Buying a Used Vehicle.. What to Look For
Good used vehicles are in demand. With careful shopping, some research and a little common sense, you should be able to find a vehicle that will fit your needs.
To begin, always inspect a vehicle in the daylight. Kicking the tires isn't enough. Check carefully for excessive wear of the interior upholstery, the seats, even the brake and accelerator pedals. New pedals may indicate a lot of use. Look closely at the exterior. Ripples on the body of a vehicle suggest that body work has been done and that the vehicle could have been in an accident.
Take the vehicle for a road test that allows driving at different speeds on different road conditions. This will help evaluate the performance of the steering, brakes, shock absorbers and front-end alignment.
Don't let yourself be blinded by the reputation of a particular make or model. Even a well-made vehicle can deteriorate if it's not maintained properly.
Ask about the vehicle's accident history and request a written statement that summarizes accident information.
Take the vehicle to your mechanic or to a diagnostic centre for a check-up before finalizing the purchase.
Signs of Trouble
Steering that pulls the vehicle to one side can mean alignment problems in the future.
Squealing brakes under normal operation can mean excessive wear or improper adjustment.
Blue smoke coming from the tail pipe can mean costly engine repairs are necessary.
Lack of control during cornering at normal speeds or an excessively bouncy ride can mean steering linkage problems and/or worn-out shock absorbers.
Check the Odometer
An average vehicle accumulates 16,000 to 20,000 kilometres per year. You should be cautious if the vehicle shows particularly low kilometres for its age, or if the signs of wear are not consistent with the vehicle's odometer reading. If you believe the odometer has been tampered with, report it to the police. Odometer tampering is a criminal offence.
Ask for the Used Vehicle Information Package
Before you make a decision to buy the vehicle ask to see the seller's Used Vehicle Information Package. Read it carefully to see if there are any outstanding liens registered against the vehicle, if there is anything in the vehicle's registration history that might cause concern and if the name of the person selling the vehicle is the same as the name on the registration.
When the transaction has been completed, it's the buyer's responsibility to take the Used Vehicle Information Package to a Driver and Vehicle Licence Issuing Office to register as the new owner within six days of the sale. At that time, the buyer must pay retail sales tax on the vehicle. The amount of retail sales tax to be paid is based on the purchase price or the wholesale value calculated at the time of transfer, whichever is more.
Wholesale Value
The wholesale value is based on the Canadian Red Book, which lists the wholesale and retail values of used vehicles. These values will be printed on the Used Vehicle Information Package. Values may change from the date the package is issued to the date of transfer. The wholesale and retail values are based on average amounts paid for vehicles of the same year, make and model. They do not take into account optional equipment, vehicle condition or the number of kilometres driven. The Canadian Red Book is an accepted industry standard used by car dealers, insurance companies and other provincial governments.
Red Book values may not apply to some vehicles. In these cases, retail sales tax will be based on the purchase price only.
Some frequently asked questions about registration:
How long do I have to register?
The buyer has six days from the date of purchase to register as the new owner.
Where do I go?
Driver and Vehicle Licence Issuing Offices are located across Ontario. Check your telephone directory's blue pages under Government of Ontario for a location near you.
What information will I need for registration?
Used Vehicle Information Package
Application for Transfer (vehicle portion of permit)
Safety Standards Certificate (if you intend to drive the vehicle immediately)
Valid insurance information
Ontario Driver's Licence or other identification
Plate portion of permit (if using existing licence plates)
Payment for retail sales tax, vehicle registra-tion fees and, if required, new licence plates
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General Information
Liens (Debts on the Vehicle)
Nobody wants to watch a tow truck take away their recently purchased used vehicle. That's why it's important for anyone selling or buying a used vehicle to check the lien information printed in the Used Vehicle Information Package.
A "lien" will be registered against the Vehicle Identification Number (VIN) of a motor vehicle for one of two reasons - it was used as collateral for a loan or it was repaired and/or stored and the bill wasn't paid. A properly registered lien allows the secured party (lien holder) to take the vehicle if the amount of the lien is not paid. The secured party will be entitled to repossess the vehicle from the person who owes the money or from anyone else who buys the vehicle after the lien is registered.
