What Is The Total Cost Of Owning A Car In Canada?

What are the types of costs associated with driving a car?

When calculating the cost of ownership, divide your expenses into operating and fixed costs. You have to make these cash outlays if you own the car, but don’t drive it!

Fixed costs

These are made up of the following:

• Total purchase price
• Finance or interest expenses
• Car insurance
• License and registration fees
• Sales taxes on your purchase
• Depreciation

Operating costs

Operating costs are variable and depend on both the vehicle and how you drive. This includes fuel efficiency and the increased maintenance that comes with frequent use. You should also factor in gas, oil changes, winter tire changes, repairs, parking, 407 fees, and similar expenses, all of which shift based on your driving habits.

How much does a car payment impact the cost of owning a car?

A car payment is typically the most visible part of your vehicle’s total cost of ownership, and as of 2026, the numbers show a market in transition. While prices have dipped slightly from their all-time highs, financing costs remain a major factor in your monthly budget.

According to the Q1 2026 AutoTrader Price Index, the average price for a new car in Canada now stands at $62,830, representing a 2.7% decrease compared to the previous year.

However, interest rates continue to play a big role. Statistics Canada data for early 2026 shows an average APR for new auto loans at approximately 6.45%. For a typical eight-year finance term with no down payment, this results in a monthly payment of roughly $838.

If you can provide a down payment, for example covering the taxes and fees upfront, you could bring that monthly payment down to approximately $725.

Used car prices have also begun to normalize after years of volatility. The average price for a used car in Canada is currently $36,713, a slight 0.3% decrease year-over-year.

Used car loans typically carry higher interest rates than new ones. For buyers with good credit, 2026 rates for used vehicles generally range between 8.99% and 10%. On a six-year repayment period, the average used car results in a monthly payment of approximately $660.

Look at our lease versus buying guide to determine the most suitable option.

What costs do you need to consider when owning a car?

We’ve compiled a checklist to help you calculate and understand how much it will cost on average. Below this list, we’ve given you more details for each item. Here’s what you need to consider if you want to get a clear picture of the total expense of owning and driving:

1. Total purchase price
2. Finance & interest rates
3. Vehicle registration
4. Maintenance
5. Depreciation
6. Fuel consumption
7. Winter tires
8. Parking
9. Insurance

What is the cost of your car payment or lease?

Most people need to finance a car purchase, which becomes a major monthly expense. You can either get a car loan or enter into a lease agreement, and each option affects your total cost differently.

When deciding whether to lease or finance your car, cost is usually the biggest factor. Leasing often attracts buyers because the monthly payments are lower. However, once the lease ends, you either return the car or pay a final buyout amount, and that can make your overall cost higher than taking out a loan.

• Financing: If you buy a $30,000 car with a 5‑year loan at 6%, your monthly payment is about $580, and you own the car at the end.
• Leasing: The same car might cost $380 per month on a 3‑year lease, but you don’t own it afterward. If the buyout is $18,000, your total cost ends up higher if you choose to purchase it at the end.

What are the provincial administration fees for driving a car?

Car ownership is another amount that you need to factor into your purchase. Once you have your vehicle permit and plates, you only pay the recurring annual fee for your license plate sticker.

The cost of registering and licensing your car can vary depending on your province – ranging from $60 to $200 per year.

If you register a new (or new-to-you) car in Ontario, you must pay a $32 licensing fee. Additionally, if you require a license plate, there will be an additional $59 fee. However, as of March 2022, there is no fee for annual renewals. It is worth noting that Ontario's emission testing requirements for older cars were cancelled as of April 1, 2019.

How much does parking cost monthly?

Parking might be insignificant for individuals residing outside major urban areas. However, parking expenses can escalate significantly for those living or working in bustling cities.

While recent statistics on parking costs in Canada are unavailable, Impark indicates a varying range of rates:

• Vancouver $200 to $300
• Montreal $200 to $300
• Toronto from $200 to $450
• Calgary from $200 to $500

Your parking expenditure differs; however, this estimate could be low or high depending on where your car is parked when not in use.

How does car maintenance affect the costs of owning a car in Canada?

Base your estimate of regular car maintenance costs on the manufacturer’s recommended schedule – oil changes, brakes, rotors, fluid levels, etc. Don’t forget to factor in the cost of paying more for repairs to the engine or air conditioning. Once your vehicle's warranty expires, budgeting at least $100 monthly for maintenance expenses is advisable.

According to Statistics Canada, the average Canadian household allocates $79 monthly for vehicle maintenance and repairs, although this amount can vary significantly based on your vehicle type.

If you opt for a new car, repair concerns during the warranty period – typically the first three years or 60,000 km – are minimal. During this period, your main maintenance expense will be oil changes, costing approximately $120 every three to six months. Additionally, there may be occasional additional costs, such as fluid changes and brake repairs.

