After all the time spent researching cars you’d like to buy, you finally found the one. Mileage is low, the colour is right, and it has all of the perks you could dream of. But, there’s one problem: the car is in another province.
While not an ideal situation, it’s still possible to purchase a car in another province, but it will take more time and money to complete the purchase. Read on to find out more about how purchasing a car in another province works.
Key Points
- You can buy a car from any province in Canada, which may save you money if you can find a vehicle for a better price than what’s available locally.
- You may even consider buying a car from a province with a lower sales tax rate as a way to save money.
- You’ll need to factor in transportation costs to have your car brought to your home province to make sure it’s worth buying from another province.
- Consider having the vehicle inspected by a local mechanic before committing to the purchase.
- Out-of-province cars can be financed with dealership in-house financing, bank car loans, and personal loans.
Can You Buy A Car In Another Province?
Yes, it is possible to buy a car in another province; however, the process is slightly more complex and time-consuming. Furthermore, the cost of the purchase can end up being more expensive than buying a car in your home province. This is because the car will need to be transported and transferred to you, whereas a car bought in your home province can simply be driven off the lot.
Steps To Take When Buying A Car Out Of Province
So long as you’re okay with the complexity of the process and the additional costs, you can begin your out-of-province car purchase. The process generally requires the following steps:
Step 1: Find The Right Car
The Internet is full of sites with plenty of vehicles available for sale all across Canada. Peruse all your options and choose the vehicle that matches your wants and needs, especially your budget.
Step 2: Get A Vehicle History Report
One of the most important steps, regardless of whether you’re buying out-of-province or not, is to get a detailed report on the vehicle’s history. These reports, such as a CARFAX report, include details such as the following:
- Previous accidents
- Repair costs
- Ownership history
- Registration
- Odometer rollback
Step 3: Negotiate The Price
If you’re inclined, consider negotiating with the seller to see if you can get the price a little lower than what they’re asking for. But before you do this, make sure you do some research on the value of the make, model, and year of the vehicle in question.
You can get an accurate estimate of car values using online resources Canadian Black Book. This will ensure that you don’t overpay for the vehicle and help you determine whether the price is fair or not.
Step 4: Make Sure There Are No Liens On Title
If you’re buying from a private seller who is still financing the vehicle, make sure the title is free of any liens before you agree to carry out the transaction and send funds. Ask the seller to provide the necessary documents to show that any lien has been cleared.
Step 5: Agree On The Payment Method
Once you come to an agreement with the seller on the price of the vehicle, determine the payment method. Options may include cash, e-transfer, or financing. Payment method may depend on the seller.
For instance, if you’re buying from a private seller, a secure method that has a paper trail to avoid getting scammed should be considered. A certified cheque or bank transfer may be best in this case.
If you’re buying from a dealership in another province, you may have additional options, including in-house financing for a car loan from your bank or lender. Either way, make sure you get a receipt for the transaction.
Step 6: Order A Pre-Purchase Vehicle Inspection
Assuming you’re unable to visit the vehicle in person to inspect it yourself, consider hiring a trustworthy mechanic close to where the vehicle currently is to have it professionally inspected on your behalf. Many mechanics offer mobile inspections, in which a mechanic will visit the vehicle in its location and inspect it. This can save you the headache of making a bad purchase.
Step 7: Get Financing
If you plan to finance the vehicle, start shopping around for a loan. You can get financing from banks, credit unions, and online or alternative lenders. You can quickly find lenders and compare their loan offers by using an online loan comparison site like Loans Canada’s CompareHub.
Step 8: Insure The Vehicle
Insurance is mandatory for motor vehicles in Canada. And if you’re financing the car, the lender will likely require proof of insurance. So, be sure to take out an insurance policy on your vehicle even before you take possession.
Learn more: How To Buy Car Insurance
Step 9: Arrange For Transportation
After you’ve taken care of the payment, it’s time to have your vehicle shipped to you. There are multiple options available, including the following:
- Rail Transport: A secure way to have your car transported across provinces is by rail. This is a particularly good option if the car will be moved a very long distance. That said, this option is not available in all locations, so you’ll need to inquire about its availability before you choose it.
- Open Transport: If you’re looking for something more economical, then open transport may be worth considering. Open transport involves placing your vehicle on a multi-car carrier, similar to what is used to transport new vehicles.
- Enclosed Transport: If you have a little more money to spend, enclosed transport is available. This method of transport keeps your vehicle fully protected from the elements and is ideal for luxury or vintage cars.
Step 10: Register The Vehicle
You’ll need to register your vehicle in your home province with the provincial motor vehicle office. To register your car, you’ll need to provide the following documents:
- Bill of sale
- Proof of identity (ie. driver’s license or passport)
- Proof of address (ie. utility bill or lease agreement)
- Proof of insurance
- Odometer disclosure statement
You’ll then get your registration and new license plates.
What Kind Of Financing Can I Get To Buy A Car Out Of Province?
There are a few ways to finance the purchase of an out-of-province vehicle purchase:
In-House Financing
If you’re buying a car from a dealership, consider exploring their in-house financing offers. Dealerships often provide direct auto lending to car buyers, usually through an external lender. Applying for in-house financing makes the process more convenient, as you can complete the car shopping and financing steps in one spot.
Dealerships also sometimes offer financing deals, including 0% financing, though this is typically reserved for good credit borrowers. In contrast, in-house financing may also be available for bad credit borrowers, as their loan criteria may not be as strict compared to banks.
