Here are 10 crucial things to know before buying a new or used car in Ontario to avoid costly mistakes.

From time to time, we all buy some expensive things such as cars, for instance. In 2022, Ontario had the highest number of total vehicle registrations in Canada, with 9.4 million vehicles.

In Ontario, your consumer rights are protected by law, and no one can take those rights away from you. The 2023 Consumer Protection Act (CPA) in Ontario introduces significant enhancements to safeguard you in various transactions, including those related to purchasing and repairing vehicles. Understanding these rights is crucial for you to make informed decisions and avoid common pitfalls that can lead to costly mistakes.

Do you know that car dealers are not legally required to offer refunds or exchanges? If you believe an individual or business has wronged you, there are actions you can take. But first, you have to know your rights to determine whether you have a legitimate claim.

10 Crucial things to know before buying a car in Ontario

In Ontario, the process of purchasing a vehicle is governed by several legislative frameworks designed to protect consumers. The Motor Vehicle Dealers Act (MVDA) and the Consumer Protection Act, 2023, are central to these protections.

When buying a vehicle in Ontario from a registered dealer, consumer protection includes access to the Motor Vehicle Dealers Compensation Fund (MVDCF) for financial losses, and to the Ontario Motor Vehicle Industry Council (OMVIC) that protects consumer rights and enforces dealer regulations.

1

Your basic rights under the 2023 Consumer Protection Act

The Consumer Protection Act, 2023 (CPA 2023) is Ontario’s updated legislation designed to safeguard consumers in various transactions. Under the Consumer Protection Act, 2023, when buying a new or used vehicle your basic rights are:

• Right to clear information: Businesses must provide consumers with clear and comprehensive information about products and services, including pricing, terms, and conditions. This ensures consumers can make informed decisions.
• Protection against unfair practices: The CPA 2023 prohibits businesses from engaging in false, misleading, or deceptive practices. Consumers have the right to fair treatment and accurate information.
• Contracts must be clear and understandable: Vague language is discouraged in contracts. All required information must be clear, prominent and easy to understand. If there is a dispute over unclear language, it must be interpreted in favour of the consumer by law
• Credit terms must be fully disclosed: Anyone providing goods or services on credit must give the consumer a written statement showing all financing charges and the annual percentage rate of the credit transaction. It must also explain how any extra charges would be calculated if you failed to make the payments.
• You have the right to seek help: Some companies add arbitration clauses to contracts that require you to use a private arbitration process to resolve complaints instead of going to court or seeking assistance from the Ministry of Consumer Services. You are not bound by these clauses, even if you have accepted the agreement
• Misrepresentation is illegal: All charges in a contract must be what they say they are. For example, a business may not add a $20 surcharge for a “tax” that is not really for tax. Make sure you understand what each charge is for and that it’s valid.
• Sales incentives may not be false, misleading or deceptive: A salesperson can offer you an incentive to help find other buyers, but the description of the incentive cannot be false, misleading or deceptive.
• Consumer agreements must disclose all details: If a company isn’t delivering on its contract with you, or if you encounter an aspect of the deal the company was required to disclose by law but didn’t, you have the right to cancel within one year.
• Can your car be repossessed by dealer if you have paid 2/3 or more? – In Ontario, if you’ve paid two-thirds or more of your payment obligations on a financing agreement, the vehicle cannot be seized or resold without the supplier first applying to the Ontario Superior Court of Justice for leave to repossess or resell.

2

Ontario Motor Vehicle Industry Council (OMVIC) and Registered Dealers

The Ontario Motor Vehicle Industry Council is a government-delegated authority that protects consumer rights and enforces laws that motor vehicle dealers and salespeople must follow.

• Consumer protection legislation only applies when you buy from an OMVIC-registered dealer. Purchasing from a registered dealer provides you with protections under the MVDA and access to the Motor Vehicle Dealers Compensation Fund. This fund can provide compensation if you suffer a financial loss due to a trade-related dispute with a registered dealer.
• To identifying registered dealers, look for the blue and yellow decal on dealership doors and windows, or use OMVIC’s search tool to verify a dealer’s registration.
• You can contact OMVIC’s Complaints and Inquiries Department for assistance.

3

Motor Vehicle Dealers Compensation Fund (MVDCF)

The MVDCF reimburses eligible car buyers who have suffered a proven financial loss related to a vehicle purchase, lease, or consignment transaction from an OMVIC-registered dealer.

• Coverage: The fund protects your deposits or payments up to $45,000 if a registered dealer fails to deliver on any part of the purchase or warranty. For example, if a consumer made a deposit on a particular car and a dealership goes out of business, a consumer is protected under the Motor Vehicle Compensation Fund and can get the money back
• Claim Process: You can apply for compensation up to 2 years after the dealer refuses or is unable to return your payment.

4

Private Transactions

Curbsiders are unregistered individuals who pose as private sellers but are actually in the business of selling vehicles, often without proper disclosure of the vehicle’s history or condition. Purchasing from curbsiders can be risky, as these transactions are not protected under the CPA or MVDA. To avoid curbsiders, always verify the seller’s credentials and consider purchasing from registered dealers.

• No Consumer Protection: There are no consumer protection laws that cover private transactions.
• “As Is” Sales: If you are buying a vehicle privately, the seller is not liable for issues with the car once the sale is completed, especially if the vehicle is sold “as is”.

5

All-inclusive Price Advertising for New and Used Vehicles

Dealers in Ontario are required to advertise all-inclusive prices for new and used vehicles. This means the price you see in the advertisement must include freight charge, dealer preparation charge and other miscellaneous add-on fees in their advertising, so the only additional fees the consumers should expect to pay are the applicable taxes. This regulation ensures transparency and helps consumers understand the total cost of the vehicle without hidden fees.

6

No Cooling-Off Period

It’s important to note that, under Ontario law, there is no cooling-off period for motor vehicle contracts. Unlike other large purchases, there is no statutory cooling-off period for buying a car in Ontario and the sale is final. This means that once you sign a purchase agreement with a registered dealer, the contract is binding, and you cannot cancel it simply because you changed your mind. Therefore, it’s imperative to be certain of your decision before signing any documents.

7

90-Day Contract Cancellation for Key Non-Disclosures

The CPA provides consumers with the right to cancel a vehicle purchase contract within 90 days if certain critical information was not accurately disclosed by the dealer. This includes:

• The vehicle’s odometer reading.
• The correct make, model, and year of the vehicle.
• Whether the vehicle has been branded by the Ministry of Transportation as salvage, rebuilt, or irreparable.
• Accurate details of past use, such as if the vehicle was previously used as a taxi, limousine, rental car, or for police or emergency services.

If any of this information is missing or inaccurate, you have the right to cancel the contract within the specified period.

8

Canadian Motor Vehicle Arbitration Plan

Pre-purchase disclosure of whether or not the consumer would have the benefit of the Canadian Motor Vehicle Arbitration Plan is required to resolve any disputes concerning alleged manufacturer defects or implementation of the manufacturer’s warranty.

9

Anyone who violates the CPA, 2023 may be subject to prosecution

Individuals violating certain sections of the act are liable to a fine of up to $50,000 or imprisonment of up to two years less one day. A corporation can be fined up to $250,000

10

Code of Ethics

Code of Ethics has been adopted to enhance professionalism and improve honesty and integrity in the industry. Dealers are bound by a Code of Ethics which includes dealer-to-dealer disclosure obligations that support full disclosure to the final retail buyer or lessee.

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Bottom line: when buying a vehicle in Ontario, learn your rights and do your homework to avoid costly mistakes.