If you are a new immigrant to Canada, one of your first things you need to do is get a vehicle. Having a car (or truck, or van, or SUV) is very convenient, as it makes trips to work, school, the grocery store, and home again a lot easier.
Buying a car in Canada isn’t as difficult or intimidating as it might seem at first. At least, it will seem a lot simpler thanks to this handy guide we’ve written.
In the next five minutes, we’re going to tell you everything you need to know about buying a car in Canada as a New to Canada immigrant.
By the end of this article you will have learned:
In order to legally own a car in Canada, everyone needs to secure three documents: a driver’s license, an insurance policy, and vehicle registration.
Not only do you need these three things, but you need to get them in this order: license, insurance, registration. Why? Keep reading and we’ll tell you!
Depending on where you moved from and how much experience you have, there’s a chance that you’ll be able to just exchange your old license for a new Canadian license. However, if you can’t exchange it, you may be able to use your past driving experience as a credit.
In order to exchange your license, or use your past experience as a credit, you will need three pieces of ID: your Canadian Citizenship card, your old (foreign) driver’s license, and an official abstract document. This abstract must be written within the last six months and include:
In order to get Car Insurance, you will have to have your Driver’s License first.
Once you have your license, you will only need to provide a few bits of information in order to get your car insurance:
The last piece to this puzzle is your Vehicle Registration. To finalize your legal ownership of the vehicle you have purchased, you must register it with the government. After you’ve gotten your license and insurance, and after you’ve purchased a vehicle, you need to register that vehicle with the following:
If you are buying a new vehicle from a dealership, they will often file the vehicle registration for you.
One of the first decisions you’re going to make during the New to Canada car buying process is whether you’re going to buy a new vehicle or a used vehicle. Each comes with its positives and negatives:
New vehicles come with significant deals and offers, have all the latest features and technology, come in brand new condition with warranties that last for years, and they can be leased or financed or bought in cash.
However, new vehicles are often more expensive and you can only buy them from dealerships.
Used vehicles are more affordable and can be purchased from either a dealership or a private seller.
However, used vehicles can’t be leased and are much more difficult to finance. Only select (Certified) used vehicles come with warranties. You may not know the full accident history of the vehicle. They also have older technology and features.
In Canada there are two ways to buy a car: from a car dealership or a person selling their own vehicle privately.
If you want to buy a new vehicle, you can only buy them from a dealership. You can buy a used vehicle from either a dealership or a private seller.
When you buy from a dealership you’re buying from an established business who you can trust. There are organizations in place to ensure they are operating in a legal and fair manner, unlike private sellers.
Things to expect when buying from a Dealership:
Private sellers only sell used vehicles. Car manufacturers – Honda, Nissan, Hyundai, Volkswagen, etc. – only allow their new vehicles to be sold in dealerships.
Because you’re buying from a private seller, they can sell the car for however much they want. Also, this means you don’t get to finance it (i.e. you have to pay in cash), and there will be no special pricing or sales. Private sellers sell their vehicles for as much as they can possibly get.
Things to expect when buying from a Private Seller:
Something to remember: private sellers can sell their vehicles to dealerships if they want to. They’re selling it privately because they want to make more money than they would at a dealership. So the cost is likely to be higher from a private seller.
When you’re buying a new vehicle as a Canadian immigrant, you have a few different ways to pay for it: you can buy it in cash, you can take out a lease, or you can finance it with a loan.
Cash purchases are simple, but leases and loans are more difficult to understand. Here’s a handy guide to how they work.
Before we talk about loans and leases, we need to talk about your credit score.
Your credit score is, essentially, a rating that tells lenders how trustworthy you are with borrowed money.
For new Canadian immigrants, you will have no credit history in this country. This makes it difficult to take out a large loan needed to buy a vehicle (because lenders don’t know you and therefore consider you risky).
There are several ways for you to build your credit score. Here are a few of them:
That being said, building a good enough credit history to buy a vehicle can take more than a year.
Car loans are the most common way Canadians buy cars. Here’s how paying off the loan works:
The average loan is around five years, but you can pay your loan off sooner if you’d like. When you take out a loan on a vehicle, you technically own that vehicle even before you finish paying it off. So you can do what you want with it, without limitations.
The important thing to remember when you lease a vehicle: you do not own it.
You are actually renting it from the dealership for a monthly fee. At the end of your lease (usually 1-3 years), you either have to buy the vehicle or release it back to the dealership (after which, you no longer have a car again).
The best part about a lease is that the payment will be lower than a finance payment for the same vehicle. This is because you’re not paying for the full value of the car; you are simply paying for how much value the car loses over the length of the lease.
Here’s how it works.
There are other factors into how much your lease payments are, such as interest, the length of the lease, and other terms you negotiate such as the annual kilometer limit. You can find out more about how lease payments work in our guide here.
Now for the good news!
At My Ride, we’ve worked with thousands of New Canadians in order to get them into their first cars in this beautiful country of ours. This has helped them settle into their new lives, homes, and careers. For the majority of Canadian immigrants we work with, we get them approved for a vehicle on their first try.
We work directly with a number of car manufacturers to offer special programs that help new Canadians with no credit (or low credit) purchase vehicles.
We even have discounts and incentives available to make your purchase as affordable as possible.
We’ve gotten over 30,000 people into vehicles in Alberta alone. You could be next!
Applying for a vehicle in your area is easy!
All you have to do is click here. Pick the vehicle you’d like to drive, tell us how much you can afford to pay each month, and we take care of the rest.
We make this process as easy for you as possible. Before you know it, you’ll have a car you love at a great price.