Buying a car in the U.S.
 

many pros – many cons

 

Is it worth it?

(updated August 27, 2008)

 

The Canadian dollar reached par with the U.S. dollar in late September, 2007 for the first time in over 30 years. This touched off a whirlwind of changes in the pricing of new and used cars in Canada, which has never been seen before.

In the following weeks and months, seemingly never ending media stories of how low new car prices were in the U.S., caused Canadian new car sales to drop, as many consumers either delayed their purchase or bought new cars in the U.S.

Most car companies reacted quickly by offering new cash rebates and or attractive low interest loan and lease rates in an effort to drive traffic back into quiet showrooms. This caused great confusion in the marketplace as consumers scrambled to try to figure it all out.

At CarCostCanada, our customer service department spent most of their days answering questions about buying cars in the U.S. and our data department scrambled to keep up to the ever changing prices, rebates and interest rate offers as the car companies changed their programs dramatically three to four times more often than normal.

Now that things have settled down and the U.S. question is rarely asked, as Canadian consumers, are we better off today than we were last fall? Absolutely!

In most cases new cars in the U.S. are still less expensive than they are in Canada, but the gap has narrowed very significantly. In the fall, with a Canadian dollar worth more than the U.S. dollar, it was common to see Canadian prices on similarly equipped vehicles 20%-25% higher than in the U.S., even after factoring the cost of getting one home.

Today the story is quite different. Now that the Canadian dollar is worth a little less than the U.S. dollar and car companies have either lowered their prices or increased their incentives, which effectively is the same thing, the gap has closed to a more reasonable average of 10%-15%. The gap is even smaller on many popular small cars after factoring in all costs of importation.

However, in many cases the new lower Canadian prices are not very easy to obtain, since most of the lower prices are not advertised. Some are, but many are not.

Lower new car prices have caused lower used car prices. With most car companies leasing 40%-50% of all new cars, they don't want used car prices to drop too much. So on the one hand they are prepared to lower new car prices to sell more, but if it’s too transparent, the used car prices on all of their lease returns will trigger huge losses. See 'Effect on leasing' below.

Therefore, in many cases they've left their new car Retail prices the same, while lowering their Wholesale prices to the dealer via secret factory to dealer rebates, to allow them to discount further than ever before. The problem is, if you know about these rebates, you’ll get them. If you don't, you may not get them.


This is where a CarCostCanada membership really becomes valuable.

When you join for only $39.95not only will you have full access to our proprietary database of dealer wholesale invoice prices, you’ll also have access to all of the current secret factory cash rebates. We'll also help you find a good low-priced dealer and send you email alerts any time prices change on any vehicle in your Wholesale Invoice Price Reports history folder.

To get your CarCostCanada Wholesale Invoice Price Reports click here


Still thinking of buying a car in the U.S.?

Before wasting too much time drooling over lower U.S. MSRP (Manufacturer Suggested Retail Prices), get a CarCostCanada Wholesale Invoice Price Report first to see how low you can actually buy a new car in Canada, after factoring in the deals you can get by being a CarCostCanada member. Then read the balance of this report.

As a general rule of thumb, most vehicles priced at less than $30,000 Canadian rarely make sense to buy in the U.S. and the more expensive the vehicle, the greater the potential savings.

The bottom-line is very simple. If the savings are big enough and the aggravation is small enough, it's worth it, otherwise it's not.

Since everyone's personal circumstances are different, please read carefully.


Latest News!

Canadian prices now lower! Canadian car companies have recently announced very attractive cash rebates, low interest rate loans and leases, as well as numerous other incentives to help offset higher Canadian retail prices.

Many of the most attractive cash rebates are secret and therefore not advertised. However, as a CarCostCanada member you will have full access to ALL Factory Incentive Programs.

Effect on leasing

The dramatic drop of off-lease used vehicle values, especially trucks, has caused General Motors (Chevrolet, Pontiac, Buick, GMC, Cadillac, Saab, Saturn & Hummer) as well as Chrysler (Chrysler, Dodge & Jeep) to stop offering discounted or subsidized lease programs, making leasing far less attractive. This has caused a huge strategy shift for dealers who had relied so much on leasing for the bulk of their sales. They now had to convince consumers on buying instead of leasing.


PLEASE DO NOT BUY A VEHICLE IN THE U.S.
UNTIL YOU HAVE READ THIS REPORT COMPLETELY

We have heard from many who have successfully bought and imported a vehicle from the U.S. and saved thousands. We have also heard many horrific stories. Please be very careful.

Our totally unbiased analysis is not intended to convince you to buy or not to buy a car in the U.S. Our goal is to inform you of all of the pros and cons that you will have to consider, to make an informed decision.

Step 1: Can you import the car you want?

With recent government regulation changes most new vehicles are now ADMISSIBLE in Canada, but not all. If a vehicle is listed as INADMISSIBLE it cannot be imported period!

For a full current list of ADMISSIBLE and INADMISSIBLE vehicles click here

Step 2: How are you going to pay for it?

