a number of reputable websites. You can also try searching for vehicles on other online classified sites.
There are advantages and disadvantages of buying from either a private seller or a dealer. For instance, purchasing from a private seller usually means you’ll get a better price while a dealer can offer warranties and a vehicle inspection.
If you go with a private seller, you can protect yourself by getting the vehicle inspected by a reputable shop that can detect and help you avoid any problems. When buying from a dealer, make sure to check their online reputation.
What to do before buying a used car
Prior to purchasing a vehicle, it’s recommended you do the following:
- Check the vehicle identification number (VIN) and make sure it matches the one on the owner’s permit or vehicle registration form.
- Ensure the seller is the registered owner.
- Inspect the vehicle for damage both inside and outside. If possible, have a mechanic look at it for you. When a car undergoes a major repair after a collision, its resale value will diminish.
- Get information about the vehicle’s collision history and the warranty.
- Look at the odometer; if the reading is low and the vehicle is old, it may be a sign someone has tampered with the odometer.
- Take the vehicle out for a test drive.
When purchasing a used car in Ontario or Alberta, each provincial government has specific recommendations.
Before buying in Ontario, the government recommends you check the DriveON website for the vehicle’s emissions testing history. You can also ask the seller to perform the test and provide you with the results. The province also recommends that you request or purchase a used vehicle information package (UVIP) to check its lien or debt information.
What you need to do after buying a used vehicle
When the purchase is made, there are certain requirements based on where you live that need to be met.
In Ontario, the seller must give you the vehicle portion of the owner’s permit, the UVIP, and the bill of sale with the purchase price and seller’s name. The bill of sale must be signed and dated by both you and the seller. You must also register the vehicle at a ServiceOntario centre within six days of making the purchase.
In Alberta, you must complete a bill of sale, which will need to include:
- your name, address, and signature
- the seller’s name, address and signature
- the VIN
- the purchase price,
- the make, model, style, colour, and year of manufacture.
After the purchase is complete, you will need to get insurance and register the vehicle with a registry agent before driving it.
Getting the right car insurance policy
When it comes to getting a car insurance policy, it’s worth comparing your options. A standard policy includes the mandatory minimum coverages you must have to drive any vehicle, such as third-party liability, accident benefits, and uninsured auto. But there are other coverages you might wish to add to your policy to ensure you have the protection you truly need.
For instance, collision coverage is optional coverage you can add to your policy. It will pay for losses if you hit an object (such as a guard rail or streetlight) or when you’re responsible for a collision with another vehicle.
And comprehensive coverage — also optional — pays for damage to your vehicle that isn’t caused by a collision, such as theft, hail, storms, vandalism, and flying or falling objects.
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