This article has been updated from a previous version.
The average Canadian can expect to spend approximately $8,000 more on a used vehicle now than pre-pandemic.
On average, pre-owned vehicles are worth 34% more this year compared to 2021, according to a recent CBC news article. 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.
Buying a used vehicle has advantages. Despite an inflated used car market, the purchase price of a used vehicle is still lower than that of a new car. Also, your car insurance rate may be less than what you would pay on a new vehicle. The cost of financing will likely be a lot less, too.
There are also, however, disadvantages 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 you like might not be in the vehicle you buy.
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. Similar to buying a home, you should have a budget so you don’t overspend.
- Narrow things down. It’s best to choose a specific type of vehicle (e.g. SUV, car) as well as the brand and a specific model. If you don’t do that, you could be searching for a long time.
- 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.
- 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 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 Drive Clean 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 in Ontario and Alberta 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. The following needs to be included: your name, address, and signature (as well as those of the seller’s), the VIN, the purchase price, and the make, model, style, colour, and year of manufacture. After the purchase is complete, you need to get insurance and have the vehicle registered by a registry agent before driving it.
Getting the right car insurance policy
Insofar as getting a car insurance policy goes, it’s worth taking a look at what your options are. You can buy a basic or standard policy that include 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 more fulsome protection.
For instance, collision coverage, which is optional coverage you can add to your policy, 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, another optional type of coverage, pays for damage to your vehicle that isn’t caused by a collision, such as theft, hail, storms, vandalism, and flying or falling objects.
Have a conversation with your insurance broker or agent about how best to protect yourself and your vehicle. Also, before you purchase any new or used vehicle, get an idea of what a policy will cost by comparing auto insurance rates from a broad range of insurers for free.
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