Cost of Owning a Car in Canada 2021

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Cars have existed for as far back as the 20th century and are regarded as one of the best inventions the world has seen. As one of the easiest means of transportation, the usefulness of a car cannot be overemphasized. The Cost of Owning a Car in Canada depends on many factors – brand, model, new or used, etc.

Car – The Evolution 

To fully appreciate the sophisticated lines and sleek design that populate 21st-century car, it is important to take a trip down memory lane since the first Model of cars rolled out. There is a rich design history between the cars of the 20th century and the alluring designs of modern-day cars.

It is easy to get all excited about how far the evolution of cars has come. So far from the first invention in 1769 which came with the steam engine to the 2020 model with advanced safety, infotainment, and connectivity technology.

Although cars have depreciating value and are responsible for most injury-related health problems and air pollution, they make transportation easier and faster. It is indeed one of the easier ways to move around.

Whether you are going to work or visiting family and friends, cars are a great choice. People have different needs and use for cars; some people use them as private taxis (commercial) while most people use their cars for personal use. 

There are different kinds of cars ranging from sedans to SUVs to luxury cars to sports cars and pick-up trucks. These cars all vary in price and the cost of maintenance. A middle-class family can afford a Sedan while it would take the salary of a highly paid government official or celebrity to afford SUVs and luxury cars. 

Buying a Car in Canada

Canadian cities generally have excellent public transport systems and there might not be a need to own a vehicle in Canada. However, about 75% of Canadians own a vehicle of their own. The cost of owning a car in Canada varies by province and each province in Canada has its laws on vehicle regulation. 

In Quebec and parts of British Columbia, you must get winter tires for the winter months, else they would not be allowed to drive in those months. Additional costs like this also determine how much it costs to own a car in Canada.

In Canada, you can either buy a new car or a second-hand car. To know a used car’s history, you can look it up on CarProof.ca, check for necessary information, and also check that it is not stolen.

You would have to pay a small fee to be able to access the information alongside the details of the car. Whether you buy a new car or a used car in Canada, you have to pay taxes. Here’s the breakdown:

  • You may pay 5% of goods and services tax, a provincial sales tax or a combination of the two (harmonized sales tax) on a new car.
  • You pay the same for used cars if you are buying from a dealer
  • When buying privately, you will have to pay a retail sales tax

You can choose to get a car loan or enter into a lease agreement. The lease agreement allows you to pay for the car for as long as you and the dealer agree to.

It is like a long-term rental and once it is over, you can choose to stop using the car or you make a final payout to buy it. The lease agreement can be more expensive than getting a loan. 

Vehicle-related expenses can vary per province in Canada. Registration fees, weather, insurance, depreciating, parking, tires, etc. can play a huge role in determining the cost of buying a car in Canada.

Sadly, most car owners overlook the cost depreciation, which in some cases can double the cost of ownership.

Owning a Car in Canada

Generally, there are three things needed to own a car in Canada, they include:

  • A driver’s license (most likely Canadian)
  • A valid insurance policy (you can’t get one without a license)
  • Vehicle registration (cannot be done without insurance)

In some provinces, you cannot buy a car without a Canadian driver’s license. As for the insurance, there is no way you can register ownership of your car without it and the minimum of third-party cover required varies across the provinces. 

You may also have to insure medical expenses and out-of-job situations caused by automobile accidents in some provinces. If you are buying a car through a dealer, all other documents needed besides your license and insurance will be arranged for you.

So, if you are shopping for a used car or you have found a few models that caught your eyes, it is important to find out if they are the right one for you. One sure way to know is to research intensively how much they will cost to own and operate them.

Regardless of which car you buy, there are several other things to consider besides the price of the car. Hence, it is important to have an in-depth knowledge of the car’s whole operating cost so you can estimate and compare it with your budget.

Cost of Owning A Car in Canada

Owning a car in Canada can be pretty expensive excluding the cost of buying. in fact, owning a car is often considered the second most expensive expenses of an average Canadian family next to owning a house. The cheapest price of a brand new car in Canada is at an average of C$16,000.

To own a car in Canada, a lot of costs are involved. These costs are categorized into; fixed costs and variable costs. 

Fixed costs include: 

  • Total Purchase price
  • Interest costs
  • Car insurance 
  • License and registration fee
  • Tax
  • Depreciation

Depreciation is the most expensive cost involved with owning a vehicle in Canada.

Operating costs include:

  • Fuel
  • Maintenance
  • Repairs
  • Parking 

Operating costs are dependent on your driving habits and the type of car. Fuel costs account for more than 20% of annual driving costs. To own a car in Canada, with the consideration of all the aforementioned costs, you will be spending about C$955 monthly including finance costs. That is, about C$11,460 annually. With the exclusion of finance costs, an average of C$502 is spent monthly and about C$6024 per year. 

Car owners who live or work in bigger provinces are faced with parking cost. A province like Toronto, car owners spends an average of CA$185 – CA$650 including Tax for parking. While in Vancouver’s West End neighbourhood, residents spend an average of CA$360 yearly for on-street parking. 

It might interest you to know that although you may pay less for a used car, you could spend much more in areas like maintenance and repairs. An SUV cost CA$12,000, while a Pickup Truck and a compact car cost CA$8,600.

Alternatives to Owning a Car in Canada

If owning a car seems too expensive for your budget, you can opt for cheaper and easy-to-access alternatives such as:

  • Car Hire
  • Car sharing (this is common in the cities and there are several providers of this service)
  • Public transport (as mentioned earlier, the system is excellent)

You may also want to put the following tips into consideration if you decide to own a car;

  • Use your cars for long: the longer you use your car, the lesser its value of depreciation.
  • Don’t buy large vehicles as they are generally more expensive (pickup trucks in particular)
  • Buy hybrid cars (they are less expensive and are efficient too)
  • Buy electric cars (they are projected to cost less in 2025 and you won’t have to spend on fuel)

It is recommended by financial experts that your car expenses should not surpass 15%-20% of your monthly salary. Before you decide to own a car, you must remember that owning a car is a privilege and not a right. 

Best Cars to Buy in Canada

Below are the lists of the best cars to buy in Canada with their average prices. Each of the below-listed cars has different specification and serve different purposes.

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Owning a car in Canada can be pretty expensive but based on your personal needs and condition, you may require a car to get by. Before you make the choice to own a car in Canada, consider carefully all of the costs involved, weigh the pros and cons, assess the factors, and make the best decision that suits your budget and your needs.

If you consider Canada’s excellent public transport system, your location, and other cheaper alternatives to owning a car, you may find that there is actually no need for you to own a car.

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Avid researcher, freelance writer, and personal finance enthusiast passionate about financial education and literacy.

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Kareena Maya

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Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.