How to Buy a New Car in Canada

Disclosure.  I am not a “car-guy”.

My brain has no interest for storing information about the various models, horsepower and specifications of luxury cars.   A car’s purpose for me is get to get me and my family from point “A” to point “B” in comfort and safety.  My sense of happiness or ego has no correlation with the price or status of my car.

I am your stereotypical millionaire as described in the book “Millionaire Next Door” .  Toyotas and Hondas are the staple vehicles for my family.

My preference is towards purchasing new vehicles, because it takes up less  of my time, and the cost of a new vehicle (if purchased correctly) does not cost much more than a slightly used 1 or 2 year old used vehicle.   Other reasons include the peace of mind factor and the fact that the new vehicles have the latest technology for comfort, performance and safety.

Most people develop stress and/or anxiety when it comes to purchasing a new vehicle.   Not many people enjoy sitting at the dealership negotiating with their salesperson.  They give you a quote, you give a quote back, they go ask their sales manager….rinse, repeat.  Process could take hours, days or even weeks.

It is an inefficient use of one’s time and energy.  Most families will go through the process of purchasing a new vehicle once every “x” number of years, so it’s hard to become an “expert” in new vehicle purchases.

Let’s see how you can purchase a new vehicle with the most efficient use of your time for the lowest price.

STEP 1: Plan New Vehicle Purchase Date

This first step is crucial, but is taken too lightly by most people.

Plan well in advance for when you want to purchase a new vehicle.

Ideally, the months of September, October or November are said to be the best times to purchase current year’s vehicles, as these are considered the slower months and the dealerships are trying to clear out inventory in time for the next year’s inventory.   Also, consider near the end of the month, as dealerships are trying to pad their numbers for bonuses that they receive from the manufacturer

Plan out your budget so that your money will be readily available near that date for either a cash-purchase (if there is a cash incentive), or financing through the dealership (if you are going to invest that cash at a higher rate of return than the financing rate)

You do not want to be rushed or forced into a new vehicle purchase, because your vehicle broke down or requires an expensive repair.  Although this cannot be predicted with 100% certainty, you can sometimes get a feel for how your current vehicle is holding up from discussions with your service advisor at routine maintenance services.  A good honest service advisor will suggest to you (ask them) when certain parts need to replaced in the near future/next service appointment, so that you can possibly plan to replace your vehicle before the next expensive major maintenance.

My general rule when to  replace my vehicle is approximately after 10 years of use or around 200,000 km mileage . I find that around this time period is when the cost of vehicle repairs start to close in on the actual depreciated value of the vehicle, so it makes sense financially to replace the vehicle.

STEP 2: Online Research of Vehicle Models

Research online to determine the prices and specifications of the vehicles that you are interested in purchasing. This information is found easily on the vehicle manufacturer’s website

Next, check out Consumer’s report online  (CR requires a membership fee) or go to your local Chapter’s Indigo store to read CR’s magazine’s annual vehicle review/rating for free.   CR is my gold standard for car reviews.

Other good online car review sites include:

Talk to trusted friends/family members for their opinions, if they are currently driving one of the vehicles that your interested in purchasing

Cycle through STEP 2 as many times as you need, until you have narrowed down your search to at most 3 vehicles

This will be the most time consuming step, but most important step.

STEP 3: Test-Drive

If you have a day-off during week (preferably Monday, Tuesday or Wednesday), go test-drive your list of vehicles back-to-back.

You can call up the dealerships to schedule the test-drives ahead of time, but if you go during the early part of the week, then simply going in to the dealership unannounced should be fine since these are their quiet times.  If you only have time for test-drives on Saturday, then I’d recommend that you call ahead and schedule the test-drives, as the dealerships are quite busy on the weekends.  You need to test-drive your list of vehicles back-to-back on the same day, so that the feel of each drive is fresh in your mind, and therefore, you can make a valid comparison between the test-drives.

Obtain any additional information about the vehicle during the test-drive from the salesperson, but if you did your homework in STEP 2, then you may realize that you know more about the vehicle than the salesperson

After the test-drive, don’t bother wasting your and their time by going back into the dealership to “chat”.  Take their business card and then proceed to the next scheduled test-drive appointment.  As a bonus, look out for manufacturers’ offers for test driving their vehicles.  For example, Toyota Canada offers 250 Aeroplan miles for each test drive.

