If you've found yourself complaining that the cost of purchasing a vehicle within Canada is much more expensive than purchasing the same car in the United States, you're not alone. However, with the U.S. recession having a huge impact on economies worldwide and the Canadian dollar rising, some have found more success purchasing cars in the U.S. and importing them back home.
If you've already considered this route, know what to expect before, during and after a purchase ahead of time, including import regulations, fees and more. You never know; after exploring the process, you may decide that buying and importing U.S. vehicle to Canada isn't your best option.
Canadian vs. U.S. Vehicle Costs
Comparisons between Canada and U.S. vehicle prices show that Canadians pay almost 20 percent more than Americans for their new vehicles because a large number of auto manufacturers are located in the United States. This adds up to between $5,000 and $6,000 more per vehicle, on average.
Car manufacturers are known for justifying the price difference by claiming the lost dollars must be made up, but it seems some Canadians don't feel the explanation is good enough and are instead taking their business south of the border in hopes of finding a better deal.
The Costs Associated with Importing a Car
Conducting a vehicle import from the U.S. to Canada has worked for some, especially because the cost of importing itself is free thanks to the North American Free Trade Agreement (NAFTA). However, a Canada car import is not totally free. There are some other costs that could add up rather quickly:
- Exchange rate: The Canadian dollar is about six cents higher than the US dollar, which means a $20,000 USD car could cost you slightly above $21,200 CAD.
- RIV Fee: The Registrar of Imported Vehicles (RIV) requires buyers to pay a fee of $205 plus their Goods and Services Tax (GST) in all provinces. A Quebec Sales Tax (QST) is required for that particular province.
- Shipping costs: If you cannot drive the vehicle yourself back across the Canada border then you may need to factor in shipping costs from a customs broker.
- High emission excise tax: If a vehicle you want to purchase has a high emissions excise tax (also known as green levy), you could pay $1,000 to $4,000 extra for your vehicle. Check the potential vehicle tax at the Natural Resources Canada Website.
- Other costs: Some other possible costs include air conditioning excise tax ($100 CAD) and duty (6.1 percent) if the vehicle wasn't purchased in North America.
It's possible that after adding up all of the costs you'll incur with purchasing from the United States, buying the car won't be worth it. Be sure to consider all of the above expenses before making the purchase.
How to Import a Car
- Find a reputable dealer: It's important to find a dealer that you trust will know how to help you import your car and ensure it is safe and reliable. To confirm a car is in quality condition, you could order an inspection from Carchex.com.
- Check out additional inspection requirements: The RIV is a great resource for helping potential buyers determine what a vehicle needs in order to pass federal inspection requirements.
- Secure financing and purchase the car: Since Canadians can't obtain car financing in the United States, you will need to explore your financing options at home before making the purchase.
- Prepare to visit Canada Customs: After you've purchased your vehicle, you'll need to secure your vehicle title, bill of sale and VIN number so that when you reach Canada Customs, they will release your car. Also, don't forget your driver's license and passport.
Deciding whether to purchase a vehicle in the U.S. is a considerable decision that requires lots of research. However if you've weighed your options and find importing your new vehicle across the border is financially beneficial, it could be the right choice for you.
Author Bio: This guest post was written by Danielle Nagami from Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide.