How to Shop for Your First Car if You’re New to Ontario, Canada?
Welcome to Canada! How’s your move going so far, a little bit of a blur? Totally understandable. It’s exciting, and maybe a little confusing at times. One thing you’ve probably noticed is the choice of transportation. With the cold winters, long distances, and sometimes limited public transit, having your own car can make your life a lot easier. That said, buying your first car in Canada can feel a bit overwhelming, especially if you’re still settling in. You might run into things like not having a credit history here yet, or figuring out what kind of insurance you need. Don’t worry, you’re not alone. At Stratford Kia, we work with newcomers all the time, and we’re here to make the process easier. Continue reading with our team as we’ll walk you through everything you need to know/do when you plan to buy a first car in Canada.
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What You Need to Buy Your First Car
Before you head to the dealership, it helps to know what you’ll need to get started. Buying a car in Canada comes with a bit of paperwork if you plan to take out a loan, which includes a few financial checks, but we’re here to break it down for you.
Valid Driver’s License
First of first, you’ll need a valid Canadian driver’s license. Here’re some situations you may have:
1. Use Your Foreign License Temporarily
When you move to Canada, you are allowed to drive with your valid foreign driver’s license for up to 60 days. After 60 days, you need to switch to an Ontario driver’s licence.
2. Exchange Your Foreign License (If Eligible)
Ontario has agreements with certain countries allowing you to exchange your foreign driver’s license for an Ontario license without taking a road test. Countries with such agreements include: Australia, Austria, Belgium, France, Germany, Great Britain, Hungary, Denmark, the Isle of Man, Japan, South Korea, New Zealand, Northern Ireland, Republic of Ireland, Switzerland, U.S. States. For more information about how and where to exchange your license, visit ontario.ca.
3. Apply for a New Ontario Driver’s License (If Not Eligible for Exchange)
If your country doesn’t have an exchange agreement with Ontario, you’ll need to apply for a new driver’s license. To apply for a driver’s licence in Ontario, you need to:
- Be at least 16 years old
- Be a resident of Ontario
- Pass a vision test
- Pass a knowledge test
Now, you get a G1 licence, which is a leaner license that needs to practice driving over time. To get a full licence, you have to:
- Finish two learning levels: G1 & G2
- Pass two road tests
Again, for more information about different types of driving licences, please visit ontario.ca.
Established Credit History or Valid Credit Score
When you apply for a car loan or lease, lenders look at your credit score to decide how likely you are to repay the money. A good credit score usually means better interest rates and how much you could loan. Without a credit history, lenders don’t have much information to assess your reliability, which can make getting approved more challenging. If you’re new to Canada, you might have little or no Canadian credit history yet. That’s normal, and don’t worry. The good news is, you can start building your credit right away. Simple steps like using a credit card responsibly, making small purchases, and always paying your bills on time will help you build a strong credit history. As your credit improves, you’ll find it easier to qualify for loans with better rates.
Understanding How Credit Inquiries Work
When you apply for credit, like a car loan, lenders will check your credit report. This is called a credit inquiry or a “hard pull.” Each hard inquiry can cause a small drop in your credit score because it shows you’re looking to borrow money. While one or two inquiries won’t hurt much, multiple inquiries in a short time can have a bigger impact. Moreover, there’s another type of credit inquiry, called soft inquiries. It happens when you check your own credit, which will not affect your credit score. If you’re not sure about how an inquiry might affect you, feel free to contact us at Stratford Kia. We can explain how we handle credit checks and help you find the best way to protect your score.
Lease vs. Finance: Which Option Is Right for You?
When you’re getting your first car in Canada, we believe you already heard about leasing or financing. But which one is right for you? Here’s a quick look at the pros and cons of each to help you decide.
