Tips by OMVIC - Consumer Tips
Before purchasing a vehicle, either from a dealer or privately:
- Consider all expenses – not just loan payment:
- Parking: Home? Work?
- Repairs: Can you afford repairs or should you consider a warranty?
- Determine your priorities: price, features, mileage, warranty, etc.
- Research vehicle reliability and depreciation rate
- Compare finance rates: dealer, bank, other sources
- Ensure vehicle meets current and possible future needs
- Research additional products, services or warranties you’re offered
- New vs. used:
- Some charges apply only to new vehicles (e.g., freight, pre-delivery inspection (PDI), air tax, tire tax, green levy fee, etc.)
- Demonstrators (“demos”) are used vehicles
- Prices advertised by Ontario dealers MUST include all fees and charges (except HST, licensing and agreed-upon options)
Research History & Value
- Canadian Black Book may provide the wholesale value of your trade-in
- CarProof often shows reported incidents or collisions
- Transport Canada may list known defects or recalls
- Used Vehicle Information Package (UVIP) provides ownership history, lien information and historical odometer readings – by law, a private seller must provide a UVIP (ensure all pages are provided)
Know When You’re Protected
In Ontario, all motor vehicle dealers and salespeople must be registered with OMVIC. Consumer protection legislation ONLY applies when consumers buy from an OMVIC-Registered Dealer. There is no consumer law that covers private transactions. If something goes wrong, you’re unfortunately on your own.
If you purchase a vehicle from an OMVIC-Registered Dealer, your transaction is also protected by the Motor Vehicle Dealers Compensation Fund.
Review the mandatory disclosures that OMVIC-Registered Dealers must provide in writing to consumers related to the vehicle’s history and condition.
Before You Sign on the Dotted Line
Take the time to read your contract or bill of sale and understand all the terms. Don't sign the contract until you're ready to commit to the deal. Once you give your deposit and/or sign the contract, you have agreed to purchase or lease that vehicle.
Remember: this is a legal and binding contract and there is no such thing as a "cooling-off" period under provincial law.
Tips for Buying From an OMVIC-Registered Dealer
Buying registered provides consumer protection, but a signed contract is still FINAL! Consider the following car-buying tips:
- Ensure salesperson understands your needs. Not being listened to? Shop elsewhere
- Take thorough test drive – not just around the block
- Understand “all-in” price advertising, don’t accept additional charges (except HST and licensing)
- Only agree to pay for optional products or services you want and believe have value
- Used vehicle? Ask for or purchase history report; consider inspection by trusted mechanic
- Get all conditions and promises in writing (e.g., xxx to be repaired, subject to partner's approval)
- Keep copies of all documentation including advertisements, contract and/or finance agreement
- Carefully read contract (and finance agreement) – there’s no cooling-off period once signed
Three Options for Trading in a Vehicle
Not all relationships are built to last. You’ve had your car through good times and bad, but your needs have changed. You need more space, better reliability and the latest technology. It’s time to say goodbye to your current ride, and make room for a new(er) one.
There are a number of options for getting rid of your car, but we’ll focus on these three:
- Selling privately
- Trading it in
- Selling it on consignment
Please consult the graphic below for some of the pros and cons for each option.
Selling privately may get you the most money for your vehicle, but there are challenges to overcome: posting advertisements (online marketplaces like AutoTRADER, Kijiji and Craigslist provide free ad space to private sellers), responding to calls, texts and emails, waiting for buyers who make an appointment but don’t show, meeting strangers to demonstrate the vehicle (it’s a good idea to have someone with you when meeting potential purchasers), obtaining a Used Vehicle Information Package (Ontario law requires private sellers to provide one to the buyer), arranging secure payment (will it be cash, bank draft, EMT?), ensuring the buyer transfers the ownership from your name; the process isn’t for the faint of heart.
