Buying first car in Canada is a very important decision. And therefore nobody would like to take a chance, neither should you.
Whether you are an immigrant in Canada who has recently arrived and started the journey of a new comer, or a graduate who just completed studies and started an internship or first job, you would not like to spend your money in buying first car in Canada, without taking the following factors into consideration.
Your few minutes to read this carefully can save your pocket and end you up in a much more comfortable situation, compared to go-with-the-flow style of buying a car.
What is more important at this stage? Brand or Money?
Ask yourself this question and keep the following things at the back of your mind:
- Number of passengers you want to travel with. Immediate family, near and dear ones.
- Number of Kilometers of daily, weekly, monthly and yearly commute.
- The segment – hatchback, sedan or SUV. Canadian weather (especially winter) is different than others. SUV gives you confidence of safe driving during harsh and challenging conditions. SUVs can be of multiple types, entry level SUVs, mid sized SUVs and the big SUVs.
- Your current Bank Balance.
- Your income, if you have a job, or expected income in case of soon to be employed.
- Your priorities. You might first want to get a better accommodation, better laptop, better insurance, and several other things which is going to support you in initial few months and years.
- Insurance can be much more higher than your expectation, and the whole calculation may go upside down. You are new, with less driving experience in Canada, which might shoot up your insurance premium for initial period. Some times it may be costlier than car itself. Have the numbers ready, and the numbers should be exact.
- Everyone has a budget, which is mostly, a little lower than what it costs to buy their dream car.
- Good brands may attract your attention, can be recommended by friends and family, but you may be charged a premium price on that Brand, which is a dead investment for few years until you get it back while selling your car. Brand indeed is a good thing, but is it important at this time? or you can think of any other brand which is within your budget and has:
- the same engine capacity
- same number of seats
- same features
- same fuel efficiency
- same finance rate
- but lower price
- ‘Penny saved’ is ‘penny earned’. If you save, say $3000 in total price, it is as good as earning $3450, because when you earn $3450, after deducting 15% tax (considering a lower slab) you get $3000 in your bank account, and earning an extra penny is much more difficult than spending an extra dollar (you know it better than me)
The secret of Automobile Industry
The secret of Automobile Industry is that there is no secret!
Automobile Industry is highly matured industry, because every manufacturer has proved their expertise with the passage of time and with the super tight competition since more than 100 years, manufacturers only with proven abilities has survived this course of tough time.
All manufacturers have good technology, nice features, beautiful showrooms, excellent websites, strong sales team, technically sound service team, a wide range of vehicle segments, and decades of experience.
As a matter of quick interesting fact, several automobile spares and parts are manufactured by same manufacturer for multiple Brands, which proves that car industry is driven more by its marketing strategy and less by technology.
This also means that, the only factor influencing the decision of buying first car in Canada is PRICE
Price you pay can be of two types:
- One time – purchase price – major portion – severe impact
- Recurring – maintenance – minor portion – lower impact
How much to spend on buying first car in Canada?
According to me, you should use a part of your fund for car, which is 75% of the total budget of car. The rest 25% can be used in case of emergency or miscellaneous, unavoidable and unexpected expenses related to car. This will help you to stay cool, calm & comfortable even in the state of emergency and unforeseen situations, and avoid getting financially stressed, when you are already stressed with the situation. If with the Grace of God, you don’t face any such incidence, you then have those 25% to upgrade your next dream car 🙂 sounds good?
First car in Canada, an Investment or Liability?
Having a car, means having a bunch of liabilities. There is no alternative, but there is always a better and cost effective way.
I would not like to scare you or deviate you from buying your first car in Canada, but help you make the right calculations. Facts are facts, good or bad, hiding them will not change them.
– Malay Sherasia
Expenses which start only after you buy your first car:
- Insurance
- Licence Plate Renewal
- Periodic Service or Preventive Service or Maintenance like Oils & filters, coolant and other fluids, etc.
- Unexpected or Breakdown Service or Accident job, because of your or others’ mistake.
- Wear and Tear with usage like Tyre, Seat cover, Paint, etc.
