Buying a Used/Secondhand car

Information on the paperwork and process involved in buying a car through a classified advertisement...

There are a number of websites in Canada with classified advertisements for used cars. These include:

Valuing a car

Some provinces set a guide price for used cars to ensure they are sold for a reasonable and fair price. This guidance does not exist in all provinces but there are many commercial websites providing information on the current market value of used cars.

Rules regarding the selling and buying of used cars

The different provinces have different rules regarding the selling and buying of used cars and the transfer of vehicle ownership. For example, vehicles sold in Ontario must have a Used Vehicle Information Package. Check with provincial registration administrations for details. When buying a second hand, used car check all the original paperwork is correct and matches the seller's identification. Buyers should also check the used car history report and odometer reading. Some provinces require a safety check or vehicle history report to be carried out on a vehicle before sale, to ensure it is roadworthy. It is normal to pay in cash or by bank draft for a private sale. Buyers should obtain a "Bill of Sale" which should state the sellers name and signature, date, and purchase price. The seller should provide the buyer with the following documents which are required to register the vehicle:
  • Certificate of sale
  • Certificate of title
  • Safety inspection number/certificate
Note: Motor insurance is compulsory and is available from a number of commercial companies, including the CAA (Canadian Automobile Association). Vehicles should be transferred within 6 days of the sale. Failure to do so is is an offence under the Highway Traffic Act.

Taxes on the purchase of a used car

The sale of a secondhand car is also subject to taxes. If the vehicle is bought from a used car dealership, it is subject to the appropriate GST and PST, or HST rate. If a vehicle is purchased privately, as the individual is not HST registered (a business or individual registered with the Canadian Revenue Agency for tax purposes) then the buyer is subject to pay RST (Retail Sales Tax). This rate varies across the provinces although in some areas, for example Ontario, this tax has increased in line with the HST rate.