subject: What are the miscellaneous fees/expenses that are associated with buying a used car? [print this page] Buying a car is not just about paying the price tag and running off with the vehicle right away. There are some extra costs that are associated with purchasing a used car of your own. Paying these costs are just as important as paying the car's price itself, simply for the fact that they are mandated by law. In this article, we will talk about the the various "miscellaneous" expenses one by one.
First, there's the insurance costs.
Payments for a car's insurance coverage is probably the single most expensive additional cost that comes with acquiring a vehicle. It may be true that insurance counts mainly when (and if) accidents do occur, but they are still mandatory nevertheless. Hefty fines are imposed on people who fail to show insurance documents when asked by officers on the road.
However, only one type of insurance is actually required by the government. This is called third party liability insurance, otherwise known as TPL insurance. TPL insurance is a type of policy that insures against damage to other persons' property or lives should an accident happen where your vehicle is part.
The other type of insurance is called a comprehensive insurance. Aside from the usual TPL coverage, a comprehensive auto insurance policy also covers damage done to your car should the other party have no TPL insurance. It also covers costs if you happen to have inflicted damage onto the car via an accident or some other unfortunate event.
Insurance costs for vehicles vary according to the insured vehicle's year, make and model. It is also dependent on the age of the vehicle, whether it's a used car or brand new. Typically, used cars have lower insurance costs that their brand new counterparts, owing to a lower replacement value brought about by their age.
Second, sales taxes.
Retail sales taxes and harmonized sales taxes are commonly a part of every car buying process. They are based on the value of the cars involved, along with some other technicalities. A separate article was written to tackle this topic exclusively. Furthermore, a small fee for the appraisal process may also be charged, just in case the purchase value of a car is lower than what is written in the Canadian Red Book.
As an overview, retail sales taxes are applied to used cars that were sold between two private individuals. On the other hand, harmonized sales taxes are collected when the car sales transaction took place with a professional car dealer as one of the transacting parties. Proper payment of taxes is essential in making sure that the transfer of owner and the bill of sale will be recognized by the Ontario Provincial Government as valid and in effect.
Third, miscellaneous expenses.
There are also other miscellaneous expenses that are connected when in the process of purchasing a used car. These costs are often relatively miniscule, but are worth noting nonetheless.
Of course, a newly-purchased second hand car must be registered to the authorities as your own, as soon as all the other mandated expenses have been taken care of. This registration process entails a nominal fee that must be paid to Ontario's transportation ministry. A small fee may also be paid to the notary for the notarization of the bill of sale.
What are the miscellaneous fees/expenses that are associated with buying a used car?
