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Buying Your First Car in Canada

Buying Your First Car in Canada

Buying Your First Car in Canada

One of the first big purchases you're likely to make after settling in Canada is a car. It's common for people to own their own car here because it makes getting around much easier. Whether your car is new or used, most people need to borrow funds to purchase one.

Should you buy or lease your first car?

There are several ways to purchase a car including taking out a car loan or signing a lease. The decision to buy or lease comes down to how you’ll use your vehicle and what you can afford.

  • Do you want to upgrade every few years or will you have your vehicle for five years or longer?
  • How much you'll drive each year (number of kilometers)?
  • How do lease payments and other lease conditions compare to a monthly loan payment plan?

Your answers to these questions can make your decision that much easier.

Buying Your First Car in Canada

Car loan

You can borrow up to the full amount of the purchase price and pay it back over a predetermined time, typically 1 to 5 years. You can choose to make payments monthly or bi-weekly. As well, you can make additional loan payments or pay off the full loan at any time.

You can either get a car loan at a dealership when you buy the car, or you can buy your car privately. If you choose to buy your car privately you can get pre-qualified for a car loan at any RBC® branch. If you pre-qualify for a loan you can shop with confidence, knowing what your budget is.


You pay a monthly amount to a leasing company, usually for a term of 1 to 5 years. At the end of the term, you can return the car or buy it outright for the price stated in your lease agreement. Here’s what you need to know about the terms of the lease:

  • There is often a maximum number of kilometres you can drive per year.
  • The vehicle must be serviced regularly.
  • You may be charged for excess kilometres, or wear on the vehicle when you return it.
  • There are penalties if you break the lease before the end of the term.
Remember, you don’t actually own the car you lease, but you’ll be responsible for all of the maintenance and repairs during the term of your lease.
Tips on lowering your car financing costs:
  • Make as large a down payment as possible. A larger down payment can help you get more affordable monthly payments.
  • Use the prepayment options. Even a small lump-sum payment, or a slight increase in your regular payments, can make a big difference in interest savings over the loan’s term.
  • Consider a variable-rate loan. Take advantage of fluctuating rates. If rates decline, you’ll benefit.

Our checklist for buying a car2

  • Research your car online.
  • Know what you can afford for a monthly car payment. Get an estimate for your car loan payments.
  • Look into the costs of fuel, insurance, parts and maintenance so you can be sure your car is affordable once you drive it off the lot.
  • Get an automobile insurance quote. You have to have insurance to own a car in Canada.
  • Test drive different vehicles.
  • If you’re buying a used vehicle make sure you get it inspected.
  • For a new vehicle – ask your dealer for an RBC Royal Bank® car loan.
  • New and used vehicle financing is also available at any RBC Royal Bank branch.

Get on the road faster and buy your first car in Canada – with an RBC Royal Bank car loan1:

  • No Canadian credit history required1 at a dealer
  • Take up to 60 months to pay back your loan1
  • Flexible financing for new or used cars up to 4 years old1

Whether you buy your car at a dealer or privately, it is easy to get started:

  • Choose your car.
  • Negotiate your price with the dealer or private seller.
  • Get an RBC Royal Bank car loan

TIP: Bring your driver’s licence, landing papers or permanent resident card, and proof of employment to the dealership. You’ll need all 3 items.