You cannot finance or lease a car in the U.S. You must be a cash buyer.

If you do not have the cash, you may be able to arrange a line of credit or other unsecured loan. Your other option would be to have a Canadian dealer buy and import the vehicle for you. Many are now familiar with the process. You would then be able to arrange a normal secured loan directly through the dealer or from your own bank.

Compare the cost of financing your U.S. vehicle at regular bank rates with the low rate financing and leasing deals typically available on Canadian models. You may find that once you add up the higher interest costs, it may not be worth it.

Step 3: Costs of Importing a vehicle

Over and above the cost of buying a vehicle in the U.S., you will also be faced with a number of additional costs including:

  • Shipping and transportation costs - $500-$1,500
  • Customs brokerage fees - $200-$500
  • Import duties – 6.1% for vehicles built outside of North America
  • Federal air conditioning excise taxes and heavy weight taxes- $100-$500
  • Federal Green Levy / Fuel taxes on vehicles with poor fuel economy- $1000-$4,000
  • Recall clearance letters - $200-$500 on some makes
  • Canadian standards modifications – varies by make and model
  • Miscellaneous other fees and costs- $200-$500
  • Your time – How much is your time worth? You don’t work for free. Factor in the time you'll spend by your normal hourly wage times two to cover the aggravation factor.

Step 4: Finding a Dealer to sell you a new car

Most car companies restrict their dealers from selling new cars for export. You may have to contact a number of dealers before finding one which will cooperate.

Used cars are typically not a problem.

Step 5: Finding the best deals, discounts and rebates

Check pricing carefully. Many U.S. dealers include rebates and discounts in their pricing that you will likely not qualify for.

Canadian car companies have recently announced very attractive cash rebates, low interest rate loans and leases, as well as numerous other incentives to help offset higher Canadian retail prices. Many of the most attractive cash rebates are not advertised.

Before buying a U.S. vehicle, get a CarCostCanada Wholesale Invoice Price Report which discloses all of the secret factory rebates and dealer discounts available to Canadians. In many cases, once you take the Canadian deals into account, buying in the U.S. is rarely worthwhile.

To get your CarCostCanada Wholesale Invoice Price Reports click here

Step 6: Factory warranties

Some Canadian car companies will not honour warranties on U.S. purchased vehicles, even used ones. Notable examples include: Honda, Acura, Chrysler, Dodge, Jeep, Subaru and Mitsubishi. Nissan voids warranties on cars exported before they are 6 months old.

Please contact the customer service departments of the car companies of both Canada and the U.S. Tell them that you are planning to buy a U.S. car and that you want to confirm that the warranties will be honoured at Canadian dealers. Request a response in writing by mail and or email. Customer service 800 numbers can be found on the company’s websites, typically under 'contact us'.

Note: Free maintenance packages and extended warranties on U.S. models typically do not get honoured in Canada, even if they do honour the basic warranty. Ask about roadside assistance as well.

If warranties will not be honoured in Canada, you may be able to arrange to purchase an after-market extended warranty through a Canadian dealer. Otherwise, if you live close to the border, you will always have the option of taking your vehicle to the U.S. for any warranty work. Please note: Chrysler, Dodge and Jeep cancels the warranty as soon as it's exported and Nissan if it's exported before its six months old. GM will only honour US warranties once the vehicle is 6 months old AND has a minimum of 7,500 miles.

Step 7: Vehicle modifications and inspection requirements

Most ADMISSABLE models do not require any modifications to meet Canadian requirements, other than daytime running lights in most cases. Avoid any vehicles that require other modifications, which can be very costly.

All U.S. vehicles have speedometers and odometers in miles. Most speedometers also have kilometres shown on the inside of the circle, but not all. Some models allow you to change the display to kilometres where others do not. You can change the instrument cluster to the Canadian version, but this tends to be quite costly. It may also cause confusion at a later date when you try to make a warranty claim.

More information can be obtained on the Government website for the Registrar of Imported Vehicles www.RIV.ca

You must supply a factory recall clearance letter to register your U.S. car in Canada. Many car companies are making it very difficult to get the required factory recall clearance letter. Some also charge $200-$500. For more information click here.

Modifications and inspection requirements. Please read the information after the link very carefully. Modifications and inspection requirements

To see a complete how-to-import list on the Registrar of Imported Vehicles website click here

Additional information and helpful links regarding importing a U.S. vehicle

RIV Contact Information

RIV FAQ's

Driving Television produced an excellent series of videos dedicated to the topic of buying a car in the U.S. To see all of the videos click here

CarCostCanada members can also get personal advice about buying a car in the U.S. vs Canada by clicking here

Online Forums: CarCostCanada has a forum where you can post your questions or comments. Click here

NOTE: Due care and consideration has gone into preparing this report and the contents of this report should be considered for discussion purposes only and should not be viewed as specific instructions as any one's personal circumstances may differ and therefore require professional direction and/or advice.

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