8 Important Questions to Ask When Buying a Car

If you’re on the hunt for a new vehicle, asking the right questions is critical to finding a car that suits your budget and needs. But it can be difficult to know which details are essential to your car-buying experience — especially if you’re looking to maximize your budget. Whether you’re a first-time car buyer or a seasoned shopper, review these eight questions to ask as you head out to the dealership.

1. Is the car in stock?

Car inventory is a big factor in the success of your search. Supply chain disruptions that happened during the pandemic has eased off, but vehicle supply still varies by make and model. If you need the car right away, it’s a good idea to ask a dealership if they have the type of car you’re looking for in stock. If not, you’ll want to inquire about the wait time and potentially shop elsewhere.

2. What does the car warranty cover?

Your vehicle warranty ensures the car’s manufacturer will cover the costs of defects throughout your contract. All car manufacturers typically provide warranty coverage for new vehicles, but the agreement duration varies. The average warranty for a new vehicle in Canada is three years or 60,000 km, whichever comes first. After the warranty expires, you pay for repairs unless you purchase an extended warranty to lengthen the coverage.

Longer warranties offer peace of mind to new car owners, but there may be exclusions in these contracts. For example, coverage for rust protection may vary depending on how old the car is and where it’s located. And warranties do not cover regular maintenance (such as oil changes and tire rotations) or damage caused by failure to uphold safety measures. For these reasons, it’s important to follow the recommended maintenance schedule for your car.

When it comes to used cars, you also have warranty options. Dealerships may offer certified pre-owned warranties that cover specific parts of the car. Sometimes, you can also purchase a warranty extension from a third-party provider.

3. How reliable is the car?

Reliability can refer to both a vehicle’s safety and its durability. For safety, check Transport Canada for information about recalls, CARFAX Canada for vehicle history reports, and Consumer Reports for safety ratings of different makes and models. In terms of reliability, cars often deteriorate over years of use; however, some are more vulnerable to problems than others. Research how your desired make and model holds up and whether it requires more maintenance than a regular oil change and tire rotation.

As you evaluate reliability, you may want to consider the popularity of your car and whether it’s easy to find replacement parts. If your vehicle is old or uncommon, you may have trouble finding parts, especially if you plan to own the car for a long time. 

4. How much mileage is on the vehicle?

This question applies to new and used vehicles. Understanding how long the car has been on the road can help you set the price you’re willing to pay and create a plan for its maintenance in the long term.

Test drives can increase mileage on new vehicles that have been on the lot for a while, so don’t forget to check mileage on new cars. Used cars with over 200,000 km per year are often considered “overdriven,” making them more prone to mechanical issues. A used car with over 300,000 km is generally considered close to the end of its life — so if your prospective vehicle has a similar mileage, you may want to ask a mechanic for a second opinion on its durability. Some cars have a reputation for reliability, even with high mileage, as long as they’re properly maintained. 

5. Are there rebates or incentives available?

Manufacturers offer rebates to encourage brand loyalty and increase sales for a particular make or model. Rebates can make certain cars more affordable and may offer an incentive to consider other options. Dealerships often call this a consumer credit, bonus cash, or purchase allowance, and they can offer hundreds to even thousands of dollars toward your car purchase.

Most rebates are given at the manufacturer’s level, meaning you can find the same deal at any dealership. Dealer-level rebates vary from one dealer to the next. 

If you’re considering an electric vehicle, the Canadian government has additional financial incentives. You can search this complete list of EVs eligible for up to $5,000 in point-of-sale incentives to see if it applies to the car you want. 

6. What are the upfront costs?

Before leaving the lot with your new car, you have to pay upfront costs, which include: 

• Down payment. When taking out a loan, you’ll pay an initial amount of money toward paying it off. The more you pay upfront, the less you’ll have to borrow in the long term — which may save you money on interest.

• License and registration fees. The cost of registering your vehicle will vary by province. Many dealers are now able to offer registration to their buyers. Ask your dealership if this is an option. 

• Taxes. Any motor vehicle purchase will be subject to GST, HST, PST, or RST, and the rate will vary by province.

• Dealership fees. The dealership may charge administrative fees and other additional fees. Make sure to ask about these additional fees when discussing the vehicle price.

You’ll also want to consider the total price of the vehicle you’re buying. Often, dealers focus on the monthly payment, but you’ll need to understand all costs associated with the vehicle to properly budget for it. 

Help inform your vehicle budget. Estimate your loan payments with the RBC Car Loan Payment Calculator.

7. What are the financing terms?

Many Canadians use auto loans to finance their car purchase. Pre-qualifying for a loan before going to a dealership will help inform your budget. You can pre-qualify online by providing information such as income and current debt obligations to the lender, who will provide a tentative assessment of the loan amount you’re eligible to receive.

It’s important to note that pre-qualification doesn’t guarantee you’ll receive a loan. But it does help you build a budget for car shopping early in the process. Most of your loan negotiations will likely be about interest rates, which is the percentage of your loan you’ll pay the bank to borrow money. Per Statistics Canada, the average interest rate on an auto loan is 6% to 7% (as of October 2024).

The term of your loan is how long you have to pay it off fully. Short- and long-term loans have different benefits. You can opt for a long loan term to bring down the monthly or weekly payment, but you will pay more over the long run. With a shorter-term loan, you’ll have larger weekly or monthly payments, but you will pay off your loan more quickly and will probably get a lower interest rate. Choose the loan option that best aligns with your financial situation.

Pre-qualify to learn how much of a loan amount you could qualify for.

8. How much can I save if I trade in my used car?

If you already own a car, you can trade it in to the dealer — or sell it to them — when you want to buy a new vehicle. Start by getting your car’s online valuation estimate using tools such as Consumer Report’s Car Value Estimator. The price the dealer agrees to can go towards purchasing your new vehicle.

To determine a car’s trade-in value, dealers use the year, make, and model of the vehicle, the number of kilometres on the odometer, and the overall condition of the vehicle. An in-person visual inspection of your vehicle is necessary before confirming the trade, but this usually does not cost anything.

Asking the above questions can help you make the most of your car-buying process and get you the best car for your budget and lifestyle. As you proceed, RBC can help. 

• Pre-qualify for an auto loan. Use our pre-qualification tool to find out how much of a loan you could qualify for before you visit a car dealership. 

• Estimate your monthly loan payments. Use the RBC car loan calculator to determine what payments work with your needs and budget.