Learn more: In-House Car Financing, Is It Right For You?
Car Loan
The conventional way to finance a vehicle purchase is with an auto loan. With this type of loan, your lender will lend you a lump sum of money to pay for the car, then you repay that amount — plus interest — over a set term via installment payments. This is a secured type of loan, which means the car collateralizes the loan.
You can get car loans from banks, credit unions, and alternative lenders. Banks tend to offer the lowest interest rates, though you’ll need to have a good credit score to qualify. If you don’t, you may want to consider applying with an alternative lender to increase your chances of loan approval. Just keep in mind that alternative lenders charge higher interest rates given the higher risk.
Personal Loan
A personal loan is a type of loan provided by banks, credit unions, and alternative lenders. Similar to a car loan, you’ll be given a lump sum of money that is repaid over time through regular installments. However, the difference is that with a personal loan, the money can be used for a variety of purposes, including paying for a car.
If the personal loan is unsecured, it will typically come with higher interest rates and lower loan amounts compared to secured loans. Be sure to review the loan terms and conditions before committing.
Costs Associated With Buying A Car Out Of Province
When you purchase a car out of province, there are some additional costs to consider outside of normal car ownership, including the following:
- Transportation Of The Vehicle: You’ll need to arrange to have the vehicle moved from the province you buy it from to your residence. Alternatively, you may consider driving it home yourself. Either way, transporting the car to your home will be an added cost to consider. You could be spending anywhere from $1,800 to $6,000 or more, depending on the distance between the two points, vehicle size, and mode of transport.
- Licensing: There may be fees for transferring the car’s registration and getting a new license plate in your home province.
- Transfer Of Registration And Title: This fee is not exclusive to buying a car from another province, but is a fee to consider nonetheless. The exact cost depends on your home province.
Understanding Provincial Sales Tax On Vehicle Purchases
Much like other types of consumer goods, you’ll need to pay sales tax on a vehicle purchase. However, the amount of tax you pay depends on the province you buy from. Each province has its own tax rate.
New Cars
When you purchase a new car, you’ll have to pay the federal 5% GST and a provincial sales tax (PST), depending on the province you live in. For example, if you buy a new car in Ontario, you’ll pay a goods and services (GST) of 5% and a PST of 8% (13% harmonized sales tax, or HST).
Further, whether you buy new or used can also impact how much you pay. More specifically, where you buy the car from (ie. a dealership or a private seller) affects the tax rate you pay.
Used Cars: Dealerships
When you buy a car from a dealership, you’ll have to pay both GST and PST (except in Alberta, where only the GST applies).
Used Cars: Private Sales
If you buy a used car from a private seller, you won’t be subject to GST. Instead, you’ll just pay the PST in the respective province. Given this, you’ll pay less tax when you buy a vehicle from a private seller versus a dealership.
Regardless of where you buy your used car from, the total tax rate will depend on the province you buy in. The lowest sales tax rate is in Alberta, where only the 5% GST rate applies. However, if you buy from a private seller, no sales tax applies in Alberta at all.
On the other end of the spectrum is BC and Quebec, which have the highest sales tax rates of 12% – 25% and 14.975%, respectively, for dealership-purchased vehicles. And for private sales, the rates are 7% – 20% and 14.975% per province.
Learn more: Car Sales Tax On New And Used Vehicles In Canada
Pros And Cons Of Buying A Car Out Of Province
As with all financial decisions, there are corresponding benefits and drawbacks to consider. Before you make your final decision on purchasing a vehicle out of province, consider the list of pros and cons below.
Pros
There are a couple of reasons why you may want to shop out-of-province for your next car:
- Good Deal: Perhaps the biggest reason to shop for a car in another province is because of a great deal you’ve found. Depending on how much lower the car’s price is compared to similar vehicles locally, it may be worth it to go a few extra steps to buy out-of-province.
- Potentially Lower Sales Tax: Sales taxes differ from province to province. If you’re purchasing a car in a province with lower sales taxes than your home province, there is an opportunity to save on that portion of the purchase. This is just another way to save. Keep in mind that you’ll still be responsible for paying the motor vehicle tax.
- Getting The Car You Want: If the car you want isn’t available in your province, purchasing a car in another province might be the only way to get the car of your dreams. In addition, if you consider all of the car merchandise available in Canada, you’ll have more options.
Cons
Despite finding a great deal on a car that checks all the boxes, there are a handful of potential drawbacks to consider about buying a car in another province:
- Extra Cost: Purchasing a car at a local dealership is more likely to be cheaper than purchasing a car in another province. In particular, having the car shipped from where it currently is to your home can be quite costly.
- Unfamiliar Business Practices: The business practices of dealerships and lenders can vary from province to province. For this reason, there is a greater risk of getting yourself into an unfavourable situation if you don’t know what to expect.
- More Time-Consuming: Because you’re working with dealerships and lenders in another province, the time to research the car you want, test drive the car, and secure financing will be more time-consuming. If you can’t take time away from work or other more important things, buying a car in another province might not be right for you.
Final Thoughts
Purchasing a car in another province might make sense if you can’t find the car you want in your home province or if you’ve found an excellent deal elsewhere. If that’s the case, it’s certainly possible to buy a car in another province, though it will take more time and effort. Just make sure to calculate all extra costs involved in buying a car in a different province to ensure you’re not spending more than you would for a similar vehicle where you live.
