What to Look for as a Newcomer Buying a Car in Canada

New to Canada? Depending on where you live, having a car may be necessary for your way of life. This guide can help you find the right vehicle and show you how to get a car loan as a newcomer.

Finding a car in the Canadian auto market can be confusing if you’re unfamiliar with the process. For newcomers to Canada, a little research can go a long way toward finding and financing your perfect vehicle.

Here’s an easy guide for newcomers buying a car in Canada to get you started.

Step 1: Figure out what you need

Think about what your needs are: How big is your family? Will you be using your car for work? What’s your commute like? The more you know your needs, the more likely you’ll find the right fit. Consider:

Number of passengers

Safety, the number of seats and cargo space are necessary for families, so larger vehicles like SUVs and minivans might be right for you. If you use your car mostly for yourself and one to two others, a compact car or sedan might fit your needs.

Using for work

If you need to use your car for work, consider what that entails: Do you need to carry tools or equipment? Are you travelling to worksites or just commuting to the train? If your auto is going to be key to your job, look at the reliability, space and horsepower. For example, pickup trucks have plenty of space and power to handle heavy loads. For short commutes, a hatchback, compact or sedan might do the trick.

Canadian weather

Remember: It gets COLD in the winter here in Canada! Your vehicle will have to handle sub-zero temperatures and rough road conditions from December to (at least) March, no matter where you live in the Great North. Make sure your car is built to drive through snow and ice safely — vehicles with front-wheel drive or all-wheel drive typically have better traction in bad conditions than rear-wheel drive vehicles. Don’t forget to have a shovel, snow brush and traction mats stored to prepare for any sudden snowstorms! Also winter tires are always recommended when driving in winter months.

Step 2: Consider buying new or used

Once you understand your needs, look at makes and models that fit your needs. One consideration is buying a new versus used vehicle.

• New: Cost is the main difference; new cars tend to be more expensive to buy and insure, but they also have no wear and tear and have the latest auto technology and safety features.

• Used: While there are many potential advantages to buying a used car — lower prices and financing costs, for example — there are also potential downsides, such as higher maintenance and repair costs and a shorter lifespan than a new car.

For more help deciding between buying a new or used car, check out Buying Your Next Vehicle: New or Used?

Step 3: Set your budget

Before you start test-driving cars, plan out your budget. Owning a car requires many one-time and recurring costs.

Most new residents are likely to get a car loan to pay for your vehicle. You can pre-qualify for a car loan to get an estimate of the loan value you may qualify for.

Pre-qualification doesn’t guarantee you’ll be approved for a loan, but it will help you plan your budget and help you understand financing terms and conditions.

Tip: When budgeting for your car, don’t forget to factor in the additional costs of car ownership:

Owning a car means paying ongoing costs like fuel, insurance and more. It’s important to plan for the long-term expenses of owning your vehicle. Ongoing costs may make a vehicle that fits your budget into one that squeezes it.

Registration

If you buy a new or used car, you must register your car and renew the registration every year. The process differs in each Canadian province, as does the annual cost. The registration certificate proves that you are the legal owner of the vehicle and that it’s allowed to be on the road.

Gas/Fuel

When it comes to fuel, a vehicle with good gas mileage can really help your budget over time. Be sure to ask your dealer or research online to see if your desired make and model has good mileage.

Another exciting option is electric vehicles (or EVs). Electric vehicles are powered entirely by an electric battery, meaning they don’t need gas at all. This may make them a more affordable option over time than carbon-producing gas engines, saving you hundreds of dollars per year at the pump. You can often recharge an EV for free at public charging stations or pay to install a charger in your home. While electric vehicles are usually more expensive at the dealership, the money you save on gas might make them a good investment.

Maintenance and repairs

Usually, a new car should need less maintenance and fewer repairs. Regular maintenance (replacing oil, rotating tires, etc.) may help extend the longevity of your vehicle. If you’re buying used, or looking to own your car for a long time, remember that the older a car’s model is, the harder it may be to repair.

Insurance

Auto insurance is mandatory in Canada. Essentially, insurance is a contract between you and an insurance company to help cover the costs associated with any vehicle damage, injuries to the driver and passengers, or liability for damage or injuries caused in the event of an accident. When you’re ready, you can find auto insurance by contacting insurance agents or brokers, visiting insurance company websites or using online comparison tools.

Step 4: Buying online or at the dealership?

These days, there are many sites and apps to help you research and buy online. While each site differs, they may help you streamline your choices by comparing different cars easily and reading independent buyer reviews. When you’re ready, you may even be able to buy online.

Going to a dealership, however, will allow you more opportunities to test-drive vehicles. You may be limited to a few manufacturers, but when it comes time to negotiate prices and terms, you’ll deal with a salesperson who may be motivated to make a deal.

Step 5. Secure a loan

In Canada, dealerships are able to provide auto loans, so you don’t have to go to a bank. Your loan can take place at the dealership instead of borrowing money directly from a financial institution, such as a bank, credit union or online lender.

Be sure to ask about how flexible the repayment options are:

• Are you able to pay off the loan early without a penalty?

• How often do you have to pay: weekly, bi-weekly, monthly or semi-monthly?

• Can you choose how long your payment term is?

Several financial institutions also offer auto financing options for immigrants that don’t require a credit history and offer flexible repayment options.

Newcomers may be eligible for an RBC car loan even if you have no Canadian credit history.* Check out RBC’s Car Loans for Newcomers to Canada hub for information about car loans and calculate your loan payment.

* Available to permanent residents and temporary foreign workers who have been in Canada for less than 3 years. Down payment of up to 15% may be required. Maximum financing term is 96 months with a maximum loan amount of $75,000. Note: for investor class permanent residents, there is no maximum loan amount. No credit history required on vehicles less than 10 years old, provided you meet all of the eligibility and credit criteria of Royal Bank of Canada.

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