Leasing a Car
Pros:
- Lower monthly payments compared to financing
- Usually a smaller down payment
- You get to drive a new car every few years
Cons:
- You don’t own the car. Technically, you’re renting it
- Mileage limits apply, and extra fees may occur if you go over
- You need to keep the car in good condition to avoid extra charges
Financing a Car
Pros:
- You own the car once the loan is paid off
- No mileage restrictions
Cons:
- Higher monthly payments than leasing
- Usually requires a larger down payment
- Responsible for maintenance and repairs
Again, if you’re new to Canada, you might not have a strong credit history, which can impact your financing options. Whether you lease or finance, it’s important to consider your budget and how long you plan to keep the vehicle. The good thing is, here at Stratford Kia, we offer special financing programs for newcomers. Our team is here to help you explore all your options and find a plan that fits your financial situation.
Car Loan Options: Short-Term vs. Long-Term
When financing a car, one of the biggest decisions you’ll make is choosing between a short-term or long-term loan. Each option has its pros and cons, and what works best depends on your financial situation, especially if you’re new to Canada and still settling in.
Short-Term Car Loans (2–4 years)
If you have stable income, some savings for a down payment, and want to own the car outright sooner, short-term financing would be a good choice.
Pros:
- You pay off your car faster
- Lower overall interest costs
Cons:
- Higher monthly payments
- Can be tougher to manage on a limited income
Long-Term Car Loans (5–8 years)
Go for long-term car loans if you’re still building your financial foundation, working a temporary job, or adjusting to life in Canada and need lower monthly payments for flexibility.
Pros:
- Lower monthly payments
- Easier to fit into a tight budget
- Can help you get a nicer vehicle
Cons:
- You pay more interest over time
- You might owe more than the car is worth in early years
Alright, let’s say you’re buying a $30,000 car with a $5,000 down payment and a 5% interest rate. The chart below shows approximate monthly payments compared between short and long terms.
| Term | Approx. Monthly Payment | Total Interest Paid |
| 24 Months | $1,100 | $1,390 |
| 48 Months | $575 | $2,585 |
| 72 Months | $403 | $3,982 |
Additional Considerations for Newcomers and Immigrants
Getting the Right Insurance
In Ontario and Canada, car insurance is mandatory. To get insured, you’ll need a valid driver’s license and often a proof of address. As a new resident, you’ll want to start comparing quotes from different insurance providers. You can contact companies directly, use comparison websites, or work with a licensed insurance broker who can do the shopping for you. Because you might not have a Canadian driving history yet, your insurance rates could be higher at first, but don’t worry, it gets better over time with safe driving and no claims. We’ve also listed a few common insurance terms to help you better understand what’s coming up:
- Liability Insurance: This’s the minimum required by law and doesn’t cover your own vehicle. It covers damages or injuries you cause to other people or their property.
- Collision Coverage: Pays to repair or replace your car if it’s damaged even if the accident is your fault.
- Comprehensive Coverage: Covers non-collision incidents like theft, fire, vandalism, or weather damage.
- Deductible: The amount you agree to pay out of pocket before your insurance kicks in. A higher deductible means lower monthly premiums.
Used vs. New Cars
You may also struggle with a new or used car. If you’re new to the country and watching your budget, it’s worth weighing the pros and cons of each. For many newcomers, a used car is a smart choice. It’s typically more affordable upfront, and you can often find well-maintained vehicles with low mileage. Moreover, you’ll likely pay less for insurance. When shopping used car, look for:
- A full vehicle history report
- A warranty or the option to buy extended coverage
- Low mileage and a clean interior/exterior
- Dealership with certified pre-owned program
On the other hand, new cars are ideal if you want long-term reliability and have a flexible budget. At Stratford Kia, no matter what you choose, we offer financing options for newcomers that apply to both used and new vehicles.
Shop for Your First Vehicle in Canada at Stratford Kia
Buying your first car in Canada as a newcomer might seem tricky, but with the right information and a team that understands your unique needs, it doesn’t have to be overwhelming. Most importantly, plan ahead and ask for help when you need it. The Stratford Kia team is here to guide you through every step. We’ll make sure you find the car you’ve been dreaming of for your new life in Canada. If you’ve got a plan, we’ve got a car for you. View our new or used inventory online, contact one of our Kia experts to get your questions answered, and book a test drive today.
Browse Kia Models at Kia.ca.