Are Cars Cheaper in Canada or the USA?

What's in this article?

Canadian vs US Vehicle Average Cost
New vs Used Vehicles
So What About Pre-Owned Cars?
Tax Breaks and Expenses for Cars in Canada vs America
Paying For Your Vehicle
The Bottom Line

North Americans have long debated which country has the more affordable vehicles; US or Canada.

Do cars have lower price tags in the Great White North? Are some brands cheaper than others in one country? Is it smarter to buy new or pre-owned vehicles?

Many citizens of Canada or the US often wonder about purchasing a car in the other country when searching for a bargain. But few people know whether the US or Canada offers more bang for your buck when buying a car.

Keep reading for a breakdown of whether the US or Canada is cheaper for buying cars.

Canadian vs. US Vehicle Average Cost

The vehicle prices for the same cars can vary significantly between Canada and the USA, even by thousands of dollars. Sometimes even that same car model will cost more than it would in the United States.

The Canadian market is one of the prime reasons our Canadian friends dealt with historically higher retail prices than the US.

America has a substantial automotive history and more car factories than its North American neighbors.

This increases transportation, distribution, storage, and marketing costs to make a car available for Canadians to buy.

The pricing difference between the two countries can leave some Canadian buyers feeling exploited by the automakers, who have easier access to the Canadian market and thus charge higher prices.

Some Canadian consumers have bypassed these costly markups and sought better deals by shopping at US dealerships or online shopping resources that allow customers to purchase vehicles across borders.

This could lead to an excess number of used cars moving across the Canadian border, which could also cause issues: increased gas consumption and additional wear-and-tear on Canadian roads with higher maintenance costs too.

In some cases, the price range between cars in the two countries can be up to 10-20%, with the US typically being the cheaper option.

New vs. Used Vehicles

They're big differences between buying a new model of a car compared to a used/pre-owned car. Wear and tear, maintenance costs, and the year of manufacture all play a role in determining the overall price point.

The United States generally has lower prices than Canada when buying a new car, thanks to many US states not charging a provincial sales tax on new vehicles.

In addition, dealerships in the USA often offer more competitive, affordable prices and better incentives than their Canadian counterparts.

Some US states also offer tax incentives for purchasing new cars.

Take California, for example; it has a "Lemon Law" covering you if the brand-new car you bought or leased was damaged beyond repair. You could be eligible for a refund or replacement in certain situations.

So What About Pre-Owned Cars?

Even if you're interested in buying a pre-owned vehicle, your best option may be America.

A car's overall desirability and market value tend to depreciate more rapidly in the US. This decrease in value stems from most of the public preferring new cars and stricter regulations.

Let's say, you opt to purchase a used car. Although a cost-friendly alternative to purchasing off the showroom floor, there are still a lot of things that you should think about before spending your dollar bills.

First of all, the condition of the car is an essential deciding factor. Unsurprisingly, cars that have been shown a bit more love and have been maintained regularly and serviced often, drive better and cost less in the long run.

It's important to think about any extra expenses that may come up when buying a used car.

Although it may not seem like much at first, the average monthly cost for a Canadian family to maintain and repair their vehicle is $81. Over time this expense will add up to a significant amount.

If a second-hand car has been poorly maintained, the maintenance fees can rise sharply.

Basically, make sure the previous owner wasn't driving the car as if he or she was taking part in the Dakar Rally.

It's also wise to research what used cars can be imported from Canada and sold to the US as some vehicles may be stopped at the border and refused entry.

Tax Breaks and Expenses for Cars in Canada vs. America

Something else to consider when deciding on your latest set of wheels is the tax implications that both countries have. Tax breaks can make or break your decision on whether to purchase a vehicle from Canada or the USA.

Canada's provinces each set their own taxes; however, taxes are generally higher in Canada than in the US.

Some Provinces offer rebates or tax credits, such as capital cost allowance for business owners and a variety of motor vehicle expenses.

In the US, taxes are based on the State you're buying from. Some won't have a sales tax for buying a car, new, or used, while others will have additional taxes and duties in place.

Paying For Your Vehicle

Buying a new automobile in another country might be difficult, especially if you do not have the required cash on hand and need financing options.

With no US credit history and typically unable to qualify for leasing or purchase financing from car dealers or American banks due to not having a social security number, it can be challenging to come up with the cash needed to make your purchase.

However, a Canadian resident who owns property in the United States has one beneficial financing option: Home Equity Loan on their US property.

This allows them access to cash without worrying about exchange rates while still being able to purchase the desired car.

US citizens can buy vehicles in Canada but must navigate the importation process. The proper registration documentation, license plates, and insurance must all be in order, as well as any necessary taxes paid before transporting the vehicle across the border.

As previously mentioned, some car dealers may offer financing or leasing options for foreign nationals, but these tend to come at a significantly higher rate due to restrictive state laws.

There are also associated risk concerns from the lender charging a hefty foreign national markup fee, making this often not cost-effective for potential buyers.

Do proper research and know all your potential options before deciding, like purchasing a vehicle in the United States if you're living in Canada or vice versa.

The Bottom Line

Although specific models and brands may be less expensive when exchange rates, taxes, and imports/exports are taken into account, purchasing them in the United States of America is probably a safer bet.

Budget accordingly for your vehicle of choice and research it thoroughly. The last thing you want is to be surprised by any hidden charges.

Above all else, don't just choose any car; get the right one.

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