What is the total cost of ownership for a car?

This post was originally published on January 1, 2020, and was updated on February 3, 2025.

*An error in calculation was found in the report and has since been updated. 

Car ownership is one of the largest expenses taken on by Canadian households. In addition to the upfront cost of purchasing a vehicle, there are other ongoing expenses: regular maintenance, gas, summer and winter tires, and car insurance, just to name a few.

This positions transportation as the third-largest household expense at 15% of spending, behind shelter at 31.4%, and the cost of food at 15.4%, according to Statistics Canada.

Let’s break down the primary costs of car ownership so you can financially prepare for your purchase.

What is the cost of your car payment or lease?

According to data from the September 2024 release of the AutoTrader Price Index, the average selling price of a new car was $66,550 – a decrease of -1.9% YoY. Combined with November 2024 data from Statistics Canada, which shows the average APR on new auto loans has softened to 6.92%, the average brand-new car costs somewhere around $1,022 per month to finance over an eight-year term. Last year we had this at around $1,091 monthly for a new car, so it’s great for consumers to see a bit of cost savings here YoY (-$69 monthly, a -6.3% change).

Note: The AutoTrader Price Index explains that while new car prices have remained stable throughout 2024, an increase in inventory has led to more incentives. At the same time, loan rates are declining, which helps improve the affordability of purchasing a new vehicle. 

Assuming you’ve got at least some money for a down payment, expect your monthly cost to be lower. Paying enough upfront to cover the tax on an average new car brings the payment to $905 per month. This is down from the $965 it would have cost last year, based on the same calculation.

While recent supply chain issues have limited the amount you can save by buying used, prices are coming down; the price of used cars fell -8.3% from June 2023 to June 2024 according to AutoTrader, and currently sits at $35,754. Since interest rates on used car financing tend to be higher (around 10% to 12% for those with good credit) and repayment terms tend to be closer to six years, the payment on an average used car is likely to be around $745 per month. There are some cost savings here YoY with the average price of used car payments decreasing from $765, coming to a monthly difference of about $20 (-2.6% YoY).

If we assume the same logic as buying a new car and putting down a payment to cover the sales tax (13%) on an average used car, it would bring your monthly payment down to $542, using a 10% interest rate.

Note: For our scenario, we are going to average out the difference between a new car and used car prices reported by AutoTrader (listed above), which gets us to $51,152 as a vehicle price for our analysis. Then we're using an average interest rate between a new car (6.92%) and a used car (10%) which gets us to 8.46% as our interest rate for our analysis. This calculation gets us to around $734 per month for this scenario. Over the course of an eight-year loan, an average of $202 of each payment is devoted to interest.

Also, keep in mind that the monthly payments to lease may be lower, so check out our leasing vs. financing a car guide to determine if leasing is an option for you.

What is the average cost of gas per month?

The fuel consumption of vehicles ranges widely, from the electric Hyundai Ioniq 6 which uses the equivalent of just 1.7 litres of gasoline per 100 km travelled, to the audacious Bugatti Chiron Pur Sport which sucks down 26.1 litres per 100 km.

For the purposes of this article, we’ll look at a popular choice for Canadian families, the Toyota RAV4. This best-selling Canadian SUV uses an estimated 7.9 litres per 100 km. 

While data on how far Canadians drive since the pandemic is hard to find, Natural Resources Canada uses an estimate of 20,000 km per year for its Fuel Consumption Guide. That works out to 385 km per week, which feels right for a daily round-trip commute of 40 to 50 km plus some driving to get groceries, visit your parents, or take your dog to the vet.

These estimates work out to 132 litres of fuel consumption per month. At the current national average gas price of $1.541/litre, your new Toyota RAV4 will burn $203 per month in gas. Based on 2024’s peak average price of $1.724/litre, things are certainly  looking better than last year’s expected monthly fuel cost of $227 - approximately $24 in savings monthly. 

The cost of fuel can be much lower if you drive an electric vehicle. Canada’s most popular all-electric vehicle, the Tesla Model Y, is officially rated to use 17.2 kWh per 100 km travelled. Whereas the cost of hydro in Canada ranges from roughly 8c to 19c per kWh, a similar electric car would cost only $23 to $54 per month to power.