Remember, your driving habits will also influence your car expenses. Are you hard on your brakes, or are you an aggressive driver? You’ll put more wear and tear on your brakes.

How does depreciation impact the cost of driving a car?

The depreciation cost is the difference between what you pay for your vehicle and what you get when you sell or trade it in. Some car makes and models hold their value better. Also, the more kilometres you drive annually, the greater the yearly depreciation in the value of your vehicle.

A couple of online sources state that you can lose 10-15% on the value of your car when you leave the lot. That can add up to a lot of cash in a short period. Your car’s value depreciates the most during the first year of its life. Some estimates indicate that owning the vehicle in the first year can account for 57% of your cost.

“Depreciation can account for anywhere between 40 and 50 percent of the cost of owning a vehicle,” said Kristine D’Arbelles, senior director of public affairs at CAA. “If you’re buying the car for $10,000 one day and own it for so many years, you might only be able to sell it for $2,000.”

What is the average cost of gas per month?

Fuel consumption per year is another expense when owning a car. To estimate fuel consumption, you’ll need to know:

• How many kilometres do you drive annually
• The percentage of city versus highway driving you do, also known as fuel economy
• The fuel price (in 2026, the average is $1.90/L and it continues to fluctuate)

If you haven’t kept records about kilometres driven and what you’ve spent on gas, you can always estimate by using the averages car companies publish or figures you can get from the Ministry of Transport.

How does insurance affect the cost of owning a car?

Automobile policies are based on several factors about the driver, the vehicle, the plan and the insurer that you select. Here are some things to consider when looking for Ontario car insurance:

• What driver’s license do you hold – G, G1, G2? How long have you been insured? The longer your insurance history, the better rates you’ll probably get.
• Older drivers are more likely to drive more carefully.
• Driving studies confirm that women are less likely to be involved in accidents.
• At-fault accidents, tickets and claims results in higher rates.
• The safety rating and safety features.
• How easy or difficult is it to steal your car? Your comprehensive insurance will be lower based on this.
• How much will it cost to repair? Parts and labour impact collision insurance. Domestic cars are generally less expensive to repair than imported.

Find out the cheapest cars to insure and the most fuel-efficient vehicles. You can get car insurance quotes before you buy to get an estimate of how much you will pay.

Tips to lower the costs of owning a car in Canada

1. Cheaper isn’t always better: You will not necessarily pay less to drive a lower priced car. Other important factors come into play such as fuel consumption, maintenance and depreciation.
2. Drive your car a long time: The longer you own a particular car, the less it will cost you to own.
3. Resale value: Depreciation is the most expensive factor in your purchase so find a car with a good trade-in value and you can save.
4. Depreciation is high in year 1: When you drive off a dealership lot, you can lose between 15-20% of its value immediately.
5. Larger vehicles are expensive: Large and luxury SUVs vehicles are the most expensive to own. Pickup trucks are almost as expensive. If saving matters, think twice before you choose one of them.
6. Save with hybrids: Hybrids that are not luxury vehicles or SUVs can save you money if you keep it for 5 or more years.

Costs of owning and driving a car FAQs

How much does it cost to drive?

The best way to get an estimate is to add up all expenses associated with driving. Your vehicle type, how much you drive, and automobile age play a significant role. Also, your driving record and insurance will dictate how much it will cost you to drive.

What is the usual cost of running a car?

The cost to own and drive your car varies. When you factor in your monthly payment, insurance, fuel, washes, and maintenance, you could spend between $750 and $1,000 monthly. Again, this depends on your car type, how much you drive and other factors unique to your situation.

Is it worth it to have a car?

It depends on your situation and needs. Some people require a vehicle for work and to get around. Others have one as a convenience. Countless people get by just fine without a car. Assess your situation, compare the pros, cons and costs and see if it makes sense.

How is car ownership cost calculated?

Total cost of ownership, or TCO, is an average of the total expense to drive your car over five years. All costs are added and averaged over the five years to give you an estimated monthly/annual cost.

Does the cost of owning a car change the longer you own it?

Yes. While there are some fixed costs, such as the payment, other expenses are variable. Some years, you’ll use more fuel than others. There may be a year when you have a significant repair. Insurance can also fluctuate depending on any claims or tickets.

Our brokers can help you find lower insurance rates

Car ownership in 2026 is a $1,373/month investment. Before you sign a new lease or purchase agreement, ensure you have accounted for the costs of fuel, maintenance, and insurance.

Ready to see how much you can save on your monthly car costs? Use our online car insurance calculator or speak with a ThinkInsure broker today to compare the best rates in Canada.