The right and wrong way to buy a car in Ontario
Buying a new or used vehicle can be a scary venture depending on the route you take. The OMVIC “how-to road map” may help make it a smoother ride.
Follow the road map from start to sold
Knowledge is power.
Buying a new or used car can be a smooth ride or a risky road on which you get taken for a ride simply because you didn’t know the game.
The best way to avoid the car-buying blues is to be prepared and protected.
That’s why the province’s vehicle sales regulator, the Ontario Motor Vehicle Industry Council (OMVIC), has launched an interactive how-to guide to help make auto shopping easier.
The “Road to Buying a Car in Ontario” aims to help first-time car buyers, Canadian newcomers unfamiliar with the process of making a vehicle purchase, and anyone suffering from auto dealer phobia.
“These groups are most at risk and they need to know and ask the right questions,” said Terry O’Keefe, OMVIC’s director of communications and education.
“This gives them the basics and understanding of how they are protected under the law by the Motor Vehicle Dealers Act,” he added.
Set up like a board game meandering through a series of steps “from start to sold,” the how-to guide takes you along an illustrated road map highlighting crucial factors in the quest to get the right wheels and best deal.
Doing your homework is the first and most important step before setting foot in a dealership. Consider your budget and all the expenses that come with vehicle ownership, such as insurance, maintenance, cost of fuel and the vast array of options and accessories you may or may not need.
Then there’s financing, whether to buy or lease, pay cash or get a loan. Dealer financed plans can sound enticing with offers of employee pricing, zero per cent interest, no money down, bi-weekly or monthly payments, and even long terms of eight years or more.
“We see so many consumers make a buying decision based on that monthly or bi-weekly payment,” O’Keefe said, adding: “I can get that car for this much per month? Where do I sign?”
“Perhaps they don’t realize the term for that loan is eight years and they end up with negative equity that has snowballed. After four years if you take it in for a trade-in you still have four years left to pay and that’s a lot of negative equity to put into the next vehicle.”
Researching the type of vehicle you’re interested in is important and can easily be done online checking expert and owner reviews, details about reliability, history and value, warrantees, and rates of depreciation by seeing what older models are currently selling for.
Don’t rely on emotions to make your decision, but weigh the pros and cons of buying new or used and whether to purchase from a registered dealer or private seller.
There is a level of consumer protection when buying from a registered OMVIC company, which all dealers must join to do business in Ontario.
Consumers are protected under the Motor Vehicle Dealers Act and the Dealers Compensation Fund if a dealer fails to provide required disclosure that a previously owned vehicle was used as a taxi, limo, emergency service vehicle, a daily rental (unless it as previously owned by someone other than the rental agency or dealer).
A dealer is also required by law to provide the true mileage, make, model and year and disclose in the contract if the vehicle was branded, or rebuilt.
“If the dealer fails to make any of those disclosures consumers are entitled to cancel the contract and get back all of their money in 90 days after they’ve taken delivery,” O’Keefe said.
The car-buying how-to guide lists a total of 22 pieces of information dealers must disclose and O’Keefe said consumers should ask the salesperson to include that data in the contract.
“If you ask for information and the dealer refuses to write that on the contract you should walk away,” he added.
When buying from a dealer, customers are also protected under Ontario’s Consumer Protection Act, but not when buying privately.
“We’re not telling people don’t buy private,” said O’Keefe, “That’s not our message.”
“If you are going to buy private it’s important that you know you are not protected should something go wrong.”
Personally knowing the seller and the car’s history is a safe bet, but be aware there are a lot of used cars for sale on a variety of websites and used car buy-and-sell publications that are actually sold by unlicensed dealers, or curbsiders.
“We estimate that up to 25 per cent of all private classified ads are placed by curbsiders and, unfortunately, the place they get most of their inventory is salvage auctions,” O’Keefe points out.
“They buy badly damaged or written off vehicles, conduct dubious repairs and sell them to unsuspecting consumers. Often you can’t even find them again because the vehicle wasn’t in their name when they sold it — a common curbsider ploy.”
If the car isn’t in the private seller’s name or it has been owned for a short time, like a couple of months, those are two key red flags the buyer should heed.
Ask to see the ownership and the vendor’s driving licence and if they claim to be selling it for an ailing friend or relative, it may be true but it is also a classic curbsider tactic, as is rolling back the odometer.
“We convicted one curbsider last year with 42 counts of curbsiding, where he’s spun back the odometer on every vehicle and these were all expensive vehicles,” O’Keefe said.
“He and the company he represented received fines of $393,000 when convicted and within two months he was before the courts again after we charged him for selling another 30 vehicles, which we’re alleging he’d rolled back the odometers on all 30 of those as well.”
Some honest private sellers do provide vehicle histories to help them sell their cars, but it’s wise to spend the $20 to get the vehicle’s history through Service Ontario for peace of mind as investigators have found cases of auto documentation altered with vital information removed.
Buyers have had their cars repossessed because details like liens on vehicles were removed from the paperwork. It is also important to have a mechanic you trust inspect the car so you don’t discover the truth about its condition too late.
As far as new cars go, be aware of all-in pricing rules dealers are bound by and also, unlike buying health club memberships and buying from a door-to-door salesperson, there is no cooling off period once you’ve signed a new or used car contract.
The advertised price has to include all fees and charges. Dealers can only add HST, the cost of putting licence plates on the vehicle and the price of additional options requested by the purchaser.
This summer OMVIC took action against Toronto dealer Platinum Cars Inc., fined $21,000 for breaking the all-in price rule in 22 ads that stated costs did not include a $399 administration fee.
“We still unfortunately see a lot of non-compliance from dealers with this particular component of the new regulations and that’s why we’re trying to educate consumers about it,” said O’Keefe.
Earlier this year, OMVIC conducted a survey that found only 24.8 per cent of Ontarians were aware of the all-in pricing rule that was included in the auto dealer’s act.
OMVIC inspectors who have gone undercover as car shoppers found some dealers weren’t complying with the rule and slapping additional charges on customers, and all Ontario dealers have been warned about this no-no.
And unlike the 14-day refund policies some retailers have, new car buyers in Ontario cannot change their mind after they’ve signed the contract and paid for a new or used car from a registered dealer.
OMVIC’s survey also found that only 13 per cent of the people polled in Ontario last spring knew there was no cooling-off period when buying from dealers in the province.
It was those and other survey findings that have prompted the organization to develop the automotive consumer education program and create their detailed and interactive car-buying how-to guide.
So, take a spin and see just how much you can learn about car-buying with confidence with OMVIC’s “Road to Buying a Car in Ontario.”