Financed SUV or a Cheap Marketplace Car: What Does Each Really Cost?

Start with the price: $9,000 in our example, paid in cash. The Canada Revenue Agency says GST does not generally apply to a private sale, such as a purchase from a person who is not a GST/HST registrant. Then add what it costs to find out what you are buying. Those checks are yours to arrange and pay for.

• A lien search. A registry agent searches the Personal Property Registry using the vehicle's VIN. Fees vary by agent: one charges $10.00, another $15.00 plus disbursements. The Government of Alberta says that if you buy a car with a lien you may be responsible for it.
• A pre-purchase inspection. AMVIC, the council that licenses Alberta's vehicle dealers, recommends a pre-purchase mechanical inspection by an automotive technician. Ask the shop its price before you book.
• An out-of-province inspection, if the car came from another province. The car has to pass one before it can be registered in Alberta. Inspection facilities set their own prices and must post them, and the vehicle owner pays.

Those checks are only part of the picture. The line that decides the real cost is the one nobody can fill in yet: what the car needs. The sections below show who carries that risk.

Take a $24,000 used SUV. At a licensed Alberta dealer, GST at 5% is added to the advertised price: $1,200. With $0 down, the loan is $25,200. At the middle of the 550–599 band's rate over 72 months, that is about $531 a month, or ~$245/bi-weekly.

Over the whole loan you would pay about $38,270 in payments, and about $13,070 of that is interest. That interest is the price of borrowing, and it is real money. The Financial Consumer Agency of Canada's advice is to look at the full cost over the term of the loan, interest included, and not only the monthly payment.

The example leaves out any fee a lender charges. In Alberta, the advertised price of a licensed dealer's vehicle must include all fees except GST and the cost of financing, and AMVIC notes that separate financing costs or charges may apply if you finance. Ask for the full cost of borrowing in writing before you sign.

On the rule of thumb of a payment near 15% of gross monthly pay, that payment fits gross pay of about $3,600 a month. To see what pay a bigger loan needs, read the income a 3-row SUV or minivan loan needs.

Alberta's consumer rules for vehicle sales cover sales by businesses to consumers. AMVIC puts it this way: “The rules only apply to transactions between businesses and consumers.” A licensed business must give you a completed Mechanical Fitness Assessment before you sign a contract to buy a used vehicle, and it must tell you the vehicle's history in writing before you buy: for example, whether it was ever a salvage vehicle, a taxi or a rental. AMVIC also says: “Private sellers are not required to provide a Mechanical Fitness Assessment.”

Be clear about what a Mechanical Fitness Assessment is. AMVIC says it is “an assessment” and “not a pass/fail inspection,” and it is valid for 120 days. It is not a warranty. The Government of Alberta says that any warranty offered with a sale should be in writing and should state exactly what is covered and who is providing it. So on either side of this page, a used vehicle can still need repairs. The difference is what you can see before you sign.

AMVIC also warns about curbers: unlicensed businesses that sell vehicles, some of them posing as private sellers. An ordinary private seller is not a curber, but the same checks protect you from both. Consumers can ask AMVIC to investigate if a licensed business does not operate lawfully.

The cheap car can be the right call when you have the cash and still have money left for a repair, you have a technician you choose inspect it before you pay, and the lien search and the history report come back clean.

The financed SUV can be the right call when a surprise repair would push you to borrow anyway, you want one fixed payment you can plan around, and you want an inspection report and the vehicle's history in writing before you sign.

Neither is right if the payment would not fit your pay. Try the rule of thumb in how much car loan your pay can carry, or call us at (825) 736-4438 and we will go through your numbers.

Sometimes. Lenders treat a private purchase differently from a dealer purchase, so it depends on the file. We can look at financing a car you found on Marketplace or Kijiji, and every lender decides each file. Send us the listing before you pay the seller, so the checks happen in the right order. The steps are in buying from a Marketplace seller in Alberta, step by step, and the full process is in our guide to financing a private sale.