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Second, only to a house, a car is one of the biggest financial investments you’ll ever make. Once upon a time, buying a car meant spending hours at the dealership. Back then, your knowledge of pricing, APR, and availability extended no farther than what the salesperson told you. But now, with sites like Canada Drives and Clutch, those days are long gone.
Absolutely, buying a car online has never been easier. Buying a car online can mean different things for different consumers. Depending on the experience you’re looking for or are comfortable with. Generally speaking, you can classify buying a car online into two different categories, online marketplace and full-service.
When people talk about buying a car online they are typically referring to perusing resale sites, marketplaces, and even websites that belong to dealerships in their area. With this option, you narrow down your search by looking for specific makes, models, features, and location. Once you find what you’re looking for, you’ll visit the seller or dealership to test drive and finalize the purchase.
While you made the final purchase at the dealership, you make your decision online, in the comfort of your own home, without the hassle of dealing with a sales associate.
In the past couple of years buying vehicles online has evolved. You can now buy a car completely online, from start to finish. Companies like Canada Drives, Clutch, and AutoTrader.ca allow consumers to find the right vehicle, apply for financing, and have the vehicle delivered to them all from their own homes.
As we discussed above, there are countless online sites and marketplaces that allow potential buyers to search for vehicles available in their cities and provinces, think CarPages.ca, Unhaggle, and CarGurus. But, if you’re looking for a full-service experience where you never have to leave your house, there are a couple of specific companies you should consider.
Canada Drives is the countries largest 100% online vehicle shopping platform. You can search through their inventory of used cars, find the one that meets your needs, sign contracts or agreements, and make payments all online. Then choose a delivery date that fits your schedule and have your new car delivered right to your door (currently available in British Columbia, Alberta, and Ontario).
Additional Canada Drives Benefits
Founded in 2016, Clutch’s main goal was to modernize the way Canadians shop for and buy used cars. When you choose Clutch, you can browse through over 700 used vehicles to find one that fits your needs. Their fully online experience means you don’t need to deal with sales associates and never have to leave your house. You can get pre-qualified for financing online, purchase the car you want, and set up a time for it to be delivered. During the delivery of your vehicle, a Clutch concierge will have all the necessary paperwork for you to sign.
Additional Clutch Benefits
While AutoTrader.ca is one of the most popular car shopping websites in Canada and they have recently added a new feature. With their OnlineSellerPlus feature, local dealerships will deliver your car to your house so you can test drive it for 48 hours. If you like the car you keep it. Just keep in mind that this option is not available for all vehicles currently for sale on AutoTrader.ca.
AutpTrader.ca also offers the option for consumers to apply for financing, reserve vehicles, and start the trade-in process all online.
Additional AutoTrader.ca Benefits
When it comes to buying your next car online, here are the main advantages you should consider.
Find out if you should buy your next car online or at a dealership.
Buying a car online is not always going to be the right option for everyone. If you’re concerned about buying a car online, here are some of the main disadvantages.
It sometimes feels like dealers and bankers are speaking a different language. The documents that accompany them, often filled with legal and financial jargon, are not much better. To stop you from getting swindled by a smooth talker, you need to make sure you’re familiar with the following Canada car loan terms:
Buying a car online has become increasingly popular in Canada. If you’re thinking about buying a car online, here are some steps you can take to make the process easier.
Before searching for a car, you should first find out how much you can afford. This includes the car loan costs as well as the additional car expenses like fuel and car insurance. Generally, it is recommended that you use the 20/4/10 rule when budgeting.
To adhere to this car budgeting rule, you’ll need to put down a 20% down payment, and ensure your car loan term is no more than 4 years and that your monthly payments do not exceed 10% of your income. For example, If you have an income of $4,000 a month, you shouldn’t pay more than $400 a month on your car. That means to respect the 20/4/10 rule, the total cost of your car loan (interest and fees included) should be no more than $19,200.
Getting pre-approved for financing can save you from falling in love with a car that is way out of your budget. You can choose to get pre-approved from your dealership or from your local bank.
If you purchase a car online through companies like Canada Drives or Clutch, you’ll be able to get pre-approved for financing prior to choosing a car. Unlike traditional dealerships who have you choose a car before checking if you qualify for financing, these full-service companies, ensure the car you choose is one you can afford. With a quick online application, they’ll provide you with a personalized loan offer that you can use when searching for your car.
With online marketplaces, you still have to visit the dealer to finalize the details of the car and to find out if you qualify for financing. Unfortunately, not everyone qualifies, this is why it’s so important to secure financing before you step foot on the lot. Having a pre-approval letter also forces the dealership to meet or match your current offer. This helps you walk away with the best interest rate possible. But don’t worry, you don’t have to visit multiple banks and lenders. That’s what aggregate financers, like Car Loans Canada, are for. With one click, you can send your application to hundreds of institutions.
Now, you can finally start looking at cars. Before you start your search, you need to understand what you’re looking for. Take a piece of paper and list your needs on one side and your wants on the other. For example, if you only have three people in your family, you don’t really need an eight-seat SUV. Under no circumstances should you pick a car with a “want” unless it fits your budget. With that done, use one of the aforementioned sites to find a car that fits your needs. Filter by price, distance, brand, and safety features.
If you plan on trading in your car, be sure to research the value of your car. This will give you negotiation power if your dealer tries to undercut you. If you can’t get a good deal with your dealer, then you can consider liquidating in other ways:
Depending on whether you choose a full service or online marketplace to purchase your car online, the application process will vary.
Once you’ve been pre-approved and chosen a car you’d like to purchase, you’ll simply need to complete the rest of the application. This includes reviewing your loan agreement and e-signing it to seal the deal. Once you’ve signed and completed the application, you can have the car delivered straight to your doorstep.
With online marketplaces, you’ll usually have to complete the rest of the application in person. However, you’ll have all the details regarding the car you want to purchase. You simply have to go down to review the bill of sale and sign any financing paperwork. Once completed, you’ll be able to drive away in your new car.
Now that you have a better understanding of the car buying process, you’re ready to get started. Just make sure you know your credit score and have an idea of the ballpark interest rate your credit score deserves. And, don’t forget about the importance of getting pre-approved. By doing all these things, you’ll ensure you walk away from the dealership with a smile on your face.
Rating of 4/5 based on 6 votes.
Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.
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