Are you interested in buying a car? Wondering how much it’ll cost you? It’s no secret that cars are expensive. In addition to the purchase price, there are ongoing costs that can quickly add up.
While the general price point depends on the make and model of the vehicle, as well as your driving habits, there are some average car costs in Canada that you should be aware of. Let’s take a closer look at what you can expect.
What Is the Average Car Price in Canada?
The first thing you should consider when buying a car is the MSRP (manufacturer’s suggested retail price). This is the starting point for negotiation and will give you an idea of how much the car is worth. By doing this, you can avoid paying too much for your vehicle.
The average MSRP for a new car in Canada is just over $45,000. However, this number will differ based on the type of car you’re interested in. For example, a luxury vehicle will typically have a higher MSRP compared to a more standard model.
The good news is that you don’t have to pay the full MSRP when buying a car. In fact, it’s common to pay thousands of dollars less than the sticker price, if you’re able to negotiate a reasonable discount.
The key is to do your research on car prices in Canada before stepping foot into a dealership. By making a list of must-haves and nice-to-haves, you can narrow down your search and avoid overspending on features that aren’t important to you.
New vs Used Car Prices
This is a common debate when it comes to car ownership. New cars have that sought-after fresh out of the factory feel, while used cars are often more affordable. In fact, the average old car price in Canada is just over $25.000.
If you look at the numbers, it’s easy to see why used cars are so popular. Not only do they have a lower price tag, but they also come with lower insurance rates and registration fees.
It’s worth noting that your car depreciates the moment you drive it off the lot. In fact, a new car can lose up to 20% of its value in the first year alone. For this reason, many experts recommend buying a used car instead of a new one. Not only will you save money upfront, but you’ll also avoid the steep depreciation that new cars experience.
While there are some risks associated with buying a used car, such as hidden damage or mechanical issues, these can often be mitigated by getting the vehicle inspected before making a purchase. Make sure to bring the car to a trusted mechanic who can give you an honest assessment of its condition.
Average Costs of Owning a Car in Canada
Once you’ve decided on the make and model of your car, the expenses don’t stop there. In addition to the initial purchase price, you’ll also need to factor in all the other ongoing costs associated with vehicle ownership. The average monthly cost of owning a car in Canada is about $740, which comes out to about $8.800 per year.
Of course, Canadian car costs will differ based on the particular model you drive and how often you use it. For example, a luxury car or SUV will likely have higher monthly costs compared to a smaller sedan. Similarly, if you live in a rural area with limited public transportation options, you may find yourself using your car more often and racking up higher monthly costs.
Car Ownership Cost Breakdown
Knowing what goes into your monthly car expenses can help you better understand where your money is going. There are five main cost categories that you should be aware of, so let’s examine each one in more detail.
If you don’t pay for your car outright, you’ll need to finance it through a loan agreement. Your monthly loan payments will be based on the car’s purchase price, the interest rate, and the length of the loan. In general, it’s best to get a shorter loan so you can pay off your car more quickly and avoid paying too much interest.
On average, a typical auto loan has an interest rate of 4-10%. This means that if you finance a $20.000 car over five years, your total interest costs will range from $800 to $4000.
You can use car cost calculators in Canada to estimate your monthly loan payments and total interest costs. Simply enter the purchase price, interest rate, and loan term to get started.
Fuel is one of the biggest ongoing expenses associated with car ownership, so it’s important to choose a vehicle that is fuel-efficient. By getting a car that gets good gas mileage, you can save yourself a lot of money at the pump.
In January 2022, the average gas station price was 144.4 cents per litre. If you fill up your car’s gas tank once a week and it holds 60L, that means you’re spending about $87 per month on fuel. Of course, this number will change depending on how often you drive and the ever-changing gas prices.
Maintenance and Repair Costs
Even if you take good care of your car, it will eventually need to be serviced or repaired. Over time, parts will wear out, fluids will need to be replaced, and accidents can happen. Depending on the type of auto you have and how often you drive it, you could be looking at hundreds or even thousands of dollars in car maintenance costs.
For example, a typical brake job can cost anywhere from $600 to $1.500 while oil changes usually range from $50 to $100. As a general rule of thumb, it’s a good idea to set aside about 3-5% of your car’s purchase price each year for maintenance and repairs. So, if you bought a $20.000 car, you should expect to spend about $600 to $1.000 per year keeping it in good condition.
Licence and Registration Fees
You’ll need to renew your car’s licence and registration every year, and the cost will vary depending on the province you live in. For example, licence renewal in Alberta costs $75 while renewing your registration in Quebec will set you back $149.50.
These annual fees are generally relatively small compared to your other car expenses, but they can still put a dent in your budget if you’re not expecting them. Set aside a few hundred dollars each year to cover these expenses, and you’ll be prepared when the time comes to renew.
All drivers in Canada are required to have auto insurance, so it comes as no shock that car insurance claims in Canada rose to $18 billion in 2019. The cost will vary depending on a number of factors such as your insurance provider, your driving record and the area where you live. You can expect to pay anywhere from $1.000 to $2.000 per year for car insurance.
Some provinces have government-run auto insurance programs while others allow private companies to provide coverage. The median cost in Canada is $1.151, while ownership of a car in Ontario comes with the highest insurance rates at an average of $1.920.
Other Costs to Consider
In addition to the major costs that have been discussed already, there are a few other expenses you should be aware of when budgeting for your car. These may include:
If you live in an urban area, you’ll likely have to pay for parking on a regular basis. Street parking is usually free for a limited time, which is typically up to three hours. After that, you’ll need to pay for a parking permit or risk getting ticketed. The cost of a parking permit varies depending on the city, but it’s typically around $100 per year.
Most people like to keep their cars clean, but washing and waxing your car can be a time-consuming and expensive task. If you wash your car at home, you’ll need to buy supplies such as soap, sponges, and wax. You may also need to purchase a hose if you don’t already have one.
Tips to Save Money on Car Expenses
Taking steps to save money on your car expenses can help you free up cash for other important things in your life. Some tips to keep in mind include:
Opt for Public Transportation
Whenever possible, take advantage of public transportation options such as buses, trains, and subways. This can help you save on fuel costs, car maintenance costs, and parking fees.
Bigger Isn’t Always Better
When shopping for a new car, resist the urge to buy something that’s bigger and more expensive than you need. A smaller, more fuel-efficient car will cost less to operate and maintain than a larger vehicle.
Shop Around for Insurance
Don’t just accept the first insurance quote you receive. Shop around and compare rates from different companies to make sure you’re getting the best deal.
Choose the Right Maintenance Package
If you’re buying a new car, be sure to ask about maintenance packages. Many dealerships offer these packages at a discount, which can save you money in the long run.
Owning a vehicle can be expensive, but it doesn’t have to break the bank. Many owners are surprised to learn just how much it costs to keep a car up and running properly. By being aware of the major costs and taking steps to save money, you can keep your expenses in check and enjoy the many benefits of car ownership.
The average monthly car costs in Canada are about $740, with the price varying depending on the type of car you own.
Used cars can vary in price depending on their make, model, and year. The median price point is just over $25.000.