Area of Law: Consumer Law
Answer # 805
Buying a used vehicleRegion: Ontario Answer # 805
For many prospective vehicle buyers, a used vehicle is a much more affordable alternative to a brand new vehicle. However, before making a purchase, you should carefully consider both the benefits and disadvantages of buying a used vehicle.
Main benefits of buying a used vehicle
First, and most obvious, the purchase price of used vehicles is less. Second, used vehicles retain more of their value over the years. Not only are new vehicles significantly more expensive, but they also depreciate at a faster rate than older vehicles. This means that they lose more of their value in the early years of their life. For example, a used vehicle purchased for $10,000 may be worth $6,000 three years later. A new vehicle, however, purchased for $30,000, may only be worth $20,000 three years later. Buying a used vehicle means that you will lose less of your money to depreciation.
Disadvantages of buying a used vehicle
Despite the up-front financial savings of a used vehicle, a used vehicle may require more repairs. And, unlike new vehicles, most used vehicles will not include a manufacturer’s warranty for repair and service. In fact, often drivers decide to sell their vehicle specifically because maintenance is required, or because the warranty has expired.
What is the Used Vehicle Information Package?
To assist used vehicle buyers, the Ontario government has established a service called the Used Vehicle Information Package (UVIP). This package contains a variety of information, including a complete history of the vehicle and whether there are any liens registered against it.
If you are buying a used vehicle privately, and not through a car dealership, the seller is required by law to provide you with a copy of the Used Vehicle Information Package for the vehicle you are buying. If you are buying a used vehicle from a car dealership, contact the Ontario Ministry of Transportation or a Driver and Vehicle Licence Issuing Office to obtain a copy of the Package before buying the vehicle.
Make sure that the name of the person selling the vehicle is the name registered in the Package and that there are no outstanding liens on the vehicle. If you buy a vehicle that has a lien registered against it, you may be held responsible for the outstanding debt. It is not necessary to conduct a search for liens under the Personal Property Security Act if you have a copy of a recent Used Vehicle Information Package.
Once you buy a used vehicle, you are required by law to take the Package to a Driver and Vehicle Licence Issuing Office to register as the new owner and pay sales tax within six days of the sale. If you purchased the used vehicle from a car dealer, you will be required to pay the provincial-federal Harmonized Sales Tax (HST). If your vehicle was purchased privately, you will not pay the Harmonized Sales Tax (HST), but the Ontario government will still charge you a provincial sales tax of 13%. The government believes this heightened tax rate helps maintain a “level playing field” for used car dealers, who must charge the HST. Regardless, either tax will be based on either the purchase price of the vehicle, or the average wholesale value of the vehicle listed in the Used Vehicle Information Package, whichever is greater.
You will be required to bring a number of documents with you when you go to register as the new owner, including the entire Used Vehicle Information Package, the vehicle portion of the Application for Transfer, which should be given to you by the seller, a Safety Standards Certificate, valid vehicle insurance information and driver’s licence or other identification. If you are transferring your licence plates from your old vehicle to your new vehicle, you will have to bring the plate portion of the registration permit. If you are buying new plates, it will cost you between $60 and $120 to purchase a plate and a validation sticker for one year, depending on where you live.
It is not advisable to purchase a vehicle that does not have a Used Vehicle Information Package available. This may mean that the vehicle has come from another country or province, and often such vehicles have suffered considerable damage in an earlier automobile collision. If a Package exists, but the seller did not give it to you, you may be required to buy the Package before you can register the vehicle.
Tips when shopping for a used vehicle
There are a number of tips for buying a used vehicle. First, always inspect the vehicle during the daytime. Second, always take the vehicle for a test drive. If the steering is pulling in one direction, the vehicle may require an alignment. If the brakes squeal, the vehicle may require new brake pads. If blue smoke is coming from the exhaust, the vehicle may require expensive engine repairs. If you notice a general lack of control or excessive bounce when driving, the vehicle may require steering repairs or new shocks.
Third, you should check the vehicle’s odometer for kilometres traveled over the life of the vehicle. You can also check the Used Vehicle Information Package for a record of the kilometres each time the vehicle was sold. It is illegal to tamper with a vehicle’s odometer. Fourth, check with the mechanic who prepared the Safety Standards Certificate. Although the vehicle is road-worthy, it may need extensive repairs.
More information about buying a used vehicle in Ontario can be found from the Ontario Ministry of Transportation.
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