- Fuel (long drive lovers, be careful on this)
- Toll (those who indulge in riding on 407)
- Parking, at office and at residence (if rent does not include)
- Depreciation (3 years of usage can bring down the car value up to 50%)
- Interest you pay on Finance/Lease
- Taxes you pay from buying to parking to servicing
- If you are a little bit of careless, then Tickets can be a big cost too
Where to buy your First Car in Canada?
By now, you must be clear about several things, which are necessary to decide where to buy your first car in Canada.
Malay Sherasia (YourCarMate), is a OMVIC certified Sales & Leasing Consultant for the Canada’s No.1 Volume Ford Retailer located on Yonge Street at Steeles Avenue. Being an immigrant, Malay knows what is Best for an immigrant. Therefore he is successful in building relations with several first time car buyers, by understanding, analyzing and offering the Best Deal to suite the financial conditions of each and every buyer, be it first time or an experienced one.
Before buying your first car, if you would like to have a short discussion with Malay, you can reach him on MalaySherasia(at)gmail.com
Wishing you “All the Best” for your first car buying experience in Canada! Remember one thing, it is an important milestone in your life. Make it memorable with some great photographs, with your First Car in Canada.
Do not hesitate to reach Malay for any type of query related to Car!
If you want to make your career in Automobile Sales in Canada, read this article!
Thank you Malay,
I have my PR and will arrive on 21 march at Regina, we are gujarati family having 3 family members. According to you what I should do buy a new one or second hand, my preference is mid size SUV or premium hatchback.
Kindly revert.
Hello Ghanshyamsinh Jadeja, first of all, Congratulations on getting the PR for Canada! It is a big milestone towards the future of you and your family. Being an immigrant, I know what it means to get a PR for Canada.
Welcome to Canada!
I am glad that you read my article and came up with a relevant question, which might help others too.
1. You are expected to arrive in the month of March 2019, which means from now you have around 5 months to go. In Canada, like anywhere else, there are multiple deals and offers going on for automobile sector. Each manufacturer has their own strategy to boost their sales. But some of them are really good, because anyhow its not about whether to buy or not to buy, you are going to buy for sure, but if you buy the same car at the perfect time, you might save some money, as well as get some limited offers, like FREE winter tires or FREE oil change. Those things can be taken into consideration only when you are few weeks away from buying. So I will not discuss more on that, at this point of time.
2. During March, there will still be snow, although lesser compared from December to February. If you do not have an experience (like most Indians) driving in snow, it can be a big factor to be considered. I personally get more confidence in driving a SUV compared to sedan or hatchback, because of its built style, it has more ground clearance, so even in extreme conditions, SUV can be handled better (especially if its 4×4, but not mandatory). In one line, I would recommend entry level SUV.
3. Another major factor is the driving licence. Before you get behind the wheel, you need to have the driving licence. For Ontario, G licence is the final and top most level for cars and small trucks. I have another article which covers some details about it here: http://canadadekho.com/how-to-get-g-driving-licence-from-g1-in-ontario/
4. After landing, first thing you will need to find is the job, school, accommodation and other amenities like grocery store, park, community center. Depending on the distance which you need to commute on daily basis, you can decide to either lease or buy a car. Buying includes finance and cash both. Leasing is something which we did not experienced in India. Consider it as a long term rental car, where you only pay for the usage and then give it back. Lease has LIMITED kilometer usage limit for the duration you lease. Then it is charged extra. Make sure you keep some buffer while calculating commute.
5. Used or New? I would suggest a used one. Used cannot be leased. To buy a decent used pre-owned entry level SUV, you need to have a budget of C$15,000. In Toronto and GTA, you can get a finance for used car at somewhere 4.99% to 6% Interest Rate, but that purely depends on your credit as well as Bank/Dealer. I cannot give you exact number as I am not sure about Regina. But when going for a used car, always go for a dealer or renowned used car seller. Unless it is your near and dear one, you should not buy your first used car from an individual. Try to get a CPO – Certified Pre Owned, which gives you the manufacturer warranty, it might cost you few dollars extra to get the certificate, but you are buying the peace for your mind. Avoid cars who have clocked more than 90,000 kilometers. As most of the major maintenance starts around 100,000 to 120,000 kilometers. You will not like to put your car back for a major service immediately after few weeks of buying it. You will have other important task during first few months, where you will need the car for you and your family.
