How much does a car cost per month in Canada?

One of the biggest considerations when deciding to buy a car is the car price, and there are a lot of costs to account for. Not only do you need to factor in the cost of buying the car, but also the cost of gas (if applicable), maintenance, car insurance, licence and registration fees, and more. Below, we do a deep dive into the cost of car ownership in Canada in order to give you the insider scoop on how much a car costs per month.

Car ownership costs explained

From financing and car ownership to fuel and maintenance, car buyers should continue reading for a cost breakdown of owning a car in Canada:

Financing costs

The first thing to budget for is financing. If paying in full isn’t an option (or you’d rather not), you’ll need to factor in financing costs, which include monthly loan payments. Unfortunately, financing a car has gotten a lot more expensive. According to a 2024 analysis by Hardbacon, 16% of the total cost of owning a car (about $261 per month) goes toward loan interest. That’s double what it was in 2019 when interest made up just 8% of ownership costs.

Financing costs vary from person to person, but they are usually paid monthly. Depending on the terms of the loan you choose, you may be making monthly payments for anywhere from three years to eight years. Below we will discuss a vehicle loan example in details:

Car loan example

Here's an example of a seven-year loan: As of September 2024, the average price of a new car in Canada was $66,550, according to the AutoTrader Price Index. Meanwhile, November 2024 data from Statistics Canada shows that the average APR on new car loans has dropped to 6.92%.

This means if you finance a brand-new $66,550 car over seven years, your monthly payment would be just over $1,000 (though you could bring that number down if you made a down payment).

Gas prices

Don't forget to factor in gas when figuring out your monthly car costs (unless you're driving an electric vehicle). If you have a gas-powered or hybrid car, fuel will take up a portion of your budget.

According to Statistics Canada, the average monthly retail price (cents per litre) for ordinary, unleaded petrol and self-service gas stations keeps increasing year after year (for the most part), so you'll need to factor that into your monthly budget. Here's a look at some major Canadian cities over the past few years:

To get a better idea of how much you'll spend, check gas prices in your area. Also, look into the fuel efficiency of the car(s) you're considering. Some models sip fuel, while others guzzle it, so it pays to do a little research into fuel consumption.

Alternatively, if you end up buying an electric car, then you won’t have to factor in gas costs. However, you will have to estimate the cost of regularly charging your vehicle (including the installation of a charger at home), whether at home or at a public charging station, and how much this will cost or add to your monthly utility bills.

Vehicle maintenance costs

vehicle maintenance is another cost that comes with car ownership. Just as with homes, cars require regular maintenance, such as oil changes, tire rotations, battery replacements, or even just buying fluid to top up your coolant, transmission, or windshield washer fluid. Plus, annual checkups are strongly recommended, whether you suspect something is wrong with your car or not.

In 2024, drivers spent an average of 10.13 cents per mile on maintenance, repairs, and tire replacements, according to AAA. That’s based on driving 15,000 miles (or 24,000 kilometres) a year. This means drivers spent an average of $1,519.50 annually, or just over $125 a month in maintenance costs. Keep in mind that actual costs can vary depending on factors like the type of car you drive, how often you hit the road, and even where you live.

Auto insurance costs

If you want to legally drive your car anywhere in Canada, you will need to purchase auto insurance. Thus, vehicle ownership insurance is another cost that you will need to account for when determining your monthly car budget. Many car owners want to know how much car insurance costs per month in Ontario or whatever province they live in.

The best way to find out is by obtaining an insurance quote from a local insurance broker. An insurance broker will ask questions about your lifestyle, driving record, and driving habits to determine what your premium would be. Remember that insurance premiums are extremely personal; they are not one-size-fits-all. They depend on many factors, including:

• Where you live
• Age
• Gender
• Vehicle type
• How you use your vehicle
• Driving record
• Driving experience
• Past claims
• Prior insurance coverage
• Number of kilometres you drive
• Type of coverage on your policy
• Your deductibles

Contact BrokerLink today to help you compare auto insurance quotes and for tips on ways that you can reduce your car insurance costs, such as by installing winter tires or an anti-theft device in your vehicle, qualifying for an education or employment-based discount, or being eligible for low-mileage car insurance.

Parking costs

The cost of parking adds up. If you need to pay to park your car, either at your home or workplace, you must include this in your monthly budget. Parking costs in major cities like Toronto, Vancouver, Halifax, or Montreal can add a considerable amount to your monthly expenses.

Other costs of owning a car

In addition to monthly costs, there are other car expenses that you will need to cover throughout the year, increasing your monthly costs for that specific month. Some of these include licence and registration fees, swapping your winter tires, and even car accidents. We will discuss each cost in details below:

Licence and registration fees

If you plan to drive the car you buy, then you will also need to account for the cost of obtaining a licence plate and registering your vehicle with the transportation authority in your province, as well as annual renewals.

Licence and registration fees vary between provinces. For example, vehicle registration renewal fees cost $0 in Ontario, whereas in Alberta, it costs $80 plus a $13 service fee for passenger vehicles.

Swapping your tires

While all-season tires work for most of the year, they don't perform well once temperatures drop below 7°C. That's why many Canadian drivers choose to purchase a set of winter tires, making them another cost associated with car ownership that you may need to consider. Winter tires make driving during the winter far less risky, as they have a unique tread that can remain flexible and grip the snow and ice more easily.

You will need to purchase a set of four tires, and you will likely need to pay a professional to have them installed and removed at the beginning and end of the winter season. The good news is that some of these costs may be offset by the fact that your insurance company may offer you a winter tire discount if you can show proof that you installed them on your car.

