New or used? Count the full cost of a car

Do not start from the low monthly payment. Start from your budget and a vehicle inspection, then compare paying cash, financing and leasing; the total cost is what matters, not the instalment.

1. Compare a dealer registered in your province with a private sale, and check the seller’s identity, ownership, vehicle history and liens. Have an independent mechanic inspect it before you pay; a history report alone does not guarantee its condition.
2. At auction, read the conditions before bidding: is the sale as-is? Is inspection allowed? What are the buyer’s premium, taxes and transport? The bid price is not the final cost.
3. Understand the difference: cash avoids borrowing costs, but keep an emergency reserve. A lease gives you use of the car for a term with mileage and condition rules, and you own it at the end only if the contract provides a buyout.
4. If you finance, ask for the APR (annual rate), total borrowing cost, total payments, term and early-repayment conditions. For a lease, ask for the buyout value and fees, and read the whole contract before signing.
5. Be careful with a long loan: it lowers the monthly payment but raises the total cost, and you can end up owing more than the car is worth.
6. Add insurance, maintenance, fuel and taxes to the instalment to know the real monthly cost. In Ontario, check the used-vehicle guide and the UVIP (Used Vehicle Information Package); other provinces have their own procedures.

Caution: Conventional financing may carry interest, and an “Islamic finance” or lease label alone does not prove the contract is religiously suitable.

Bottom line: Do not start from the low monthly payment. Start from your budget and a vehicle inspection, then compare paying cash, financing and leasing; the total cost is what matters, not the instalment.

Last reviewed: 27 September 2026