I would like to give an example of what it costs to own an entry level SUV so that you can get an idea. Do not consider this a official numbers. Its just an example.
An entry level SUV like 2016 Ford Escape with SE variant, which is one step above the basic, can cost approximately $15000 + 13% tax for less kilometers usage. If you make $2000 down payment, you will need to pay around $140/bi-weekly for 60 months @ 5.0% interest rate. Add around $300 per month for insurance cost. Maintenance can cost you around $25 per month if you consider average, however you do not need to pay every month. A daily commute of 55 kilometers, for 30 days a month, gives 1650 kms per month. Ford Escape runs average 10kms per liter of gas which is priced currently at $1.25 in GTA. So your monthly gas consumption will be around $200.
So to own an entry level SUV, maintain, and use it on daily basis can cost you as follows:
Used Car: $305
Insurance: $300
Maintenance: $25
Fuel: $200
——————
Total: $830 per month
If you buy a brand new ESCAPE SE, at 0% interest for 60 months (if offered from manufacturer/dealer) it can cost approx. $520 per month with $2000 down payment.
(The calculation is for reference only and does not represent the actual numbers)
I hope this helps to understand the overall car buying scenario. If you still have any query, do not hesitate to ask me.
Wish you all the Best for your first car buying experience!
Very very good article, Malay. Certainly contains lot of unique original ideas (and not those copied / common ones from the internet).
Kudos to you for that.
One suggestion – consider using an original photo of yourself. Let people know who Malay is 🙂
Hello Dhiren, I am thankful to you for the appreciation, support and suggestion. I will surely do the needful and make the necessary changes 🙂
Excellent article with good references to the actuals. Will defenetely help new immigrants to make a decision based on their circumstances.
Hello Sumin, thank you so much sparing time to read it. I feel happy when my efforts become helpful to anyone, anywhere. That is the biggest return I can expect from all the readers.
Wishing you a great time ahead…
Cheers!
Excellent article Malay, with appropriate minute details… This is ready to consider tool for new immigrants for sure.
Regards,
Prasann
Looks a great article with near to precise information.
Thank you Karthik.
Do let me know your views about buying first car in Canada!
Really liked the section that shows that details of some of the additional costs to consider with a car ownership. Is there a calculator available that can help a new buyer put together a budget for these costs? Would be a big help in getting the numbers nailed down.
Thank you Jay for reading the article and sharing your views.
Because of the variety and type of factors affecting the cost of owning a car in Canada, it is not easy to create a tool, which is intelligent and smart enough to give the approximate budget or cost analysis.
If anyone creates a tool like that, it will need to have a lot of dynamic formulas to adjust the numbers which can be near to actual ones. Which means the development cost would be high and return on investment may not be good enough.
If any platform like Autotrader, Unhaggle or CarGurus thinks of developing such tool, then it can be possible and financially feasible.
I will keep an eye and let everyone know, the moment I come across such tool. Stay tuned and do not forget to login and click on checkbox which asks you to send you a notification whenever there is something new on my blog!
Wish you a great time ahead and do share your knowledge about this, to help others.
Hey Malay! 🙂
Thank you for this great article.
Next year in March I will come to Canada as an international co-op student. (Still waiting for the IEC pools to open). I will stay in Canada for only 6 month. For my work I will necessarily have to buy a car. I am from Germany, 21 years old and have no driving experience in Canada. Now I’m really worried about the insurance costs that will be high. I will need a car that fits a total of four people. What do you think is the best option for me, considering I am 21 years old, a German immigrant and will only need the car for 5-6 month? Should I buy a cheap car where I have the risk of a lot of maintenance costs? Should I rent one (even more expensive?)? Please help me! I am totally stuck in this situation.
Thank you
Hello Katharina, first of all welcome to Canada!
Making it short and quick, if you are coming for only 6 months, I would suggest you to use a rented car.
