How to buy a car in the U.S. and save thousands

Darrell Check is thrilled about his new work van: a 2005 Chevy Express decked out with racks to hold his plumbing tools and materials. The Vancouver resident bought it south of the border for $6,800, about half of what he figures he would have paid for it up here.

That’s because it’s typically cheaper to buy cars in the U.S. than in Canada. And Check says it’s a much simpler process than you might think.

“I couldn’t get anything here for that price, not even close,” says Check, who first bought a vehicle in the U.S. in 2008; a three-year-old Honda Civic hybrid for $11,000. “Buying a car in the states isn’t something most people would even think of, and it can seem mentally daunting if you’ve never done it before. But it’s really not that hard.”

If you get miffed spending $14.99 on a book in Canada that would cost you $9.99 in the U.S., you might be riled to look at the cost differences among cars on both sides of the border.

Consider a 2013 Honda Pilot: in Canada, the starting price is $34,990. In the U.S. it’s US$29,520. The price of Ford’s Focus electric vehicle in Canada is $41,199, not including tax credits. In the states, it goes for US$35,200. The company recently slashed the price by 10 per cent for U.S. residents only.

In response to the seemingly unjustified cost disparities on various products including cars, the Standing Senate Committee on National Finance released The Canada-U.S. Price Gap report earlier this year.

“A car buyer in Oshawa could be at a dealership within walking distance of the factory where the Chevrolet Camaro was assembled and face a list price almost $5,000 greater than the list price of the Camaro in Hawaii,” the report states.

Of 23 types of cars made in Canada in 2012, only five had list prices lower here than in the U.S. The more expensive the vehicle, the greater the price gap. According to the report, about 180,000 new and used vehicles are imported from the United States into Canada each year.

The committee found several reasons for the price gap for new vehicles, including nonharmonized tariffs, nonharmonized safety standards, and an expected exchange rate different from parity. However, for all products, from jeans to hockey gear, books to cars, the committee “cannot offer an explanation as definitive as it would have liked for the price discrepancies for products between Canada and the United States.”

There are other factors to consider when buying a car in the States, the report warns, including the possible 6.1 per cent duty if the vehicle was not manufactured in North America; costs to convert the car to meet Canadian Motor Vehicle Safety Standards, and the $195-plus-tax fee for Transport Canada’s Registrar of Imported Vehicles.

You also need to consider the warranty may not be transferable, and the car won’t be registered for recall notices. Financing is also an issue: if you need to borrow, you’ll have to arrange for a loan in Canada then pay cash when you buy in the U.S.

The steps involved in importing a vehicle are clearly outlined on the Registrar of Imported Vehicles’ website, including vehicle admissibility.

The import fee can be paid at the Canadian Border Services Agency upon declaration of the vehicle into Canada, and you’ll pay Canadian taxes there too. Imported vehicles also have to go through a safety inspection, but the way Check sees things, that’s something that anyone buying a used car should do anyway. And for him, the minor effort involved in buying from the States is worth the savings.

“I’d never buy a car here again,” he says. “It’s simpler than it seems.”