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Understanding Car Ownership Costs in Canada

Understanding Car Ownership Costs in Canada

Owning a vehicle for the first time in Canada is an amazing experience that gives you freedom and independence.

While there are many things to consider when buying your first vehicle, the first thing you should do is create a budget that includes every expense beyond the price of the vehicle.

This includes everything from insurance and maintenance costs to gas and depreciation. 

This blog will break down the main ownership costs new car owners in Canada should consider in their vehicle budget: 

  • Purchase Price and Depreciation
  • Insurance
  • Fuel Costs
  • Maintenance and Repairs
  • Taxes and Fees
  • Financing Costs
  • Opportunity Costs
  • Provincial Factors


Then we provide you with a simple suggestion to help you determine what vehicle you can afford. If you are new to Canada and have questions about vehicle ownership or financing your first vehicle, contact us today!

Car Ownership Costs

Purchase Price and Depreciation

The first and most obvious cost is the initial purchase price. However, it's essential to consider depreciation—how the vehicle value decreases over time.

Canadian vehicles, like most worldwide, typically lose value each year due to factors such as wear and market changes. Resale values can vary based on the brand, model, and maintenance history. To make sure your vehicle maintains a high resale value, we recommend always following your maintenance schedule.  

One thing to note is that the Canadian Black Book (CBB) announced Nissan Canada as the Most Improved automotive brand at the 2023 Best Residual Value Awards.


Vehicle insurance is mandatory in Canada. The cost depends on various factors, including your location, driving record, the type of vehicle, and the coverage level. In provinces like Ontario, where insurance rates are typically high, understanding available discounts or factors that affect premiums is essential.

For example, insurance companies are required to offer you a 2-5% discount if you purchase and have winter tires installed on your vehicle. 

Fuel Costs

Fuel prices fluctuate and impact the overall cost of ownership. While electric or hybrid vehicles offer potential fuel savings, the initial investment in these vehicles can be higher.

Consider the fuel efficiency of your vehicle and how your driving habits affect fuel consumption.

If you are in the market for a crossover and want to keep your fuel budget low, the Nissan Kicks might be the right choice for you with an impressive fuel economy of up to 7.7 L/100 km in the city and 6.6 L/100 km on the highway.

Maintenance and Repairs

Regular maintenance is essential for keeping you safe and your vehicle running properly. From oil changes and tire rotations to brake replacements and more significant repairs, these costs can add up over time.

As well, extreme weather conditions might require specific maintenance, such as winterizing your vehicle. That includes everything from battery replacements to winter tires. 

Taxes and Fees

Apart from the initial sales tax on the vehicle, there are ongoing taxes and fees, such as annual registration fees and potential road tolls.

According to Thinkinsure, the average car registration cost in Ontario is the same for most drivers and ranges between $60 to $120 per year depending on where you live.

Parking in downtown Toronto can also be quite expensive with costs ranging from around $20 - 25 per day in a lot and around $2 -5 an hour on the street. 

Financing Costs

For many Canadians, purchasing a vehicle involves financing. The interest rate, loan duration, and down payment significantly impact the total cost of ownership.

Comparing financing options and understanding the terms is important to help you avoid paying more than necessary.

We always say the bigger the down payment, the better. This will reduce the size of the car loan you will need and ultimately help you spend less on interest. 

Opportunity Costs

Every dollar spent on a vehicle is a dollar that could have been used elsewhere. Consider the opportunity cost—what else could that money have been spent on?

We always like to think of opportunity costs in terms of time. If you are spending countless hours on public transportation or researching ways to get to work and other places, think about how much time you could have back by owning a vehicle you can trust to get you wherever you need to go. 

Factors Affecting Costs in Different Provinces

Each Canadian province might have specific regulations, taxes, and insurance requirements that impact vehicle ownership costs.

For instance, provinces like Alberta or Saskatchewan may have lower insurance rates compared to Ontario or British Columbia.

Knowing the costs of things will help you budget accordingly like spending $90 on a licence renewal or getting a new licence plate ($15 - $300). 

Also Read: Everything You Need To Know About Antifreeze and Why it Matters

Managing Vehicle Ownership Costs

While vehicle ownership costs are inevitable, there are ways to manage them effectively. We recommend a few things to help you keep costs as low as possible. 

  • Regular Maintenance: This can help you avoid large repair bills and improve your fuel efficiency at the same time.
  • Comparison Shopping: Beyond the test drive, research things like insurance rates, financing options, and maintenance costs to find the most cost-effective car for your budget.
  • Fuel-Efficient Driving: Practicing fuel-efficient driving habits can significantly reduce fuel costs. Consistent gentle accelerating and braking can improve the fuel economy of your vehicle by up to 40%.
  • Resale Value Consideration: Choosing a vehicle with good resale value can help you keep depreciation costs low. The Nissan Frontier has the best resale value in the line-up, which holds up to 72.2% of its value after the first 5 years.

According to Edmunds.com, while there is no absolute calculation for how much you can afford to spend on a car, a smart rule of thumb is that your new-car payment should not be more than 15% of your monthly pay after taxes. If you're leasing or buying a used vehicle, it should be no more than 10%.

Shopping for a New Car in Toronto?

Are you a first-time car buyer in Canada? Congratulations!

When you budget for your new vehicle be sure to remember all the costs involved. Not just the initial car price.

From insurance and maintenance to fuel and depreciation, being aware of these expenses will help you make informed decisions, ensuring an amazing and cost-effective ownership experience. 

Have questions about buying a vehicle for the first time in Canada? Need help choosing the right car for your budget or securing financing with little or no credit? Our team is here to help!

You can call us at (416) 748-2900 or contact us online. Be sure to follow us on Instagram and Facebook for more helpful tips.

Categories: Finance