Are you shopping for a new vehicle? The following tips may be of interest to you before making a purchase from a dealer.
Is the merchant selling a vehicle to you holding a license from the Office de la protection du consommateur? This license is mandatory for all motor vehicle merchants.
Financial protection
In order to obtain a license, a merchant must provide a deposit. This money can be used to compensate you if the merchant does not comply with their obligations. The deposit could be used, for example, to refund a down payment you made to purchase a vehicle if the merchant were to go out of business before the vehicle could be delivered to you.
To make sure the merchant you are doing business with has a valid license, refer to our tool Get information about a merchant. The merchant must also:
- display the license on their premises;
- include their license number in the contract they are providing you.
If you are planning to purchase a new vehicle, you should first:
- determine the price you can afford to pay for a vehicle. Take into consideration the cost of insurance and the vehicle’s fuel consumption;
- decide which type of vehicle suits your needs;
- find out which makes of vehicles are considered good choices. You can do this by consulting magazines, guides or specialized organizations. For example, you can obtain information from Éditions Protégez-Vous (in French only) or from the Automobile Protection Association;
- consult classified ads to get an idea of the price of vehicles on the market.
The Office de la protection du consommateur does not test products. We cannot make recommendations on makes or models of vehicles to purchase.
Merchants may offer you options that could increase the total price of your vehicle: an extended warranty, antirust protection, etc.
Take some time to assess the benefits of these options in relation to their price. Read the contract. Ask questions. These protections can be quite expensive compared to the benefits you receive.
Accepting or declining the additional warranty
It is your responsibility to assess whether the additional warranty (such as an extended warranty) offered to you is advantageous. Before paying for such a warranty, however, it is important to be aware of the existence of the legal warranty.
The Consumer Protection Act provides that a vehicle purchased from a merchant must serve for normal use, for a reasonable time period, given the price paid.
Before offering you an additional warranty, merchants must inform you that a legal warranty covers the vehicle you are purchasing. They are obligated to:
- verbally inform you of the existence of the legal warranty as well as what it contains;
- provide you with a short written document explaining what the legal warranty is;
- talk to you about the existence and duration of the manufacturer’s warranty, and whether it is provided free of charge with the vehicle. If this is the case, merchants must, upon request, verbally inform you of how to find out about the contents of this warranty.
Fees that may be included in the price
Specific duty on new tires may be charged separately. Merchants are permitted to add this duty to your bill.
Transport fees and fees related to excise taxes on air conditioners are an integral part of the vehicle price, as you must inevitably pay them. They cannot be added to the total price you were first quoted.
A merchant could ask you to leave a down payment (or a “deposit”) or make a promise to purchase to reserve the vehicle you want to get.
Promise to purchase
A promise to purchase can take various forms, from a simple verbal promise to a formal sales contract. In order to reduce the risk of misunderstanding, it is recommended that you sign a clear written agreement. Such an agreement could indicate, for example, a delivery date and the price of the vehicle.
Do not settle for a delivery date that is vague or subject to change using terms such as “as soon as possible,” “priority delivery” or “in 4 to 6 months.”
Furthermore, do not accept an agreement that contains a provision whereby the merchant reserves the right to increase the price of the vehicle. Such a practice is an offence under the law. Contact the Office to file a complaint.
Down payment
As a general rule, the best course of action is to make no down payment (or "deposit") until you have decided to purchase the vehicle. If you must make a down payment, pay the smallest amount possible. In any case, have the contract indicate that the down payment will be reimbursed in full if you cancel.
What happens if you change your mind or the merchant cannot fulfill the promises made to you? Whether or not you can cancel depends on each situation, the documents you have signed and how you were planning to pay for the vehicle. If you are dealing with a merchant who refuses to give you back your money, contact the Office to file a complaint.
For more information, refer to the page titled Cancelling a contract.
Before signing a purchase contract for a new vehicle, make sure it contains all relevant information.
New vehicle dealers are not required to use a specific form of written contract, except in the case of instalment sales (when your purchase is financed by the merchant). Merchants do use a hard copy contract in which they include all the information regarding the sale.
