HOW TO BUY A CAR IN SAULT STE. MARIE, ONTARIO, CANADA AS AN IMMIGRANT
If you are a new immigrant to Sault Ste. Marie, Ontario, or are planning to do so; you might be concerned about transportation. Having a car is incredibly convenient to help you or your family drive to work, school, to the store, or on longer trips. But if you are unfamiliar with how buying a car works in Canada, you won’t know what you have to do and how long everything will take to own a vehicle. That’s why we created this guide to help you through every step of the way.
Here at Great Lakes Honda, we want to make your experience purchasing a vehicle as easy and convenient as possible. Gordon Ivorra, our Financial Service Manager, will be happy to help with this process. To start, you will need to book an appointment with him by email or by phone and have these documents ready to bring with you:
1) A valid Ontario Driver’s License
2) Your work or student permit or visa
3) Your most recent paystub or letter of employment
4) If you are a student, your enrolment letter from the college or university that you are attending
We’ve included more details below on how the process works. If you have any questions or concerns, Gordon will be happy to help.
WHAT DOCUMENTS DO I NEED TO BUY A CAR?
First, you’ll need to know what important documents you need to own a car legally. There are three main things that you will need: an Ontario Driver’s License, a valid car insurance policy, and your vehicle registration (which the dealership will do on your behalf). In order to get ownership of a car, you need car insurance, and in order to get car insurance, you must have a valid Ontario driver’s license.
Driver’s License
Depending on your home country and how much driving experience you have, you might be able to exchange your license for an Ontario Driver’s License. If you can’t exchange it, you might be able to get credit for the experience you already have. To exchange your foreign license or get credit for the experience, you will need supporting documentation. You will need three pieces of acceptable identification, your Canadian Citizenship card, your foreign driver’s license, and an original and official abstract document or letter. The abstract must be written within the last 6 months and include the following:
- - Letterhead, logo, emblem, coat of arms, or symbol from the authority that issued your license
- - Your legal name and date of birth
- - The date you first got your license
- - Your driver’s license number, class, current status (active or expired) and expiry date
- - The date the abstract, letter or document was created
For the Driver’s Abstract, people immigrating from Japan can get their abstract from the Japanese Consulate, whereas people from the United Kingdom can get it from the Driver & Vehicle Licensing Agency (DLVA). If you want to see where to go for your home country, you can check Ontario’s DriveTest Centre guide here.
The Driver’s Abstract is not a necessary document to get a license, it is only if you want to claim more than one year of driving experience in order to obtain your full-G license immediately. You can still get credit for your license experience to skip part of the Ontario Graduated Driver’s License program and get a G2, for example.
Car Insurance
Before you can get Car Insurance in Ontario you have to have a Driver’s License. After that, you will need to provide only a few types of documents and information:
- - The driver’s license number for everyone in your household who would use the car
- - The make, model, mileage and registration number of the vehicle you want to insure
- - Certificate of any driver’s education or safe driving completed in the last 3 years (optional if you want a better insurance rate/pricing)
You can also submit your previous Canadian driving record (international driving experience is not taken into account). Canadians with previous insurance policies can also submit official letters from previous insurance companies to act as records of your good driving experience, but odds are as a new immigrant to Canada you will not have any such experience in the country to use.
Vehicle Registration
To finalize your legal ownership of any vehicle you buy, you have to register it with the government of Ontario. To register your vehicle, you will need the following:
- - Your driver’s license and the 15-digit registrant identification number (RIN) on it
- - Proof of a valid and current insurance policy
- - Certificate of sale and ownership title also known as the pink slip
- - License plate number
If you are buying a new vehicle from a dealership, they will usually file the vehicle registration for you. If you are buying a used vehicle from either a dealer or a private seller you will also need to include the Used Vehicle Information Package (UVIP) and Safety Standards Certificate.
Fun Fact! There are a number of Canadian and Ontario websites and services to help you settle in to living in the province, including help getting a driver’s license.
SHOULD I BUY A NEW OR USED CAR?
