Guide on Selling a Car Privately in Ontario

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When it comes to selling a car, there are a few important things you really must consider. For example, there are various laws that you have to follow, as well as some important guidelines. But not only are you merely selling a used car, but you’re also going to be selling a car privately in Ontario. This means that there are even more specific local laws to comply with, not to mention the hassle of thinking about where to list your car and how to advertise it. Thankfully, our guide should help to make this simpler for you.

What Are Some Things I Should Check Out First?

Before you sell your used car, before you even put it up for sale, you must make sure to buy your Used Vehicle Information Package. You must also make certain that your car’s Vehicle Identification Number or VIN corresponds to the number shown on your own permit, a green ownership document.

As well as both these things, one last thing you should do is to check that your car has no money owing on it – we’ll tell you more about this later.

What Do I Have to Give the Buyer?

When selling a used car, some drivers like to throw in some of their previous car’s accessories, like floor mats or an air freshener. These are nice extras, but there are some other things you are legally obliged to give to your buyer when selling a car in Ontario. So, what are these things?

Well, first of all, there’s the Used Vehicle Information Package or UVIP. This is a piece of literature detailing everything your buyer needs to know about their new set of wheels – your used car’s body details and year of manufacture, the car’s Ontario registration history, its vehicle lien information (more on this later), and its average wholesale value, along with its Retail Sales Tax information. You may need to buy this.

Then, there’s the Bill of Sale. The Bill of Sale needs to be signed by you, and should clearly show the purchase price of your car, the date of your car’s sale, your buyer’s name and address, and of course, your own name.

You’ll also need to give your buyer an Application for Transfer, which can be found in the vehicle portion on the back of your ownership permit.

Is There Anything I Should Keep?

However, there are also a couple of things you need to make sure that you don’t accidentally give to your buyer. So, what are these?

Of course, you need to keep your licence plates, since licence plates travel with a driver rather than with a vehicle. But you also need to make sure that you don’t accidentally hand over your ownership permit’s plate portion, because you’ll need to use this for registering your licence plates on other vehicles. The plate portion of your ownership permit is also useful for getting a refund if you have any full months left on your plate stickers.

Do I Need to Find Out About Debt?

Yes. It is your legal responsibility to find out about your car’s debt. Fortunately, the Used Vehicle Information Package makes it easy for you to find out about any outstanding debts.

You may discover that there is a lien on your car. A lien is something put on a vehicle to make certain that the vehicle’s owner pays an outstanding debt in full. You can find out more about this here.

What About the Bill of Sale?

Earlier, we touched on some of the information that must go into you and your buyer’s Bill of Sale, but there’s a little more to it than this.

So, the Bill of Sale needs both yours and your buyer’s information, and the date. However, the document also requires the car’s vehicle identification number (or VIN), as well as its power source, year, and make.

You also need to add your used car’s purchase price, along with the taxes collected and the HST/GST number if there is one.

There are some exceptions

Do I Need to Pay Tax?

No. As the seller, you never need to pay the sales tax. Instead, the buyer generally pays the Retail Sales Tax. This is usually 13%, but this amount is based on either your car’s wholesale value or its purchase price, whichever figure is greater.

How Do I Price My Used Car?

In the Used Vehicle Information Package, your used car’s wholesale value will be based on its price in the Canadian Red Book. The Canadian Red Book is an industry standard that insurance companies, provincial governments and car dealers alike all use.

Your used car’s value will be based on the average paid for cars that are the same make and model as well as produced in the same year as yours.

What About the Insurance?

Leading up to the sale of your used car, you may require short-term car insurance for the remainder of the time you own the car. After all, with test drive after test drive, the time in which you are planning to sell your car can easily be the busiest time of your car’s life! So, you really can’t drive around with no cover during this time when your car may be driven so much.

But obtaining a temporary insurance contract like this can be difficult in Ontario. You’ll be hard-pressed to find an insurance contract shorter than six months anywhere in Canada – read here for more on this.

And, of course, when you do sell your car, you’ll have to pay a fee for cancelling your insurance policy early. This can be quite a sting.

All you can do is speak to your insurer, make them aware of your situation and see what they can offer you. When you’re looking for insurance that you don’t intend to use for very long, the best way you can try to get a good price is look for a policy with a low cancellation fee.

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