Congratulations! You passed your G2. Now you want a car of your own. But buying your first car in Ontario involves more than picking something you like and handing over the cash.
There’s the price of the car itself, then insurance, fuel, maintenance, and the paperwork to register it. For a new driver, insurance alone can cost more than the car payment. Knowing what to expect before you shop saves you money and stress.
Here’s a practical guide to budgeting for, choosing, buying, and registering your first car as a new driver in Ontario.
How much should a new driver budget for a first car?
The purchase price is only part of the cost. A realistic first-car budget includes five things: the car, insurance, fuel, maintenance, and registration.
Insurance is the one that surprises most new drivers. A new G2 driver in Ontario often pays between $3,000 and $6,000 per year, sometimes more for younger drivers in busy urban areas. That can easily cost more over a year than a reliable used car. Build it into your plan before you buy, not after.
Fuel, routine maintenance, and the one-time registration costs round out the picture. A good rule is to look at the total yearly cost of owning the car, not just the sticker price.
Should a new driver buy new or used?
For most new drivers, a used car makes more sense. New cars lose a large chunk of their value in the first few years, and as a new driver you’re statistically more likely to have a minor incident while you build experience. A used car keeps your money at risk lower.
A used car is also usually cheaper to insure than a new one. If you’re financing or leasing, your lender will require full coverage, which raises your premium. If you own a used car outright, you can choose lighter coverage and save.
What kind of car is cheapest to insure for a new driver?
Older, reliable sedans with strong safety ratings are the cheapest to insure. Sports cars, luxury vehicles, and models with high theft rates cost the most.
Before you commit to any car, get an insurance quote for that specific model. The difference between two cars in the same price range can be hundreds of dollars a year. The car you drive is one of the few insurance factors you control completely, so use it.
We cover the full picture of new-driver insurance, including what drives your rate and how to lower it, in our guide to car insurance costs for new drivers.
Does completing BDE help before you buy your first car?
Yes, and this is the step most new drivers skip. Most Ontario insurers offer a discount to new drivers who’ve completed an MTO-approved Beginner Driver Education (BDE) course. The discount typically runs from 5 to 15 percent off your base premium.
On a $4,000 premium, a 10 percent discount saves about $400 a year. Over three years that’s more than double the cost of the course. If you’re about to insure your first car, having your BDE certificate in hand means a lower rate from your very first policy.
Drivisa is Canada’s driving education platform, and its MTO-approved BDE course is $494. You can get started for $49 and complete the rest at your own pace through the app. When you’re shopping for insurance on your first car, provide your BDE completion certificate to make sure the discount gets applied.
What do you need to buy a used car in Ontario?
To buy a used car from a private seller in Ontario, you’ll need a few specific documents:
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- A Used Vehicle Information Package (UVIP), which the seller is legally required to provide. It costs $20 from ServiceOntario and shows the car’s registration history, lien information, and wholesale value.
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- A signed bill of sale, which is part of the UVIP.
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- A Safety Standards Certificate, which confirms the car meets minimum safety standards. It’s valid for 36 days and comes from an MTO-licensed inspection station.
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- Valid Ontario auto insurance, which you need before you can register the car.
If you buy from a dealership, the dealer usually handles most of this paperwork for you, which is one reason first-time buyers often start there.
What’s the step-by-step process to buy and register a used car?
Here’s the order to follow for a private sale.
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- Check the car. Match the VIN on the vehicle to the ownership permit and review the UVIP for liens or odometer issues.
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- Get a Safety Standards Certificate from a licensed inspection station, unless you’re buying from an immediate family member.
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- Sign the bill of sale and have the seller sign over the ownership permit.
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- Get Ontario auto insurance on the car before you drive it.
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- Visit a ServiceOntario centre to register the vehicle, pay the tax and fees, and get your permit and plates.
You have to register the vehicle within six days of buying it, so don’t let the paperwork sit.
What does it cost to register a car in Ontario?
When you register a used car bought privately, you pay 13 percent Retail Sales Tax. The tax is calculated on the higher of the purchase price or the car’s wholesale value listed in the UVIP, so a suspiciously low bill of sale won’t save you money.
On top of that there’s a vehicle permit fee and a licence plate fee if you need new plates. A Safety Standards Certificate has its own cost that varies by inspection station. If you buy from a dealership, you pay HST on the purchase price instead, and the dealer typically rolls the paperwork into your purchase.
There’s one exception worth knowing. If you’re getting the car as a gift from an immediate family member, you may qualify for one tax-exempt transfer within a 12-month period by completing a sworn statement.
Do you need an emissions test to register a car in Ontario?
No, not for a regular passenger car. Ontario only requires emissions testing for heavy diesel commercial vehicles. Light passenger and non-diesel vehicles don’t need a test to register, though all vehicles still have to meet emissions standards on the road.
Should you finance or pay cash for your first car?
It depends on your budget and what you can afford to tie up. Paying cash for a used car you own outright gives you the most flexibility, including the option to carry lighter insurance coverage.
Financing or leasing spreads the cost out, but it comes with two trade-offs. You’ll pay interest, and your lender will require full collision and comprehensive coverage, which raises your insurance bill. For a new driver already facing high premiums, that combination adds up fast. If you finance, factor the higher insurance cost into the monthly math.
Frequently Asked Questions
Can I register a car without insurance in Ontario? No. You need valid Ontario auto insurance before you can register a vehicle and get plates. Line up your insurance before your ServiceOntario visit.
How long do I have to register a used car after buying it? Six days from the date of purchase. Missing the window can lead to fines, so register promptly.
Do I need a Safety Standards Certificate to transfer a car from a family member? No. A Safety Standards Certificate isn’t required when you transfer a vehicle to a spouse or close family member, though the car still has to be safe to drive.
Is it cheaper to be added to my parents’ insurance policy? Often, yes. Being listed as an occasional driver on a family policy is usually cheaper than a standalone new-driver policy. Talk to your family’s broker before assuming you need your own.
Does the color of my car affect my insurance rate? No. That’s a common myth. Insurers don’t factor vehicle color into your premium. Car color does affect nonetheless the price of the car. The most common car colors (Black, White, Silver, Navy blue) tend to be more expensive as they have a higher demand, cars with specific colors (Red, Yellow, Orange, Baby Blue) have lower demand and tend to be priced at 10-15% cheaper.
What’s the single best way to lower my insurance before I buy? Complete an MTO-approved BDE course and provide the certificate when you get quotes. It’s the one discount you can earn before you ever own a car.
Getting your G2 and your first car around the same time? Complete Drivisa’s MTO-approved BDE course first so you qualify for insurance discounts from day one. Enroll at drivisa.com and get started for $49.
