How to Buy Your First Car

Buying a car can be an intimidating experience for anyone, especially first-time car buyers. Buying a car may be your biggest purchase yet so it’s important you’ve done your research and are going into the process with adequate knowledge and understanding. In this article, we’re going to help you navigate through the car buying process and help let you come up with answers to some of the decisions you’ll face. By the end of reading this article, we expect that your stress levels about buying a car will be much lower.

1. Choose the Type of Car You Need

The first part of the car buying process whether this is your first car or fifth is deciding what type of vehicle best suits your lifestyle. If you’re married with three kids and two golden retrievers, you probably shouldn’t buy a two-door civic. If this is your situation, you probably want a van or large SUV. Since you have three kids, you’re probably going to want a vehicle with high safety ratings. Lastly, maybe you’re concerned about the environment or want to have a fuel-efficient car. If this is the case, you should consider buying a hybrid or part electric car.

‍2. Lease, Loan or Cash

Once you know what type of car you need, it’s time to decide how you intend to pay for that car. If this is your first car, chances are you’re going to be very concerned with buying a car at an affordable price. There are three ways to get a car: you can lease it, get a loan for it or pay cash for the car in full. 

Leasing is usually not as practical for a first-time car buyer because a lease doesn’t result in ownership. A lease is basically a long-term rental agreement with mileage limits. Leasing is great if you want a newer car with all the fancy bells and whistles, but in terms of its price and practicality, it doesn’t make as much sense as financing or buying with cash. 

Getting a car loan is usually the best way for first-time car buyers to get a car because it allows them to pay for the car in increments over a set period of time. You’ll have to pay interest on the loan that is based on your credit score throughout your loan term. Getting car financing is a great way to improve your credit score if you can consistently make your payments on time and in full. A car loan also means that at the end of the loan you will own the car and can either sell it to buy a new vehicle or drive it into the ground. 

The last option to buy a car is by paying for it in full with cash. While this is not an option for most Canadian’s, if you can afford to pay for a car outright, it’s the most affordable way. 

‍3. Decide on a New or Used Car

Now that you know the type of car you need and how you want to pay for it, you need to decide whether a new or used car makes more sense. Check out our tables below outlining the pros and cons of both buying a new car and a used car. 

4. How to Buy a New or Used Car

Hopefully, the charts in step #3 helped you decide whether buying new or used makes more sense for you. But now you need to know the options you have and how to go about buying new or used.

How to Buy a New Car

Buying a new car is fairly straightforward as you don’t have a ton of options in where to do it. There’s only one place you can buy new cars in Canada and that’s at a car dealership. If you decide to buy new you should first decide on a few specific vehicles you have an interest in buying and then go to the dealership that specializes in that car manufacturer. You should check the reviews on your local dealerships and see if any standout, don’t be afraid to visit multiple dealerships! The more knowledge you have about the vehicle, the more confidence you’ll have at the dealership.

Once you’ve decided on the new vehicle you want to buy from the dealership, now you need to decide how to pay for it. Let’s assume you’re going to apply for financing. The first thing you need to consider is how much of a down payment you want to make on the car. The down payment will likely decrease the interest rate on the car loan as your asking for a smaller amount of money from the lender. A down payment will also decrease your monthly payments as you’d have already paid off some of the loan upfront. The second thing you may want to consider is finding a co-signer. A co-signer is a close friend or family member who will sign off on the loan and accepts liability on your behalf if you fail to make your payments.

How to Buy a Used Car

If you’ve decided that buying a used car makes more sense for you, you have two main options. The first option is to buy privately off of a website like Kijiji or Facebook marketplace. While this could be a great way to get a better deal on a used car, it comes with plenty of risks. You may run into a shady seller who may be hiding the car’s true condition or history. While you should absolutely bring a mechanic to do an inspection of the car before you buy privately, the second option to buying a car is much less risky. 

The second option to buying a used car is going to a dealership. This is a much lower-risk way of buying because you know the dealership has thoroughly inspected the vehicle to ensure there are no hidden problems. Also, if anything shady was to happen, the dealership’s reputation would be on the line and it would be in their best interest to remedy the situation.

5. Gather All The Necessary Paperwork

Whether you’re buying a new car or a used car, the paperwork that you’ll need is pretty much identical. These are the three must-haves:

Drivers license: If you want to drive legally in Canada, you’ll need a license for whatever province you reside in. Make sure you have a valid driver’s license before buying your first car.

Valid insurance: Having auto insurance is critical, it protects you, your vehicle and any damage you do to other people or their property. While there are different levels of insurance coverage you can choose from, each province has its own rules on what the minimum requirements are for insuring your vehicle. You can get insurance through the dealership you bought the car from or you can wait and shop around to find the best possible premium.

Vehicle registration: A vehicle’s registration certificate shows that the vehicle your driving is allowed to drive on Canadian roads and belongs to you. 

Looking to Buy Your First Car?

If you’re ready to make the leap and buy your first car, you’re in the right place! Car Loans Canada has helped thousands of Canadians get approved for financing on their first car. Fill out our short application and get approved for a car loan in minutes!