At the end of STEPs 1-3, you should have concluded the exact vehicle model and colour that you want to purchase with a general date in mind.

STEP 4: Online research of Invoice Price and Incentives

To get free dealer invoice reports, you can choose either CarCostCanada or Unhaggle

CarCostCanada allows 1 free dealer invoice report per e-mail address.  In return, you will receive an e-mail inquiry from one of their recommended local dealerships.  For additional reports, you can either use other family members’ e-mail addresses or pay the $30 membership fee + HST for 5 additional reports

Unhaggle allows an unlimited number of free dealer invoice reports.   The average purchase price of the vehicle in your region is also stated, which is another useful piece of information.  In return, you will receive an e-mail inquiry from one of their recommended local dealership.  For their Premium Service, you pay $99  fee + HST, and then allow Unhaggle to negotiate for you, to up to 10 local dealerships for the lowest price (I have not used this service,  so cannot comment on effectiveness)

Reports from CarCostCanada and Unhaggle are identical.  Study the reports.   Look at the invoice price and any incentives for cash purchase, finance rates etc…

Get out your calculator and crunch the numbers.  CarCostCanada recommends a purchase price of 3% above invoice price.  So aim for 3%, or below

STEP 5: Research Trade-in Value

If you are not trading in your current vehicle, then proceed to STEP 6.

If you are trading in your current vehicle, then you can get an estimate of your current vehicle’s trade-in value, check out Canadian Black Book(CCB) and VMR Canada.  Both are free services.

You will get an average range of trade-in values for your vehicle across Canada.  This is only an estimate!  Most dealerships’ websites also offer an online quote for trade-in value for your vehicle using CCB.  Again, this is only an estimate!  I cannot stress this enough.  These values are only estimates!   It is uncommon for you to receive a final trade-in value similar to the quoted value on CCB, VMR or from the dealership’s website.  If you do, then congrats!  The actual trade-in value will depend on the dealership’s subjective assessment on the condition of the vehicle (scratches, dents etc…) and telephone quotes that the dealership receives from auction wholesalers.

For what it’s worth, I’ve been informed from a  car sales manager that one should take the mid-range of CCB’s or VMR’s trade-in value of your vehicle, and then deduct approximately $900-$2000, which is the average range of cost that a dealership will need to spend to certify the vehicle for resale.  If you shop around your vehicle to different dealerships, you will notice a variety of trade-in quotes for your vehicle.   This will not be an exact number……it’s a bit of a grey area, so be prepared.  Keep in mind that the trade-in value is deducted from the pre-tax cost of your new vehicle, so you pay less HST, which can amount to significant savings.

Example: Trade-in value is $9,000 for your current vehicle.  HST savings is: $9,000 x 0.13 (Ontario HST 13%) = $1,170.   So total savings is $9,000 + $1,170 = $10,170

STEP 5: Negotiate Purchase Price via E-mail

You have now finished your homework!   You have the knowledge and are in control.

Now comes the part where most people find the most stressful, however, this is actually the easiest, least-time consuming  part of purchasing a new vehicle, since you have done your homework.

When you are ready to purchase,  check the website of the local dealership that you want to deal with, and find the e-mail address of one of the sales managers.   You can also elect to use one of the recommended contacts from CarCostCanada or Unhaggle. You want to deal with the sales manager, as he/she can negotiate with you directly via e-mail.

Some recommend sending an e-mail blast to all of the surrounding dealerships, and pit one quote against another.  However, I didn’t want to be dealing with multiple e-mail offers (time efficiency), and also wanted to be courteous, so I elected to e-mail my local dealership.

Sample e-mail:

Hi “name”,

I am looking to purchase a 2017 “vehicle model, exterior colour, interior colour”.  I have already test-driven this vehicle, and have obtained the invoice reports on Unhaggle (or CarCostCanada).

Being a loyal customer to your dealership, I am reaching out to you first to see if we can finalize a deal for my new vehicle purchase.  I have not contacted the other local Toyota dealerships yet, but will contact them if we fail to reach a mutually acceptable deal.