Car accidents

Car accidents happen every day. Even the most common car accidents cost money. Typically, car accidents are more expensive if you are found to be at fault for the accident because at-fault accidents result in insurance premium hikes, although you can avoid this reality for your first at-fault accident by adding accident forgiveness coverage to your policy. At the very least, if you get into a car accident and file an insurance claim, you will need to pay your deductible. However, depending on the type of coverage you have and the circumstances of the accident, you may also be on the hook for paying even more money than this.

For example, if your car is damaged, and you don't have collision coverage or comprehensive coverage, you'll have to cover the costs to repair or replace the vehicle yourself. And even if you do have coverage, you'll have to make sure you have enough coverage; otherwise, your insurance payout may not be enough to cover the cost of a new car. Please note that if you get into an at-fault car accident, it is liability car insurance that comes into play. Make sure that you purchase enough to cover the cost of both a minor and major accident.

Regional cost breakdown of owning a car in Canada

Now that you understand the various monthly costs associated with car ownership, let's talk about how they vary and what you can comfortably afford depending on where you live in Canada. Things like auto insurance rates, gas prices, and even maintenance costs are different from one province to another. For example, car ownership in Toronto has gotten a lot more expensive—up 52% since 2019, according to the same analysis by Hardbacon. As of 2024, the average monthly cost sits at $1,623.

To give you a clearer picture, we used CAA's Driving Costs Calculator to calculate the average monthly cost to operate a 2024 Toyota RAV4 (Canada's top-selling SUV) with an annual mileage between 15,000 and 20,000 kilometres.

 

*Total cost per month includes the average maintenance, licence/registration fees, and fuel costs. This table does not include monthly car insurance costs, monthly car payments, or local parking fees.

New vs. used car costs

When deciding between a new or used car, it all comes down to cost, depreciation, and long-term value. Here’s how they compare:

New cars come with a full warranty, so repairs aren’t a major concern in the first few years. Plus, you get the newest safety tech, fuel efficiency, and in some cases, better financing rates. However, new cars come with a much higher price tag. And we can't forget about depreciation; a new car lose 20% to 30% of its value in the first year alone, according to the Canadian Black Book.

As for a used car, you get more car for your money, since someone else already took the biggest depreciation hit. Plus, after the first few years, cars lose value at a much slower rate. However, older cars may need more maintenance and repairs, which can drive up costs as warranties are likely expired. Also, if you take out a loan, interest rates on used car loans are often higher than for new cars.

Depreciation

Depreciation is the biggest hidden cost of car ownership. If you finance a new car, you’re paying off a loan on something that’s rapidly losing value, which could leave you owing more than it’s worth. A used car, on the other hand, has already gone through the steepest depreciation curve, meaning you’re getting better value for your money.

Tips to reduce the cost of car ownership

A few tips that may help you reduce how much you spend on a car each month are as follows:

Buy a used vehicle instead of a new one

Buying a used car is one of the quickest ways of minimizing how much money you spend on car insurance. Used cars, even lightly used cars, are usually far cheaper to buy or finance than new cars. This is due to the depreciation we talked about, and they depreciate most in the first year. If you don’t have to buy a new car or can’t afford to, you will likely get a much better deal on it by buying it one or two years later.

When buying a used car, just make sure to do your due diligence, especially when buying it from an independent seller. We strongly recommend hiring a professional mechanic to inspect the car before signing on the dotted line.

Avoid buying the cheapest car on the market

Although this might seem counterintuitive, trying to reduce the costs of car ownership by purchasing the cheapest car on the market may not work out in your favour. This is due to the fact that cheap cars may be more likely to break down or be less fuel-efficient. In turn, you could end up paying more money in maintenance, repairs, or fuel than you would have spent had you simply purchased a more expensive car from the get-go.

Refinance your vehicle loan

Another tip to reduce the financial burden of car ownership is to refinance your car loan. Car loan payments add up fast, but if you notice that interest rates have dropped since you initially took out your loan, it might be worth looking into refinancing options. Doing so could result in a significantly lower monthly car payment.

How to save money on car insurance

Another way to reduce the overall cost of car ownership is to keep your car insurance premium as low as possible. As you now know, car insurance is mandatory in Canada, which means that you will need to buy a car insurance plan if you want to legally drive your car anywhere in the country.

That said, auto insurance plans vary in price, and there are several strategies you can employ if you want to lower your premium. Below, the experts at BrokerLink have put together a list of tips to help you reduce your monthly car insurance costs:

Pay for your policy annually

Paying for your car insurance policy annually rather than monthly is one way that you might be able to save on car insurance. Many companies charge extra for monthly policies because they tack on administrative fees for every payment you make.

Bundle home and auto policies

Buying two or more insurance products from the same provider, even if they are different products, can also result in car insurance savings. For instance, if you have a home and you need to buy home insurance or tenant insurance, you could bundle these two policies together and qualify for a major discount. Contact BrokerLink today to learn more about how insurance bundles work and how you can qualify for one.

Consider choosing a higher deductible

If you can afford to increase your car insurance deductible, you could save on your monthly premium. Raising your deductible by $500 or $1,000 can result in a cheaper policy. Just make sure that you can realistically afford to pay this amount if you need to file a claim down the road.

Get in touch with BrokerLink today

For more information on car costs in Canada, get in touch with BrokerLink today. We can outline the various costs that should be budgeted for, as well as the different types of auto insurance that are important to add to your policy (e.g. third-party liability car insurance).

Get started today by contacting BrokerLink and requesting a free car insurance quote. Auto insurance quotes can be obtained over the phone, in person, or on our website using our free online quote tool.