Information to be found in the contract
Make sure the content of the contract corresponds to what the merchant promised.
Verify that this information is also present in your contract:
- the place and date the contract was signed;
- the merchant’s name and address;
- your name and address;
- the model year, serial number, make and model of the vehicle, as well as the engine displacement;
- the options;
- the accessories added by the dealer and their price (winter tires, remote starter, etc);
- the vehicle delivery date;
- the total price of the vehicle;
- the amount of the down payment, if applicable;
- the price of the trade-in vehicle, if applicable.
The motor vehicle merchant license number must also be included in the contract.
If you are selling your old vehicle through the merchant from whom you are purchasing your new vehicle (accommodation sale), the related information must be indicated in the contract.
Information on the back of the contract
Take note of the terms and conditions listed on the back of the contract. In particular, you will find the information regarding cancelling the contract.
Different options are available if you decide to purchase your vehicle on credit.
Remember that making the lowest possible monthly payments can be tempting, but it is generally more costly. This makes sense as the repayment of the principal is spread out over a longer term, and interest fees will be added.
Financing offered by the merchant
When you finance your vehicle through the credit company affiliated with the merchant, it is considered an instalment sale. You will pay for the vehicle in a series of instalments over a given period of time.
The merchant retains ownership of the vehicle until you have paid for it in full, even though you take possession at the time of purchase.
Before entering into an instalment sale contract with you, the merchant must evaluate your ability to reimburse the credit applied for. To find out more, refer to the evaluation of your ability to pay page.
0% Financing
If merchants offer you "0% financing" or "0% interest," ask them if the interest rate is identical to the credit rate that will appear in the contract. Doing so can help you avoid unpleasant surprises.
Credit charges represent the true cost of your loan. They include interest, but also, where applicable, insurance subscribed through the merchant (notwithstanding exceptions), administration fees, the value of the discount granted to consumers who pay cash, etc. The interest rate may therefore be 0%, while the credit rate may in fact be higher.
Insurance
Fees for insurance in case of death or invalidity are part of the credit charges, if you accept the insurance offered by the merchant. You are not, however, obligated to subscribe to this insurance.
Borrowing from a financial institution
Borrowing from a financial institution can be advantageous. You may be able to take advantage of the discount that the merchant offers to customers who pay cash.
There are differences to consider between taking out a vehicle loan or a personal loan. From a legal standpoint, a vehicle loan generally constitutes an instalment sale and not a true loan. This means that the financial institution retains ownership of the vehicle until you have paid for it in full, even though you take possession at the time of purchase. A personal loan offers greater flexibility, as you can sell your vehicle at any time, without having to ask permission from the lender.
Loan calculations
You can use a calculator (in French only) to determine certain amounts, such as the monthly payments or the interest rate.
You can choose to sell your old vehicle to the buyer of your choice through the merchant selling you your new vehicle. This transaction is called an accommodation sale. It must be included in the contract.
Advantages of an accommodation sale
An accommodation sale can often allow you to pay less tax on your new vehicle. The buyer of your old vehicle will have to pay the GST and QST. (Normally, the buyer pays only the QST on sales between individuals.)
Example of an accommodation sale
You purchase a new vehicle for $22,000. You sell your old vehicle to a buyer of your choice for $8,000. You will have to pay tax on the difference between the two amounts, in this case $14,000.
Role of the merchants
Merchants conducting transactions in accommodation sales incur no responsibility. They are acting as intermediaries.
If merchants charge fees for acting as intermediaries, they are bound by the same obligations as used vehicle merchants. In particular, they must offer a warranty of fitness to the buyer of your vehicle.
The Office de la protection du consommateur recommends that you avoid signing any documents until you have decided to purchase a particular vehicle. Contrary to popular belief, you do not have the right to cancel a contract if you change your mind within 10 days.
If merchants claim that your signature does not bind you to any commitment, you can ask them to write "no commitment from the consumer" on the document you are signing.
The Office encourages you to find out more about cancellation terms on new vehicle purchases.
Last update : February 28, 2023
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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.
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