How To Import a Vehicle Into Canada
Published in the Serious Buyer, Serious Seller Eletter, March 25, 2011, Written by Viraf Baliwalla
With the high Canadian dollar, there are many great car buying opportunities to be found in the US. For the average buyer of mid-level vehicles like Toyota Sienna or Honda Odyssey, savings can be found on vehicles 2 years of age or newer. The general rule of thumb, the newer the vehicle, the greater the difference.
For those that can afford a little more, even better deals are available on higher end vehicles like Mercedes, BMW, Audi, Lexus, Acura, Land Rover, Cadillac, etc. After all is said and done, the differences between Canadian prices and US prices can easily amount to $10,000-$15,000 by the time it lands in your driveway.
On a recent Lamborghini purchase, the difference was around $130,000. Unfortunately, by the time we factored in transportation, duties, taxes, fees and other costs, the savings were whittled down to a mere $90,000.
But how does one go about navigating the red tape and hurdles to take advantage of such savings? Automall Network is a seasoned expert in importing vehicles, have been featured in the media and are the preferred member benefit for some very high profile associations. In this article, we share our secrets and the steps we go through for the entire process. As well, we will talk about a new "à la carte" service just recently launched.
Step 1 - Sourcing the vehicle
Normally, US dealers will not sell a new car for the purpose of export as it goes against their franchise agreements. That's not to say it never happens, but finding a dealer that will co-operate is the trick and you still may face warranty issues. We stay away from importing new cars since we are able to acquire them for our clients at a very aggressive price from Canadian dealers. Besides, we have access to ALMOST new vehicles in the US with very low mileage. If you can find such a vehicle, the few thousand miles will depreciate the vehicle significantly in price.
When we are sourcing vehicles from the US for our clients, we often search the dealer only auction sites first where we often find good condition, off lease vehicles. If we can't find something there, we then search the following sites: Autotrader.com, Cars.com, Edmunds.com, EbayMotors.com, KBB.com and individual dealer websites. We recommend that you only buy through licensed dealers. When buying from a distance, we don't typically recommend buying from private individuals.
Step 2 - Negotiating the price
Negotiating the best retail price long distance with a dealer is not so easy. They know they already have the vehicle attractively priced compared to Canada, so they may not be very flexible. If the difference is already significant, people will buy it at full price. Remember, it is you that has called them to buy their vehicle. This gives them greater negotiation leverage. We recommend you don't let on that you are from Canada. Turn on call blocking on your phone. Try to work your best deal as if you were a local buyer. Fortunately, as a dealer, we get trade pricing so we don't have to go through this.
Step 3 - Doing your homework
Taking shortcuts in this area will most likely result in costly problems down the road. People have been known to pay tens of thousands of dollars for vehicles which cannot be operated in Canada. DO YOUR HOMEWORK. Check for importability restrictions, whether the vehicle comes with all the features necessary to pass the RIV inspections, cross border warranty coverage, not to mention the vehicle history. Also, make sure to have the vehicle independently inspected by a qualified, licensed mechanic BEFORE YOU PAY A DEPOSIT. We put the vehicle through a very comprehensive independent inspection so we know what we're buying on behalf of our customers.
Step 4 - Paperwork and Customs clearance
You will need the bill of sale and the title when you cross the border. However the paperwork must be sent to the border 72 hours in advance of the vehicle showing up. If you plan on driving the vehicle back yourself, allow a few days' stay in the US and budget meals and accommodation. Duty at 6.1% of the purchase price will be charged at the border if the vehicle was manufactured outside of Canada, US or Mexico. You will also be charged GST. The PST for your province will be charged when you license the vehicle.
Step 5 - Transportation
As a retail customer, you have the choice of flying down to pick up the vehicle and driving it back or driving down with someone and driving back separately. You are often able to get a temporary tag (plate) which is valid for several days however some states require you to pay local sales tax to get one. This would mean that you have to pay the local state sales tax plus the duty, if applicable, plus Canadian sales tax (HST or GST & PST). No matter what, you cannot get around paying the Canadian sales tax. As a final option, you can hire a trucking company to bring the vehicle back for you however you will not be able to drive around to get the vehicle inspected or certified. As a dealer, we have contracts with trucking companies and customs brokers and we have a dealer license plate which allow us to avoid double taxation and drive the vehicle to various inspection stations. Again, if you are driving the vehicle back yourself, be careful of the 72 hour rule.
Step 6 - RIV (Registrar of Imported Vehicles)
As the vehicle crosses the border, you will be given a "Form 1". Allow a few days for RIV to get the paperwork and in the mean time, contact the manufacturer to obtain a recall clearance letter. Some manufacturers will charge for the letter while others will make you go through expensive modifications first. We have sources to avoid these costs. Once you have the recall clearance letter, it must be faxed to RIV and an online payment of $195 must be made. A few days later, your "Form 2" will be ready. Download and print it, then take the vehicle to the nearest RIV authorized inspection station. As long as the regulatory requirements are met, the inspector will stamp the "Form 2".
Step 7 - Certification
The vehicle must then be certified before it can be legally licensed in Canada. Ontario also requires an emission test. If you drove the vehicle back with a temporary tag, you will have a few days left to do this running around but get it done as quickly as possible. If you had the vehicle shipped up, you will need to truck or tow the vehicle to an inspection station till you get your plates.
Step 8 - Licensing and insurance
Make sure you have adequate insurance coverage on the vehicle from the date you plan to pick it up. Take the vehicle into a Ministry of Transportation office with the Form 2, bill of sale, safety, insurance slip and any other paperwork. You can purchase new plates or transfer your old plates from a previous vehicle. In either case, the plates can now be mounted on the vehicle.
And presto! Your vehicle is now a Canadian.
There are a lot of steps here. Again, taking shortcuts in one or more areas could have very costly consequences. We have created two levels of service for our clients. With our full service, all the above steps are taken care of plus you will get the vehicle at a wholesale auction price or at trade rates. We charge a flat rate of $1500 to manage and coordinate everything, $2500 on more rare or exotic vehicles like the Lamborghini.
We have recently created an "à la carte" version of our offerings for those that want to do some of these steps on their own. We call it our Easy Import Service. Pricing is as follows:
- Homework on the vehicle: $400
- Customs clearance: $599
- Transportation: typically $750-2000 depending on distance
- Regulatory items: $650.
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