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Before making a major financial decision you
should consult a qualified professional.
Buying a Vehicle
Canadian Tax and
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Probably your first major purchase in life will be a
vehicle, so take your time and do it right.
Save up the money. Don't go into debt for a
Carefully consider all options. This will
probably be the first test of your financial
You should know exactly what the insurance, gas and
maintenance costs will be for any vehicle you are
Compare fuel efficiency for different vehicles before
making your decision. This information is readily
available on the internet. Estimate how many
kilometres you will drive, and you can then estimate
your gas costs. If a vehicle uses an average of 10
litres per 100 kilometres, and gas costs $1 per litre,
then your gas will be costing you $0.10 per
kilometre. A larger vehicle using 20 litres per
100 kilometres will cost $0.20 per kilometre at $1.00
How much will it cost you to park the vehicle at
school or at work?
You can save money by buying a slightly used vehicle,
and still get some factory warranty. Check the
sales of ex-rental vehicles.
Newer vehicles usually require less maintenance than
If you don't know much about vehicles, and maybe even
if you do, it would be wise to have your chosen vehicle
inspected professionally for mechanical problems. Canadian Automobile
Association (CAA) is one organization that
will do a mechanical inspection for a fee. Their
website also offers tips and other help for buying new
or used vehicles.
Do a search to see if there are any liens against the
A careful inspection by an experienced auto body
repair person would be advisable (this saved us at least once!).
In BC, you can check with ICBC to determine the
accident history of the vehicle. However, some
accident repairs may be done without using an insurance
company, in which case the accident history is not very
If you are buying a used vehicle, you can avoid GST by
purchasing one privately rather than through a dealer or
Once you determine how much you can afford to spend on
a vehicle, and what the operating costs will be, use
these numbers to determine what you would have in the
future if you invested the money instead. This
might convince you to use public transit instead of
buying a vehicle.
We have never borrowed to purchase a vehicle, and
have never purchased a new vehicle. We seem to
have done well buying vehicles that are one or two years
old, and still have some warranty.
However, if you are set on financing the purchase of your
vehicle, make sure you know the annual percentage rate (APR) of the
financing being offered to you, and explore other methods of