Buying your first car in Canada is an important milestone. It gives you a lot of mobility and can improve both your career and social life. Canada has no restrictions on newcomers owning vehicles as long as they have the proper documents and are qualified to drive.
Our guide will help you prepare for the process and comply with Canadian laws. By the end, you should be able to decide if it’s the best time to buy a car.
To start things off, buying your first car in Canada is like buying a car in any other developed country. You need the proper documents.
What do I need to drive in Canada?
You will need a Driving License, Car Insurance and Vehicle Registration.
How do I apply for a Driving License in Canada?
The process of applying for a driving license can differ by province. We take the example of Ontario- one of the most popular and populated Canadian provinces.
First, you have to be:
- At least 16 years old and pass an eye test.
- You must provide official identity documents as a Canadian citizen, a permanent or temporary resident.
If you meet the criteria, you can apply and take a knowledge test at a DriveTest centre for a fee. On passing, you are issued a G1 or beginner’s license. You are given five more years to complete two more levels- G1 and G2, to get a full G license. The full G licence certifies you to drive a car, van or a small truck on Canadian roads.
The steps for other provinces are similar, with only slight variations.
How to prepare for a Canadian Driving knowledge test
Many online resources can help you prepare for your test, including the official Driver’s handbook issued by the Official Ministry of Transporation (MTO), the Ontario’s Official Driver Handbook, the Alberta driver’s guides or websites like tests.ca that allow you to take practice tests.
Where can I apply for Car insurance in Canada?
As a car owner in Canada, you’re legally obligated to have an insurance policy that covers liabilities, Bodily injuries and accident benefits.
You can buy auto insurance from an Insurance broker, an agent or Direct writers from insurance companies like ICBC, Co-operators, Intact Insurance and Desjardins.
Some documentation that you need to provide are:
- A Driving license and the license numbers of anyone in your household using the car.
- A vehicle’s identification number (VIN) and its make, model, year and mileage.
- Your previous Canadian driving record (not International), including traffic violations, previous claims and at-fault collisions.
Your Insurers will then assess your age, gender, location, mileage, vehicle, record and insurance history to determine your insurance premium.
Insurance scams that you should know about
The Insurance Bureau of Canada has clear warnings about scams and fraudsters. As a newcomer, you are particularly vulnerable to these crimes. They’re not always easy to spot, but here are some suspicious signs you can look out for:
- policies that are way below market rates
- insurers asking for signing fees
- requests for payment through an electronic or wire transfer to an unidentified post office.
Below is a list of the regulating bodies in each province. You can contact them to verify the legitimacy of your insurer.
Insurance Council of British Columbia
Insurance Councils of Saskatchewan
Financial Services Regulatory Authority of Ontario
Chambre de l’assurance de dommages
Department of Justice and Consumer Affairs, New Brunswick
Nova Scotia Finance and Treasury Board
Digital Government and Service, Newfoundland and Labrador
How do I register my vehicle?
A dealership usually completes the registration for you if you’re buying a new vehicle.
The procedure is straightforward in most Canadian provinces.
Using Ontario as an example, you can register your vehicle online at ServiceOntario or one of their locations with the following documents:
- Your Driver’s license and the 15-digit registrant identification number (RIN)
- Proof of identity
- Proof of purchase
- Proof of insurance from a licensed insurance provider
- A licence plate, if you already have one you’d like to use on the new vehicle.
If you’re registering a used vehicle, you will have to provide additional documents like:
- A used-vehicle information package
- The original vehicle permit from the seller
The vehicle permit costs $32 (all vehicles), while a Licence plate with a permit costs $59.
The permit and license plates are issued after you complete your registration and will have to be renewed annually.
Anything else you need to know about driving in Canada?
Stay informed about the driving laws in your province. Some common ones are:
- Wearing Seatbelts is mandatory for everyone inside the car.
- Talking or texting while driving is illegal.
- There’s a zero-tolerance alcohol rule for Drivers under 21, novice drivers and commercial drivers.
- Some provinces require that you have daytime running lights to improve your visibility to other drivers.
If the police pull you over, stay calm and don’t panic. Stops can sometimes be routine and are not always your fault. The best action is to pull over as quickly as possible with the windows rolled down and your hands on the steering wheel. Be polite and try to resolve things amicably.
How to find the right vehicle
Here’s a checklist of some things you should consider when picking a car.
- Look for a car within your budget and suited to your purpose.
- Understand the car’s specifications, fuel efficiency, service requirements, etc.