The lien information certificate may contain the following basic information:
A statement that there are no liens when no liens are currently registered in Ontario or the number of liens where liens are currently registered.
The date as of which the lien information is current. This date is usually two business days behind the day on which the search is done.
If any liens are registered, the name and address of the person who owes the money (the "debtor") and the name and address of the person to whom it's owed (the "secured party").
As the seller of the vehicle, the lien may be registered against you as the debtor. If you have paid off the amount owing to the secured party, you should contact the secured party named in the certificate and request that the lien be discharged. If you have not paid off the lien, the secured party is not required to remove the lien.
Previous owners may be listed as debtors on the lien certificate. If this is the case, you should contact each secured party named in the certificate to determine the status of the lien. If the lien has been paid off, you should ask the secured party to discharge the lien. If it has not been paid off, the lien will continue against the vehicle until it is paid. If it is not paid, the secured party can repossess the vehicle at any time from any person.
Sellers take note:
If you are selling a vehicle which you have not used commercially and have paid off the amount of the lien, the secured party should have discharged the lien within 30 days of your final payment. If the secured party has not discharged the lien, you can claim $500 (plus damages, if any) from the secured party. If the secured party does not comply with your written request for payment, you can recover the amount in Small Claims Court if the total is $6,000 or less, or in the Ontario Court (General Division) if the total is more than $6,000.
For information concerning procedures for vehicles used commercially, contact the Ministry of Consumer and Business Services.
The Safety Standards Certificate You can buy and register a vehicle with or without a Safety Standards Certificate.
However, before a vehicle can be driven on a highway, it must be inspected and certified as fit at a licensed Motor Vehicle Inspection Station. There are more than 10,000 inspection stations across Ontario.
A Safety Standards Certificate is issued once a vehicle has met the minimum safety standards required by the Highway Traffic Act. The certification does not cover the engine or the transmission of the vehicle and it is not a guarantee that the vehicle will not need repair for any period of time.
A Safety Standards Certificate is valid for transfer of ownership purposes up to 36 days after the inspection.
Motor Vehicle Insurance
In Ontario, automobile insurance is compulsory. A written declaration of insurance coverage must be completed before you can register a vehicle for use.
Any owner of a vehicle who gives false information of insurance or makes a false statement on an application form for a permit is guilty of an offence. If convicted, you could be fined up to $2,500, your driver's licence could be suspended for up to one year, and your vehicle could be impounded for up to three months.
All vehicles must be insured for a minimum third-party-liability insurance of $200,000. Collision insurance is advisable but not compulsory.
All drivers - whether driving their own vehicle, or a vehicle owned by someone else - are required to carry the pink liability insurance card (or a photocopy) issued by insurers. A driver must give this card to a police officer, if asked. Failure to do so is an offence and you could be fined up to $200.
Retail Sales Tax
When you buy a used vehicle privately, the retail sales tax you pay is based on the purchase price or the vehicle's wholesale value, whichever is more. The wholesale value is based on the Canadian Red Book, which is an accepted industry standard used by car dealers, insurance companies and other provincial governments. Amounts are based on average prices paid for vehicles of the same year, make and model.
If the buyer paid less than the Red Book value and an appraisal supports a lower price because of the condition of the vehicle, tax is paid on the declared price or appraised value, whichever is higher. Any reduction in tax is available only when a completed appraisal is given to a licence issuer prior to changing ownership. If the transfer has been completed and tax has been paid on the average wholesale value, an appraisal must be sent in with an application for a refund to the Ministry of Finance.
Appraisal forms are available from Driver and Vehicle Licence Issuing offices and Ministry of Finance offices.
Tax Exemption
Payment of retail sales tax is not required when a vehicle is a gift and is being transferred between close family members, which only includes a spouse, parent, step-parent, grand-parent, son, daughter, grandson, granddaughter, son-in-law, daughter-in-law, father-in-law or mother-in-law. Only one tax-free transfer per vehicle is allowed every 12 months.
A statement sworn before a Commissioner of Oaths will be required for certain transfers, such as gifts between family members and transfers for insurance purposes. Diplomats and Status Indians who qualify will be able to complete a transfer without paying tax by simply showing their identity card.
