How To Shop For A Car In Canada

How To Shop For A Car In Canada

Have you decided to purchase or upgrade your vehicle and want to know how to shop for a car? If so, you have landed on exactly the right page.

Below we have provided a thorough breakdown of the critical steps you should take when searching for that perfect car. We will show you how to shop for a vehicle and advise you on obtaining the best price.

Purchasing a car requires thorough research and can be tricky if you are unsure of how to proceed. Therefore, be sure to read each step carefully to ensure that you arm yourself with all the knowledge you need. 

Our guide on how to shop for a car.

How much can I afford?

Your first step when exploring how to shop for a car is to determine what you can afford. 

Monthly payments against your loan or lease are one thing. But it would be best if you also considered other monthly expenses such as interest, insurance, fuel, and maintenance costs. There are also upfront costs to bear in mind, such as your down payment, registration fees, and taxes. 

You will be required to make a down payment against the car when financing your car loan or lease. As a rule of thumb, your down payment should not be less than 20% of the vehicle’s value.

There will always be some form of tax that you need to pay. Irrespective of whether you purchase a new or used car from a dealer or private seller, you will be liable to pay tax.

To get an accurate idea of the amount you qualify for, we advise that you approach a few lenders for a quote. Lenders, which include dealers, will require your credit score as part of the quote process. If your credit score is good (IE: 660 or more), you will find it easier to qualify for preferential rates.

How do I find the right car?

When you are clear on what you can afford, you should begin searching for a car that best suits your needs. 

Searching through manufacturer and dealer websites for a suitable car is part and parcel of how to shop for a car. Bear in mind desired function of the vehicle. Try to find articles and reviews about the cars you prefer, to determine whether their features align with your lifestyle.

Another critical decision to make is whether to go for a new or used car. There are pros and cons related to both. 

For instance, when buying a new car, you will likely benefit from a warranty and maintenance plan. However, the value of your new vehicle will depreciate exponentially as soon as you start driving it.

On the other hand, buying a used vehicle could save you considerably in terms of the price of the car. But it could end up costing you more in maintenance and may even come with pre-existing issues due to wear and tear.

If you choose to opt for a used vehicle, think about what mileage you prefer the car to have when you take ownership. The mileage reading and the year model will give you a good indication of how often the vehicle usage. We advise that you look for a car driven no more than 25,000 kilometers (about 15,500 miles) per year.

Do you need a car with cameras in the rear to assist with reversing? Will you need substantial space in the trunk? Put in the research and establish your preferred vehicle make and model, as well as the specific features you require.

Should I take a car loan or sign a lease?

When determining how to shop for a car, you essentially have three options regarding payment. You can either pay in full immediately, take a car loan, or lease the vehicle.

Each option offers both advantages and disadvantages. Someone can rarely afford to pay for a new or used car in full. Therefore, most Canadians will be choosing between car finance and a lease option. 

When you finance a car through a car loan, you will borrow enough to cover the total purchase price of the vehicle. Hence, when the loan is paid in full at the end of the loan term, you will own the car.

When learning how to shop for a car, you will discover that you will never own a vehicle if you lease it. But you will still be liable for all the expenses that come with owning a car. And, unlike a loan that comes with a defined term, you will be making monthly payments for as long as you have a car. 

That said, you will not have to make a down payment with a lease, and your monthly payments will likely be less. You will also benefit from driving a new vehicle every few years. However, be warned that you should not opt for a lease agreement if you plan on travelling more than 19,000 kilometres (approximately 12,000 miles) per year.

How do I find a car dealer?

Once you have decided on the type of car you want, you should search for a dealership to purchase the vehicle. The trick is to find a car dealer that has your preferred make and model available. You will also want to secure the best possible price for your ideal vehicle.

It would, therefore, be to your benefit to contact a few different dealers to ask about their pricing. It is also essential to ask about any extras, promotions, or additional benefits they offer, differentiating them from other dealers.

You can carry out your initial dealer search online when determining how to shop for a car. But once you have narrowed your options down to a few select car dealers, it is advisable to visit the dealer. This way, you can inspect and test drive the vehicle and obtain an official quotation from them.