Trading a vehicle in means you’ll likely get less for it as the dealer will only pay the wholesale value, but there are also some upsides. It’s easy, fast, secure and there are tax advantages as you’ll only have to pay HST on the cash difference. In other words, if you’re buying a $25,000 vehicle and the dealer gives you $10,000 for your trade-in, you only pay HST on the $15,000 difference – a savings of $1,300. The dealer will likely ask you to sign a trade-in disclosure document outlining important information about the history and condition of your trade (e.g. previous accidents). The dealer is required to do this by law as they must make disclosures to anyone they then sell the vehicle to.
Consignment may not be that common, but some dealers do offer the service. They will put your vehicle on their lot and sell it – for a fee; most often a percentage of the sale. The dealer is required to have a written agreement with the consignor outlining the expected selling price, the minimum selling price and the fee they will charge. Dealers are also required to hold all funds received on a consignment sale in a trust account.
To help with your decision, make sure you do your research. Consult the Canadian Black Book. This free online service provides wholesale value estimates as well as an equity calculator, which includes information on carrying the balance of a loan into a new deal. Of course, OMVIC’s website offers plenty of resources.
Once you’ve made your choice on how to part with your ride, ensure you have all paperwork in order and take a final look before you move on to your next set of wheels.
Dealers cannot legally sell a vehicle with an existing/outstanding lien. If a dealer agrees to pay out a lien on a customer’s trade-in, the dealer must do so immediately and provide the customer with a release letter from the financial institution. To determine if a lien is registered against a vehicle, consumers can purchase a Used Vehicle Information Package (UVIP) from Service Ontario, or a vehicle history report from Carfax Canada. The Ministry of Government and Consumer Services has a toll-free “Lien Check Hotline,” which consumers can call as well: 1-800-267-8847. For consumers who may have an issue arising from a transaction with a registered dealer, OMVIC’s Complaints and Inquiries Team offers free assistance and can be reached at 1-800-943-6002 x3942.
Note: With regards to consignment sales, it is the consignor’s responsibility to ensure the lien is paid off, before a dealer can sell it on the owner’s behalf.
Tips to Avoid Curbsiders
1 - Research the Vehicle’s History
A history report from CarProof provides useful information on:
- Reported collisions/incidents
- Existing liens
- Past odometer readings
- Out-of-province registration information
- Theft recovery
- Ministry of Transportation branding information (e.g., salvage, irreparable, rebuilt, none)
By law, private vehicle sellers must provide the purchaser with a Used Vehicle Information Package (UVIP). UVIPs often include:
- Current registered owner and vehicle ownership history
- Lien information
- Past odometer readings
- Estimated fair market value of vehicle (if available)
Carefully review the UVIP to ensure all pages are included.
UVIPs are available from Service Ontario locations and online: ontario.ca/driving-and-roads/used-vehicle-information-package.
In order to obtain a UVIP or history report, the vehicle identification number (VIN) is required.
2 - Know Who You’re Buying From
Curbsiders often sell vehicles that are not registered in their name. It’s important to ensure you’re dealing with the registered owner:
- Be bold. Always ask the seller for ID and compare it to the vehicle ownership- they must match
- Curbsiders may make excuses if they don’t match, so be extra vigilant if the vehicle is not registered in the seller’s name or has only been registered in their name for a short period of time
3- Beware of Vehicles Priced Below Market Value
In order to sell vehicles as quickly and easily as possible, curbsiders may offer a “too good to be true” price. They can do this because the vehicles are often accident-damaged, odometer-tampered or rebuilt write-offs. No one sells vehicles for less than they are worth. If a deal seems too good to be true, that’s a warning, not an opportunity.
Online resources may help determine vehicle values/prices:
Member-based consumer groups also provide vehicle pricing information. These include:
4 - Get a Second Opinion
Even if you get maintenance records from the seller, have the vehicle inspected by a licensed mechanic – one you trust. A mechanic may find problems the seller did not disclose or know about.
If the seller resists, walk away.
Can’t find a good mechanic? There are lists of pre-screened mechanics, repair shops and appraisers available from the APA and Car Help Canada.
For more information about consumer protection please visit: www.omvic.on.ca/portal/Consumers.aspx