When you start thinking about what vehicle you want to buy, the biggest thing to consider is whether you want to buy a new vehicle or a pre-owned one.
| Category | New | Old |
| New Vehicles | Used Vehicles | |
| Price | New vehicles will be more expensive. | Used vehicles will be more affordable. |
| Payment | New vehicles can be leased, financed, or bought outright. | Used vehicles cant be a lease but can be financed. There are many banks and lenders to work with, if you have limited credit or are looking to build your credit, this may be your best option. |
| Warranty | Comes with new warranties as standard so you have coverage for defects and maintenance. | Only Certified Pre-owned vehicles come with a warranty, if you want additional peace of mind you can purchase an extended warranty from the dealer. |
| Condition | Brand new condition, any defects covered by warranty. | Used vehicles are one of kind, no two vehicles will be identical in terms of condition. Dealers recondition their vehicles to be ready for sale, some dealers provide conditioning reports but as a consumer, you should always look at the Carfax history report. |
| Features | Newest features, options, tech, and safety. | Technology is not as up to date as new vehicles. You are limited by the vehicle's model year. |
| Incentives | Can get deals from the manufacturer. | Vehicles are priced by the market and all incentives are from the dealer. |
HOW DOES LEASING OR FINANCING WORK?
When you buy a new vehicle, you have different ways of paying for it: you can take out a lease, you can finance it with a loan, or you can buy it outright on the spot with cash. That last option is straight forward, but how leases and loans work are more involved.
Credit
To get approved for either a lease or a loan, you need to have a good enough credit score. A credit score is essentially a rating on how trustworthy you are to banks and other money lenders as far as being able to pay them back if they loan you money.
For immigrants who just arrived in Canada, you will have no credit history and that makes it difficult to take out a large lease or loan on a vehicle. There are ways you can build your credit score as quickly as you can, but here are some of the basics:
- - Secure Credit Cards — they are a safe way to establish your first credit history as trustworthy
- - Bill Payments — always pay your regular bills (rent, energy, cell phone, etc.) on time and in full
- - Smaller Loans — take out smaller loans and regular credit cards and pay them off on time and in full
However, even if you do all the right things to build a good credit history it can still take more than a year before you will have a credit score good enough to be approved for car financing. If you cannot wait that long, you can save up a few thousand dollars to buy an old used car for cash to use until you can get approved for car financing.
Loans
Car loans are by far the most common way that all Canadians pay for a new car. Let’s say there’s a new car you want to buy that costs $20,000 but you only have $4,000 saved up: you put the $4,000 towards the purchase as a down payment and then take out a loan for the $16,000 left to pay. Here’s how paying off the loan works:
- - Length – longer loan terms mean lower monthly payments but more total interest paid
- - Interest Rate – the exact rate charged depends on your credit score and the length of the loan
- - Incentives – manufacturers sometimes offer special incentives for lower loan rates than usual
Loans average around 5 years in length, though you can pay it off sooner if you want to save from having to pay more in monthly interest. When you take out a loan to pay for a new car, you own the vehicle and can do what you want without any limitations or penalties.
Leases
Leases are usually shorter than loans, but by the end of the lease, you have the option of buying out the remainder of the portion left owing (called the residual value) or walk away from it. If you walk away, the car is returned to the dealership and you then have the option of either leasing or buying another one.
Your monthly lease payments are usually lower than they would be if you take out a loan to buy the same vehicle, which is a big benefit for leasing. This is because instead of paying for the full value of the vehicle you are only paying for how much value the car loses over the term of the lease. Here’s how it works:
- - You lease a new car that costs $20,000
- - At the end of a 3-year lease, the car is worth $12,000
- - Your monthly lease payments cover the $8,000 in value that the car lost over the 3 years
There are other factors into how much your lease payments are, such as interest, the length of the lease, and other terms you negotiate such as the annual kilometre limit.
Fun Fact! If you know someone who has a good credit score and trusts you enough, like a good friend or relative who has lived in Canada for longer, you can have them co-sign your credit application. It can be risky for both of you but as long as you both know what you’re getting into it can be a viable solution.
ARE THERE PROGRAMS TO HELP NEW CANADIANS BUY A CAR?
The good news is that Canadian banks and car manufacturers fully realize the issues that newly arrived Canadians face in buying a new car which can be important in helping them settle into their new lives and jobs. They usually apply either on the first car you buy or within three years of getting your citizenship.
Banks, such as the Royal Bank of Canada (RBC), Scotiabank and financial institutions like Honda Financial Services have programs to help new Canadians with no credit history still get approved for loans. The issue with these programs is the loans are more restrictive-the maximum loan allowed is lower, they require sometimes a down payment in cash, or they can have higher interest rates.
Almost every car manufacturer that sells new vehicles in Canada has some type of discount or incentive to new Canadians or first-time car buyers. You can either get a flat amount discounted off of the vehicle that’s usually between $500 and $1000, or they will have special financing programs like the banks to make it easier to get approved loans.
Get in touch with our team today for advice on buying a car or finding the right vehicle for you!