Test-driving your prospective vehicle before buying it is essential. It will allow you to understand any potential issues and get a feel for the car. We strongly advise that you take an independent licensed mechanic with you to inspect the vehicle. A good mechanic can assess the vehicle’s overall condition and determine whether it will be a sound purchase.

What are my car finance options?

When researching how to shop for a car, you must consider which type of car finance is best for you. There are four primary options to consider, as follows:

  1. Standard car loan: You can obtain this kind of loan through traditional lenders and other financial service providers. 
  2. Home equity loan: If you have a home loan and have accumulated sufficient equity, you can utilize that equity to purchase your car. In this case, your home will stand as collateral to obtain the loan.
  3. Unsecured personal loan: You could consider this option if you have a good credit score. There is no need to use your car as surety to secure the loan with an unsecured personal loan.
  4. Dealership financing: The most convenient option is to apply for finance through the dealership. Bear in mind, though, that interest rates will likely be higher when financing through a dealership.
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Do I have to get car insurance?

It is mandatory to have car insurance if you wish to own a vehicle in Canada. The car dealership may request proof of your insurance policy before selling you a car. You will certainly not be able to register as the vehicle owner until you have obtained valid car insurance.

Car insurance is compulsory in Canada to ensure that citizens have sufficient cover for damages resulting from an accident or collision. There are different kinds of car insurance cover, and the minimum cover required differs from province to province.

When learning how to shop for a car, you will discover that basic cover for physical damage to your vehicle is usually the bare minimum. However, some provinces require your insurance to cover medical expenses and loss of income related to an accident.

It would be best if you did some research to determine the specific requirements within your region.

How do I get the best price on a car?

Getting the best possible price for your car is easy when you know how to shop for a car. There are certain things you can do to reduce the overall cost to you. These are our top tips on what to consider when looking for the best price on a vehicle:

  1. Down payment: Offering the dealer or lender a more significant down payment will reduce the amount of the loan you need to take.
  2. Credit score: With a better credit score, you are seen as less of a risk and will enjoy lower interest rates associated with your monthly repayments.
  3. Loan term: When determining how to shop for a car, consider a shorter loan term. Your monthly repayments will be higher, but you will pay off the loan quicker. You will, therefore, end up paying less for the car in total.
  4. Additional fees: The price of the car advertised does not include vehicle registration, sales tax, or dealership fees. These additional costs are usually added to the total loan amount, which adds to the interest you pay each month. Try to pay these costs upfront to avoid unnecessary interest.
  5. Timing: The best time to purchase a car in Canada is in November. That is when car dealers start clearing out older models to make way for new vehicles arriving in the new year. 

What we have learned about how to shop for a car.

The above guide will provide you with all the information you need when examining how to shop for a car. 

By following these steps, you can make informed decisions to find the perfect car for your needs. You will also establish the type of finance to apply for and get the best price when doing so. 

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FAQs about Shopping For A Car In Canada

What is it like to shop for a car in Canada?

If you’re thinking of purchasing a car in Canada, we recommend creating a plan first. This plan should entail how much: you can afford, what car best suits your needs, your loan options and car insurance.

How much should I go for when buying a car in Canada?

It always depends on how much you can afford. It’s recommended that you look at the monthly expenses such as: interest, insurance, fuel, maintenance costs, down payment, registration fees and taxes. As mentioned before, your down payment shouldn’t be less than 20% of the car’s value.

How do I find the right car?

Once you have looked at the costs associated with buying a car, you should look at cars that is suitable for your needs. It’s hard to choose between a new and old car when you don’t know what to look for. For instance, an advantage of buying a new car is that you will save from warranty and maintenance. While an advantage of buying a used car means you save money on the purchase price as new cars go through depreciation.

Should I take a car loan or sign a car lease in Canada?

Most of the time when buying a car, there are three options: pay in full amount, take a car loan or lease the vehicle. When you finance a car through a car loan, this can help you obtain the car while you pay for it. When you lease a car, you don’t have to make a down payment and your monthly payment will most likely be less than a car loan. You can also drive a new vehicle from time to time with a car lease.

How do I find a car dealer in Canada?

Online is the easiest way to find a car dealer in Canada. You can look into different car dealers and compare prices as well as promotions, additional benefits and what makes them different to other dealers. Once you’ve done this, you should always visit the car dealer so that you can inspect and test drive the vehicle.


July 14, 2021
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