- Pick an Automatic or manual drive.
- Check the car’s availability and if there are any ongoing sales nearby.
- Visit a dealership and know your financing options.
You can narrow down your choice by browsing the catalogues of different car dealerships. Many sites like Clutch, Canada Drives and CarDoor and automotive marketplaces like AutoTrader Canadian Black Book and Carpages.ca can help you with the latest vehicle information.
You will also find cheap cars for sale on private marketplaces like Craigslist, Kijiji and Facebook Marketplace
The best time to buy a car is when you can find it reasonably priced and in good condition.
Should you buy an Electric/ Hybrid vehicle?
According to Statistics Canada, Hybrid electric vehicles registered the highest increase in car sales (+91.4%) in 2021 on a year-over-year basis. Battery electric vehicles also rose by half. The numbers reflect a shift towards electric and battery-powered cars. Many buyers adopt the relatively new technology to escape rising gas prices worldwide. The way things are shaping up, ‘now’ is the best time to invest in Electric vehicles.
Who should you buy from, Dealerships or Private sellers?
Dealerships operate under a defined set of rules and government regulations. They provide warranties and payment options like leases, in-house loans, and a more comprehensive selection of cars on sale.
A Private Seller operates outside official channels. It’s best used when you want to buy a cheap car. Be sure to check the quality of the vehicle before purchase. Know that there’s always some risk involved, and your options are limited regarding payment method and vehicle selection.
Most people recommend buying from a dealership unless you’re short of cash or are dealing with a trusted private seller.
Ownership transfer
When buying from a private seller, you must know the rules and regulations governing ownership transfer. It’s safer to check the laws in your area before purchasing a vehicle.
Some common points to remember are:
- The seller will have to notify the Motor Registration of the car sale.
- The purchaser has to transfer ownership.
- The seller’s vehicle registration permit, bill of sale and Public Liability Insurance Card must be on the vehicle at all times.
- A bill of sale must include the date, buyer’s name and license number, year, make, model of vehicle, plate number, purchase price, seller’s name and signature.
How to finance your first car
Two primary methods to finance your first car are Car Loans and Lease.
- Car Loans- You can apply at your dealership or through a financial institution. The process can be as simple as finding an authorized vehicle dealer, choosing a car and asking for financing through a Financial institution. You will need to provide relevant documents, including your Government-issued photo ID and proof of employment.
- Some popular Canadian banks offering auto loans are Toronto-Dominion Bank, BMO, RBC, CIBC and Scotiabank. Be aware of special offers that cater to Newcomers buying their first cars.
- Banks cater to customers with higher credit scores. A score above 650 is usually the benchmark for a traditional auto loan. Your options are more limited if you have bad credit. You’ll have to borrow from non-traditional lenders at higher interest rates after the down payment.
- Leasing is another option if you’re not interested in owning the vehicle or want to change cars in the future. You make a down payment and smaller regular payments throughout the lease period. After your lease expires, you must return the vehicle or purchase it at market value.
How do you properly inspect a used car?
You should be aware of a vehicle’s history before purchase, including any previous accidents, service history, and any lien or debt on the car.
Vehicles have unique Vehicle identification Numbers (VIN) that are shared with agencies when the car is involved in an incident. A VIN check can provide a basic history of the vehicle you’re planning to buy.
Some sites that provide VIN checking services are:
- CARFAX Canada
- VIN verify provided by the Insurance Bureau of Canada and
- Transport Canada
You will need a full Vehicle history report (VHR) for more comprehensive checks. This paid service provides you with more details regarding- accidents, service records, recalls, mechanical discrepancies and Ownership changes.
Some sites that can provide VHR services are:
Can you test drive vehicles as an Immigrant?
Yes, you can test drive vehicles as an immigrant. There are no restrictions as long as you have a valid driving license.
Are there any Programs that help Immigrants buy cars?
Yes, many Financial Institutions like the Royal Bank of Canada, Scotiabank and Toronto-Dominion Bank offer attractive car loans and financing options without requiring a Canadian credit history for easy access.
It is impossible to anticipate all the challenges you’ll face as a newcomer or know the best time to buy your dream car. Our guide won’t prepare you for everything.
Ultimately, you will have to overcome many small obstacles yourself. We can assure you that it’s all worth it in the end. Driving in Canada is an experience you don’t want to miss.
We love to hear about your experiences. Please share with us and be the inspiration for many Newcomers’ looking to buy their first cars in Canada.
