How to pay for your used car?

Now that you've chosen your next used vehicle, there's still an important point to address: financing! And if you haven't yet settled on a specific model, you might be wondering about how to buy your vehicle.

How to pay for your used car? What are the steps to follow? What do 1st, 2nd, and 3rd chances in auto credit mean? Groupe Beaucage gives you more insight into the intricacies of used car financing!

The financing process

Unless you're paying for your vehicle in full, you'll need to apply for credit. This can be done directly on-site – the most common method – or by going directly to your financial institution to apply for a loan.

What's the advantage of dealing with a used car dealer, like Occasion Beaucage? Unlike your bank, which will be the only one evaluating your application, the dealer can submit your credit application to various financial institutions to secure the best financing terms, not only in terms of interest rates but also repayment terms.

Step 1: Determine your maximum budget

This is the very first step, even before choosing a vehicle. Indeed, there's no point in shopping for a model that would be beyond your means or would result in monthly payments so high that they would suffocate you!

Instead, you should determine how much you can afford to pay per month for a car, as many factors, besides the loan amount, can affect your payments, such as the interest rate and the amortization period.

Step 2: Shop around

Once you know how much you can afford to pay each month – or every 2 weeks, depending on the financing option you prefer – you can, if you haven't already, shop for a vehicle that meets your financial criteria; our credit specialists can advise you on which vehicles to consider based on your needs and budget.

Step 3: Submit your financing application

If you're buying your car from a dealership, they'll fill out the financing application for you; however, if the desired vehicle is from a private seller, you'll likely need to submit the application yourself to your financial institution.

Taxes in Quebec

What is the sales tax on a used vehicle in Quebec? Once again, it depends on where you acquire your vehicle from!

Purchase from a Private Seller

If you buy your vehicle from a private seller, you'll only have to pay the QST when you go to the SAAQ, but beware, as different scenarios apply here as well.

A "Standard" Private Seller

If you buy the vehicle from a private seller who isn't a close family member (like an uncle, a friend, or a stranger), you'll have to pay the QST on the market value of the vehicle and not on the price paid.

So, if the vehicle is worth $5,000 but you paid $4,000 for it, you'll have to pay tax on $5,000.

A Close Family Member

In this case, you'll pay the QST on the selling price regardless of the market value. Thus, if you paid $1,000 for a vehicle worth $10,000, the tax will only be levied on $1,000.

You might even be doubly lucky because if this close family member gives you the vehicle, you won't have to pay any tax!

Purchase from a Dealer

The sales tax for a used vehicle from a dealer applies at both the federal and provincial levels; therefore, you'll need to pay the GST and the QST on the selling price of the vehicle, plus the price of any additional accessories (tires or others) that you've added.

Is a CO2 tax payable on a used car?

There is no CO2 tax in Quebec; instead, it's the tax on energy-intensive vehicles. It does not apply to used vehicles. You can contact one of our advisors to learn more about the details of this tax in Canada!

Credit Chances

You've probably seen these advertisements announcing 1st, 2nd, or 3rd credit chances; but what do they really mean?

As the name suggests, a 1st credit chance allows a first-time buyer – often a young adult – to get financing for a used car even though they have no credit experience.

In the case of the 2nd credit chance, it's not just people who have or have had credit problems; on the contrary! Indeed, this category can also include self-employed individuals (some banks are hesitant to grant them loans due to fluctuating incomes), unemployed individuals, or, for example, buyers with a slightly higher debt-to-income ratio but who still have a good credit score. The interest rates demanded are generally higher than for a conventional loan.

Finally, 3rd chance credit financing, also called in-house financing, allows buyers with a poor credit history to leave with a vehicle, with a down payment and the remainder financed by the dealer. Here too, the interest rates are higher than for a conventional loan, but this type of financing allows a greater number of buyers to access financing.

To learn more about financing options for a used car or to come and make your choice from our vast inventory, come see us today! We are located near Sherbrooke, Granby, Drummondville, and St-Hyacinthe!