It would be costly compared to an owned car, if you calculated per kilometer cost, but if you buy a car and sell it within such a short span of time, you might have to shred more money.
Another concern is that, you may not be able to find a buyer easily for a used car, at a good price. Most of the times, when you want to exit within deadline, you have to compromise on price.
Buying or Leasing a new car would not be a suitable option, for such a short period.
Therefore, according to me, the best option is to rent a car.
Let me know if you need any other information or help.
All the Best for the Canadian Journey!
Hi Malay… Thanks for the article and more so for the effort you take to reply to queries.
On your response above, I’m in a similar boat, so what are the recommended places to check for car rentals in Windsor? Any tips to ensure best rental car value? How does it compare to public transport costs?
Thank you, Raghu
Thank you very much for the insight. I wish i would have received this advice earlier.
Nevertheless i went for 2014 toyota camry for 19k 86k driven in august. My total cost is 807 CAD. Incl of fuel.
Thank you Ankur Sharma, for taking time to read and share your views.
Congratulations for your Camry, it is a great car. You will enjoy it.
The spending range of $800 to $1000 is the most common one!
Wish you a great time ahead!
Keep sharing your experience of driving Toyota Camry, which will help everyone here…
Dear Malay,
This was a very informative and well documented post. Thank you for it.
Was looking for a advise from you on car finance transfer. We recently bought a CPO Used Mazda 3 in Mississauga which for which the down payment was CDN 10,000 but the best car finance rate we cud negotiate from the dealer was 5.99%. Due to time constraint we couldn’t shop around for better car finance rate. Please advise, if we can do a balance transfer of the remaining outstanding to any other lender at a better rate. There are no pre-payment charges from current lender.
Looking forward to ur advise.
Best
Dev
Hello Dev, first of all, Congratulations for your new Mazda!
I know its a pre-owned, but a car is new when we first buy it. So for you, its new!
Coming to the point, the interest rate you got is not at all unusual or exorbitantly high. As much as I know, for used vehicles the range of interest rate is 4.99% to 6.99% depending on various factors. The best place to get lowest interest rate is the dealership, from where you are buying your vehicle. For the same bank which the dealership provide, if you request a quote directly, the chances are to get higher interest rates. The finance managers at dealership are working in favor of customer, to help them get the best rate for longest possible term from all possible financial institutions, mostly banks. When the buyer is an immigrant, without long and impressive credit history, the interest rates are bound to go up.
If you buy a new car, the manufacturer can provide you an option to finance at interest rates as low as 0%. But that is dependent on the available deals at the time of buying. There is no fixed rule of thumb.
For the sake of knowledge and making it sure, you can ask the bank you are banking with, to provide a quote for a used car loan. That way you may discover something useful, which you can also share it here to help others.
Overall the rate you got is fair.
Wish you a great time ahead. Let me know if I can help you in any ways.
This is the kind of advice that someone would give to their brother!. Original ideas and an interesting read. Will surely reccomend his help if you’re buying a new vehicle here in Canada.
Thanks Malay for such a great article.
Can you please make a YouTube video to guide on “How to be a salesperson and a car dealer in Ontario?”. From the basic steps to the up with all examinations, fees and requirements.
Thank you.
,ભાઈ હું છેલ્લા 16 વર્ષ થઈ automobile industry સાથે સંકળાયેલ છું, as a mechanic ( technician), ane અને મારે કેનેડા sattle થવા શુ કરવું પડે, એ વિશે થોડીક માહિતી આપજો.
hi , harsh panchal here.i am a bechlor student in automobile engineering.and i am completing my bechlors in may 2020. and then after i am thinking about pursuing my career in same field in canada.as you are senior in our field i request you to spare some time and guide me through some cofusions like courses best for our automobile industry.which certifications and which career path is suitable for automobile engineering in canada and procedure to become motor surveyor in future fingers crossed ! hope for your grateful guidance…….n by d way i am from nadiad (48 kms from aapnu amdavad).
I have tourist visa of ceneda.12 pass .I want convert work permit ya student visa .how it is possible. I from Gujarat.Bharuch city. Please guide me .