Please provide me with your best quote for this vehicle, including all applicable fees and incentives, and estimated delivery date and VIN#, if possible

I hope that we reach a mutually acceptable deal quickly.  I would then be happy to provide you with the highest customer satisfaction ratings in any survey that you would like me to complete

I have my own financing, but would be open to financing through your dealership if you can provide a competitive rate.

Thank you for your time.  I look forward to your reply.

If you have a trade-in, then you can add the following:

I will be trading in my current vehicle, but will not negotiate the trade-in value until the price of the new vehicle purchase has been settled.  Final deal will be contingent on an acceptable trade-in value for my vehicle.

This e-mail indicates to the sales manager that you are a serious, educated customer looking to close a deal quickly with no-nonsense.  It also separates the purchase of the new vehicle from negotiation of the trade-in value of your current vehicle

They will want your business.  Especially if you live near their dealership, as manufacturers pay close attention as to which dealerships customers go to purchase their vehicles.  You should receive an e-mail reply within the day.  You will probably be given a quote including all taxes, freight, fees, etc….all of which should be listed.  You will need to deduct the HST then subtract the freight, fees etc….in order to calculate the % above invoice price that that they are offering you.

Given that you have demonstrated your seriousness and knowledge in the e-mail, the sales manager should give you a quote of 3-3.5% above invoice.  As I mentioned before, CarCostCanada recommends 3% above invoice.   That is a fair price that is usually below what most customers pay for their new vehicle (4-4.5%).  Remember the dealership has employees to feed, and has to make some profit on the vehicle, however, this is also quick easy deal for them

Now it’s up to you.   You can accept 3% above invoice, which is a fair deal. Or you can try to negotiate a bit lower (probably lowest is 2%).  You are in the comfort of your home.  No stress.  Nothing to lose.   You have already been given a fair discount, but maybe you can save “x” more hundreds of dollars.  It only takes 1 minute of your time to reply back with an e-mail, such as the following:

Thank you for your offer of “$”.   I would be more comfortable with a purchase price of “$”.    If this is acceptable to you, then I can come in as early as tomorrow to sign the papers. 


You have just researched and negotiated the purchase price of your new vehicle from the comfort of you own home without having to step into the dealership (aside from test-drives).

STEP 7: Finalize Deal


If you have no trade-in, then budget around 1 hour of your time to go into the dealership to sign the papers, financing  etc….

If you have a trade-in, then budget around 2 hours of your time, since it takes them some time to appraise your trade-in vehicle.  Bring in your CCB and VMR online trade-in value quotes and show it to them.  Remind them again that the final deal is only contingent on an acceptable trade-in value.

Bring in your green ownership slip for your current vehicle.

The sales manager that you dealt with online may delegate one of their salesperson to complete the forms/appraise your trade-in vehicle with you.  This is the time to mention that “x” salesperson helped you out in the past when you came for a test-drive.  Give credit where it’s due.  Everyone’s got to make a living.

If the trade-in value comes in below what you expected, and they sincerely state that this is the best offer, then this would be a good time to ask them to throw in a free accessory (e.g. remote starter, cargo liner etc…) to seal the deal.    Again nothing to lose.  Why not try?

Congratulations! You have just purchased a brand new vehicle.

Hope you saved some time and money by reading this article.   Happy driving!

Anything you agree/disagree with?  Any other advice that you would offer?   What strategies have you found useful in your experience?

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ArnieDr. NetworthMarchDr. NetworthLoonie Doctor Recent comment authors
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Loonie Doctor

I really like your email offer suggestion. I have never seen that before. It shifts control to you. Everytime I enter a dealership, it is like a review of Psych 101 where we learned about the various sales techniques. Brilliant.


Of course MMM would say bike to most places and buy used vehicles…


Nice piece. Thanks for sharing. 🙂 However there are some opinions I disagree with A 1-2yr old car will be several thousands cheaper than a brand new car of the same model. Not a couple of thousands. Even with negotiations. The best VALUE is to buy a car that is 3yrs old with an average number of kms. Approximately 50 to 60k km Millionaire Teacher has several pages related to this. I think you should include them here because that is actually much more important than what you’ve typed in this numbered list. Source: I just bought a used car… Read more »