Moving to a new country as an immigrant is always a new experience, which is usually accompanied by some problems that occur after arrival at the airport. New apartment, job, and friends are only a small part of what you will encounter. After several difficult months when the first obstacles are behind, and you start to make an earning, the question arises about how to purchase your first vehicle in Canada. Having a car is incredibly convenient because the distance that must be covered every day is enormous. We do not take into account such necessary trips to work, shops, school or friendly out-of-town trips. However, if you have only recently arrived in the country, then it is unlikely you will be able to quickly understand how things work around here. We have created this small guide that will help you to understand the necessary information that you need to know before buying your first vehicle in Canada and assist you through every step of the way.
Table of contents
Step 1. Collect all the necessary documents
Before you run to the dealership for your shiny new car with a broad smile on your face, it is important to have on hand a few necessary documents. These documents include three main types: a provincial driver’s license, valid car insurance, and then eventually a car registration. It’s important to remember that they should be obtained in that order.
Each province in Canada is different in its methods of obtaining a driver’s license. Depending on how much experience you have in your home country, you have the right to ask for the exchange of your old license, to a new license of the province you have moved to. Residents of such countries as the United States, Australia, Austria, Belgium, France, Germany, UK, the Isle of Man, Japan, Korea, New Zealand, Northern Ireland, Ireland, Switzerland, and Taiwan are entitled to an exchange as long as you provide documents from your home country. The documents need to include the following:
- A logo or emblem of the authority that issued your driving license;
- Your full name and date of birth;
- Day, month and year when the license was issued;
- The number, class, and the expiry date of the current driver’s license;
- The date when the document was signed by your home government.
It is important to remember that the document is only valid for six months after its signing. Otherwise, you’ll have to get it again. This paper also gives you credits to avoid going through all the stages of obtaining a driving license in your province, but only if the driving experience will be more than two years.
All the steps and the conditions for obtaining a driver’s license for your particular province you can find here.
To be able to apply for car insurance, you have to have a driver’s license. Also, you must also provide information such as the driver’s license number of all individuals who will drive the car, brand, model, vehicle identification number (VIN). You can always get a certificate for completion driving courses if you want to lower the cost of insurance. It is advisable to provide copies of your previous driving records and previous contracts about car insurance. Unfortunately for newcomers, the following documents from their home countries are not accepted in Canada.
Before you get behind the wheel, you must register and license your new vehicle. Most dealers have their own on-site brokers who will assist you with the registration process and paperwork to send all required documents to the provincial government. Of the necessary information, you will need to provide your driver’s license, proof of current automobile insurance (provided at registration in some provinces), a pink slip and license plate number of your vehicle. If you correctly fill all the data, registration can be completed in the same day when you purchased the vehicle. If you buy a used car, then you need to make a Used Vehicle Information Package, which will contain all information about the history of the vehicle and additional documents that are required in a particular province (like a Test drive clean emissions certificate or security standards, etc.)
Step 2. Consider a used vehicle over a new one
Being a newcomer to Canada like you, I faced the same situation when I couldn’t afford to buy a new car because of the high interest rates and a low credit score. However, the desire to have a car as well as the advantages of purchasing it outweighed my desire to wait until accumulating sufficient money to buy a new one. Therefore, I looked to used vehicles. Yes, financing options will be much less when purchasing a new car, but it is worth considering that a car loses a third of its value after a year of use, so with proper search, it is possible to find an inexpensive car with all features, options, tech and safety for a relatively small amount. However, with a used vehicle the risks will be higher because you may not know the full vehicle history and mechanical problems that arose when the previous owner used the car. We recommend that all people who have recently immigrated to Canada, consider buying a used car, which they will drive until they can afford to purchase a new one.
Step 3. Choose the source where you want to buy a car
When buying a vehicle, newcomers have two sources to do so: they could purchase a car from a dealership or a private seller. If you are looking to buy a brand new vehicle, then you can only do it from a dealership. It is possible to buy a used car from either a dealership or a private seller.
When you purchase a vehicle from a dealer, you will have to go through a lot of paperwork. It’s business, so they are doing everything possible to earn income from each sale. Very often, these fees are already included in the sticker price. You also have the opportunity to negotiate not only the final cost of the car but also terms of financing, protection plans, interest rates and other fees. We should also mention they have a wide variety of cars which can be better quality and stronger reliability.
With private sellers, the process is somewhat different. You can only buy a used car from them, and you will be dealing with the person selling the vehicle for however much cash they want to get. You won’t see any extra fees or special pricing. Usually, these people just want to get rid of the car in any possible want, so they are not concerned with the profit. You will have less paperwork but at the same time more risks. It’s important to properly inspect the vehicle, get the full car history (a lot of sellers don’t care about their reputation, so they can easily sell you a lemon).
Select the one who best suits your current needs. Note that if you buy a vehicle from the private seller, you will have to spend more time on preparing all the necessary documents as you need to do everything by yourself.
Step 4. Finance your vehicle
All immigrants who only recently arrived in Canada, have no credit history, so it is tough to secure a large loan for a car, as you fall into the category of risky borrowers. However, if you can secure credit cards, pay your bills on time and take smaller loans for a couple of months then you have a chance to build a good credit score to be approved for car financing.
If you don’t want to wait, then you can go for a car loan. It’s the most common way of how Canadians are financing their vehicles. For example, if you already have a car worth $20,000 on your shopping list, you can put $5,000 as a down payment (initial payment) and then take out a loan for the remaining $15,000. In this case, the lender will take a percentage of monthly interest until you pay it off. The average car loan in Canada is about 60 to 72 months.
Another option that you can choose is to lease. You don’t own the vehicle, but rent it from the dealership. Leases are shorter than loans, but after the end of the contract, you have to walk from it and look for another vehicle, unless you decide to purchase it outright, or through additional financing options.
Summing up, being an immigrant in a new country with the proper approach, you will be able to purchase a car within the first year. Depending on circumstances, this period may differ for many Canadians, but it will still take some time. We advise you to be ready before buying each car and thoroughly explore all possible options to finance cars, as well as with the selection of dealerships or private sellers from whom you will purchase a vehicle. With CarLoans411, you can get the car you want even with a bad credit and today sit behind the wheel of your new car.