Buying a used car can be daunting. That’s why we’ve pulled together these resources to help make the process easier and ensure that you get the most value for your money.

STEP 1: Establish your budget (including ancillary costs).

A good rule of thumb is that the money you budget for your car shouldn’t exceed 20% of your income

Budgeting for a car chart

But the true cost of owning a car doesn’t stop at the sticker price. Here’s what else you need to consider:     

  • Cost of fuel: The cost of fuel can really add upCheck and compare the fuel economy of any car here.
  • Insurance: The cost of insurance depends on a multitude of factors – including the car’s make and model. If you’re budget conscious, get a quote from your insurance provider before you spend too much time researching a car as it may influence which vehicle you purchase 
  • Tax: Just because it’s used, doesn’t mean you don’t pay tax. Check out your provincial used car tax rate 
  • Warranty vs Out of Pocket: The average Canadian spends $1,400-1,500 on car repairs annually. You can either set aside $116-125 month to budget for repairs. Or you could consider a used-car warranty to ensure you’rcovered if you need a repair. GuardTree warranties start at $49.99/month (and you can cancel at anytime). 
  • Makes and models: Certain makes and models may cost more upfront. Older cars or those with higher mileage may cost more to maintain and repair. Consider a few different vehicles to compare as you shop. 

STEP 2: Decide how you’ll pay

When buying a used car, you’ve got two main options: 
  • Borrow: Financing allows you to retain your savings, improve your credit score and potentially make a more expensive car purchase that you could afford with your cash today.  Of course, there is a cost to finance a car. Use this loan calculator to help estimate your monthly payment and the cost of borrowing over the term of the loan.   
  • Cash: Owning your car outright is certainly a good feeling and paying for your car with cash means you won’t need to budget for the cost of a car loan each month.  

What about a leaseWhile leasing is a popular option for new cars, it’s seldom available for used vehicles. In fact, only a small number of specialty dealerships offer leases on used cars 

STEP 3: Comparison shop

As a car buyer, you'll usually have some sense of the type of car you want. But if you don’t, there are lots of great resources available. Once you know what you’re looking for, search these marketplaces and compare cars to find the best deal. 

  • Compare value: Comparing cars by price, mileage, history and model can help you decide which car offers the greatest value. You can also use this True Market Value calculator to give you an idea of what similar cars have sold for in your area. 

STEP 4: Verify vehicle history

Once you’ve found a car you’re interested in purchasing; you should verify the vehicle’s history:   

  • Ask the seller: How was the car used? Do they have service records? Were there any accidents? Answers to these questions will help you determine how the car was cared for. This will give you some idea of any potential issues that may arise for you as an owner.  
  • Look up the Vehicle Identification Number (VIN): Verify the vehicle’s history with this free VIN decoder and lookup or purchase a more comprehensive vehicle history reportThis report contains valuable information about that specific vehicle’s accident and maintenance history, product recalls, past owner history, and current liens. 

STEP 5: Test drive and inspect

Car inspections are important in helping catch hidden mechanical or safety problem(s) with a used car.  

  • Self-Inspection: Be sure to test drive and look over the car yourself. We’ve made this easy with our free self-inspection checklist. A good self-inspection will help you determine if you want to spend money on a mechanical inspection.  
  • Mechanical inspection: Its a good idea to have a professional look over the car before buying it. The typical cost of an inspection for a used car ranges from $100 - $200 - but it could save you from buying a lemon and being stuck with big repair bills later. You can book a mobile inspection or ask the seller to bring it to a mechanic of your choice. They’ll provide you a detailed report which can influence price negotiations with the seller or ultimately your decision to buy the car 

STEP 6: Transfer ownership

Once you’ve decided to purchase the car, the final step is to transfer ownership, pay taxes and purchase insurance. Find out which forms you need to complete to transfer the car’s ownership in your province here.

Get GuardTree Used Car Warranty