The Ultimate Guide To Buying a Used Car in Ontario in 2024

So, you need to upgrade your car but fear the monstrous 25% first-year depreciation a new car endures, leaving you upside down on your car loan. Also, your new vehicle’s value dips another 17.5% in year two. Your best bet is to plan on buying a used car in Ontario and letting the original owner eat the depreciation.

Buying a used car in Ontario can skirt the bulk of the depreciation issues, but it’s not without its own difficulties and concerns. Below we outline how to buy a car in Ontario, what to look out for, and other tips. Continue reading to learn all about buying a used car in Ontario.

What You Need to Know About Buying a Used Car in Ontario in 2024

Like other provinces, Ontario has its own set of rules regarding purchasing a used vehicle. As a result, you'll want to familiarize yourself with these specific rules to limit personal and tax liability and protect yourself from curbsiders, scams, and other disreputable or dishonest sellers.

Tax Considerations

Buying a used car in Ontario comes with tax considerations when you're the buyer. These taxes are confusing if you've never purchased a vehicle before, so here's a quick breakdown to understand them (and prevent shock when seeing the car's final price).

To determine your tax rate, the Ministry of Finance uses the price you paid for the vehicle or the Red Book wholesale value of the vehicle, whichever is greater. The Red Book value also comes in the Used Vehicle Information Package, or UVIP, you receive from the seller. 

If you paid less for the vehicle than the Red Book value, the Red Book value still determines the taxes you pay. 

Once you buy the vehicle, you'll owe a 13% retail sales tax (RST) on the motor vehicle, regardless of whether you purchase from a private seller or a dealer.

​​​​Beware of Curbsiders

Curbsiders, or the Canadian term for an unlicensed car salesman, are problematic throughout Ontario and the rest of Canada. These individuals often misrepresent themselves as private sellers, while also failing to disclose mechanical problems with the vehicle or turning back the odometer. 

Because curbsiders can cost you thousands, always shop with a used car dealer licensed by the Ontario Motor Vehicle Industry Council (OMVIC). For private sellers, do your research, ask for a Carfax report, and always use caution.

Documents You Should Receive

When buying a used car in Ontario, you should receive many documents. Some of these documents are required by law, and others aren’t. However, regardless of their legality, having them will help with the purchase and give you peace of mind.

• UVIP: The Ministry of Transportation requires each private seller to include this document that outlines the wholesale value of the vehicle, vehicle registration history, vehicle identification number (VIN), and a bill of sale section. If buying from a dealer, you can order a UVIP from ServiceOntario if necessary.
• Safety Standards Certificate (SSC): Although not legally required from the seller when you buy the car, this document certifies the fitness of a vehicle. You must have this to register your car with ServiceOntario. You can obtain one at any Motor Vehicle Inspection Station verified by the Ministry of Transportation Ontario.
• CARFAX report: This isn't legally required, but having one offers peace of mind and detailed vehicle background.
• Bill of sale: The purchase or sale of any new or used vehicle requires a bill of sale in Ontario. There’s no formalized document, but you can find templates online. Regardless, the bill of sale must include the following information:

• Vehicle identification number (VIN)
• Make, year, and vehicle power source (gas, diesel, electric)
• Body type, colour and model
• Purchase price: When transferring a vehicle to a family member as a family gift, you must complete the Sworn Statement for a Family Gift of a Used Motor vehicle in the Province of Ontario.
• Seller’s name, address and signature
• Buyer’s name and address
• Sale date

When purchasing a vehicle with Clutch, every car comes safety certified, and you’ll receive a complimentary Carfax report to put your mind at ease.

Registering a Car in Ontario

If you've purchased the vehicle privately, you must complete the vehicle registration at ServiceOntario within six days. You'll need to bring the following to complete the process:

• An Ontario driver's licence
• The UVIP with all completed information
• Verification of purchase, such as a bill of sale
• Vehicle permit
• Plate portion of permit if you want to transfer a licence plate
• Safety Standards Certificate, or SSC, which certifies the fitness of the vehicle
• Money for taxes

With Clutch, we’ll register the car before delivering it to you, so you can say goodbye to standing in line at Service Ontario.

Note: As of 2018, Ontario no longer requires emissions tests for light passenger cars.

Car Insurance

When you buy a used car, you should also consider the cost of car insurance and what type of insurance you require. Not only will this help you determine a monthly budget, but it will also help you insure your vehicle to the proper amount that makes you comfortable and won’t leave you paying big bucks out of pocket.

The Ministry of Transport of Ontario requires insurance providers to all support the same level of baseline insurance. 

In some cases, you may want or need more coverage. These policies include:

• Comprehensive
• Collision
• Specified Perils (water, fire, acts of God, etc.)
• Replacement Value
• Gap Insurance (insures the amount between the value of the vehicle and the amount owed on the car loan)

Again, the amount of insurance you need is often your choice. Just ensure you have enough to fit your budget and what you’re willing to pay out of pocket.

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How To Buy a Used Car to Fit Your Needs

Buying a car isn't a one-size-fits-all situation. Whether you're searching for a commuter vehicle to take from Pickering to the Financial District in Toronto or a sporty ride to impress your peers, you need to choose a used car to fit your specific wants and needs. 

You'll have to weigh the pros and cons of each feature, as well as prioritize them to make the best decision for your lifestyle. Here are the main points when buying a used car in Ontario.

Fuel Economy: Commuting on the 401 or Driving Downtown

Fuel economy is one of the most vital components of your used vehicle purchase. It dictates how much you'll pay at the pump and how far you can go on a single tank. 

A lower L/100km is ideal for families and commuters, but if you're not worried about the extra expense compared to more efficient vehicles, the choice is yours. Remember that SUVs, trucks tend to have higher fuel consumption rates than passenger vehicles. Also, all-wheel drive (AWD) and four-wheel drive (4WD) vehicles will often have lower fuel economy than equivalent two-wheel drive cars.

Cargo Capacity

Cargo capacity equals practicality. If you're the Carpool King or Queen of your local school, the errand runner, or you work at a job site, a larger cargo capacity is ideal. A two-seater Nissan 370Z or sports car with only a trunk might get the job done if you're single.

Engine Size

Do you have the insatiable need for speed? If so, a V-6 or V-8 with a turbocharger might be right up your alley. However, this goes hand-in-hand with fuel economy. You might take the hit on power to go further on each tank or strike a balance somewhere in between. Just compare power numbers (acceleration and top speed) and fuel economy.

Safety Ratings

Advanced safety features, such as automatic emergency braking and lane keep assist among others, have become the norm on most new cars in the past five years. However, older cars may lack many of these safety components.

Before you buy a car, consider the safety features. Also, check out the safety ratings issued by the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS).

Mileage

Those six numbers on the odometer are integral to pricing a vehicle and retail value. However, determining the number of acceptable kilometres is tricky on some vehicles. Do your due diligence and research the longevity of the vehicle you’re interested in. Also consider its maintenance and repair records, as a vehicle with timely maintenance and all repairs completed may last longer.

In addition, you should also check for rollbacks. A rollback is when a seller or other party lowers the number of kilometres on an odometer to fetch a larger price — an illegal practice that’s still done. To check for a rollback, compare the odometer in the vehicle with the numbers presented on a Carfax report, lien status, or other documents.

Also, your budget will play a large role in what mileage you choose. Low-mileage vehicles are often more expensive since there’s technically less wear and tear. However, other factors must be considered, including how well-maintained the vehicle is. 

Overall, 20,000 km per year is considered average. So, about 100,000 km would be a reasonable mileage if you're looking at a five-year-old vehicle.

Interior Specs and the Little Extras

A base model isn't necessarily a bad choice for a used car. It's bare bones, but if you're a proponent of practicality, it's quite possibly an excellent option. 

However, if you love blasting Justin Bieber or Rush over a Bose sound system or an onboard GPS to keep you from getting lost on your road trip to Quebec, the little extras count. Make sure to review these features to improve your satisfaction or avoid the added cost of aftermarket parts and installation fees.

Personal Style

While the aspects mentioned above are important when buying a used car, don't let that trump your style. You won't be happy purchasing the used vehicle if it doesn't meet your eye test or driving style. That's why you'll have to weigh personal style against practicality. If you're on the fence, try a test drive or read reviews to guide you to the right choice.

The Used Car Buying Checklist

If you're unsure of where to start or it's your first time buying a used car in Ontario, here are some factors to consider.

• Private Sellers vs. Car Dealerships: Although you can usually get a better price from a private sale, used vehicle dealers usually offer added protection through a guarantee or warranty.
• Research: Shop around to find the best vehicle and the lowest price, and check Consumer Reports and reviews of the vehicle. 
• Extra budgeting: Make sure to factor in more than just the purchase price into your budget. Include a Carfax report (although this is sometimes free from the seller), sales tax and HST, registration, maintenance costs, and other fees.
• Trade-in values: Find the range of values for your trade-in by using car valuation guides such as Kelley Blue Book.
• Car insurance: Decide whether you want basic liability insurance, comprehensive insurance, or collision insurance.
• Inspections: Clutch has a 210-point inspection to put your mind at ease. But if you buy from another dealership or salesperson, get a full check of the interior and the exterior by a licensed mechanic.‍
• Ask the right questions not mentioned on the Carfax report: Why are you selling the car? Have you had any problems in the past? Who drove it regularly and where? (Teen drivers tend to be a bit more rough than Granny.)

The Perks of Buying a Car With Clutch

Buying a used car in Ontario can feel like a daunting experience, but it doesn’t have to be. Knowing specific rules regarding purchasing a used car and what to look for when shopping helps you streamline the process. Plus, you can use Clutch, which provides many advantages over traditional car buying, including:

• Sell My Car tool
• No-haggle pricing
• Vehicle history report
• Optional 10-day money-back guarantee
• Optional 3-month, 6,000-km warranty

With all of these bonuses, Clutch takes the guesswork out of the car buying process and allows car buyers to choose the perfect car. Plus, you’ll enjoy tons of choices to fit all tastes, budgets, and needs. As a result, you won’t have to worry about the fine print and other hassles commonly associated with used car dealerships. And chances are, that’s something you can get behind.