What is the average cost of car maintenance?

Statistics Canada says the average Canadian household spends $79 per month to maintain and repair vehicles, but that figure can vary drastically depending on your car. It can cost significantly more to repair or maintain your electric vehicle due to the technology.

If you buy a new car, you won’t have to worry much about repairs while it’s under warranty – typically at least the first three years or 60,000 km. During that time, your primary maintenance expense will be oil changes, at a cost of about $120 every three to six months. There will also be occasional extra expenses like fluid changes and brake repairs.

Once your car is out of warranty, you should set aside at least $100 per month in maintenance costs. This allowance should cover you for routine lube, oil, and filter changes, tire rotations, and enough money saved for any unexpected repairs.

It’s worthwhile to note that inflation in Canada has hiked auto repair and maintenance costs. The J.D. Power 2024 Canada Customer Service Index—Long-Term Study found that the average cost per visit to a dealership increased by 7.6% in a year, from $436 to $465. Similarly, the average cost to an independent shop increased by 4.2% from $262 to $273. Despite the increase, inflation is causing car owners to keep their vehicles longer, opting for repair rather than a new car.  

Still, if you start to spend more than $1,000 per year on maintenance, it’s time to start thinking about buying a new (used) car. You should think about taking the maintenance money and investing it into a TFSA or high-interest savings account to afford your next vehicle purchase.

What about car administrative fees?

The cost of registering and licensing your car varies by province and ranges from $60 to $200 per year.

If you live in Ontario, you will need to pay a $32 licensing fee to register a new (or new-to-you) car, plus $59 if you require a license plate, but there is no fee for annual renewals as of March 2022. Ontario’s emission testing requirements for older cars were cancelled as of April 1, 2019.

How much do you spend on parking?

If you live outside of a major centre, parking may not be much of a consideration. But if you live or work in a big city, it can be a major expense.

There are no recent statistics on parking costs in Canada, but a quick spot check with parking company Impark shows that spaces go for a range of $200 to $300 per month in Vancouver and Montreal, $200 to $400 in Toronto, and $200 to $500 or more in Calgary.

Your own parking expense will vary, but for this analysis, we’ll estimate $200 per month, which could be particularly low or high depending on where you keep your car when you’re not using it.

What is the average cost of car insurance?

It’s hard to pinpoint the exact average cost for car insurance in Canada, as there is no updated source of truth. The latest statistics from 2023 put the price somewhere between $1,300 and $1,800. Depending on your situation, your price could be higher or lower than the national average. This is due to the complex rating algorithms each company uses, as there are many factors that go into how auto insurance rates are calculated which they use to determine your personal premium.

What we can say for certain is that the cost of car insurance is rising in Canada as the industry deals with another tough year. 2024 was a record year for claims in the P&C industry due to severe weather events. Layer on the persistent and growing issue of vehicle theft and fraud throughout Canada and it’s no wonder we’re seeing a steady rise in the cost of auto insurance.

Of all the provinces, Ontario car insurance is the most expensive. As of 2024, the average policy costs $2,006 per year, according to the Ontario government. Rural Ontarians pay much less, averaging $1,592, while GTA drivers pay much more, averaging $2,638 for car insurance in Toronto.

Splitting our pricing range down the middle, we can use an assumed average rate of $1,550 per year for Canada as of 2023. Applied’s latest rating index report shows that there has been an +11.3% increase to national car insurance rates as of the end of 2024. When applying this percentage increase to our 2023 rate, we get a rate of $1,725 per year or approximately $143 per month.

While many factors can seem out of your control, remember that comparing car insurance quotes is still the one thing you can do to help yourself find the best rate.

What is the hidden cost of car ownership? 

While most people see their car payment as an expense, it’s actually only the interest portion of your payment that represents an out-of-pocket cost. The rest repays a loan and is used to build equity in your car, much like you build equity in your home by paying off your mortgage. However, unlike a home, a car is a depreciating asset.

Depreciation is not a cash expense—you’re not writing a cheque for it—but it still represents a loss in your car's value over time. This loss in value affects how much your vehicle will be worth when you decide to sell or trade it in. 

While depreciation doesn't affect your monthly cash expense directly, it is still an important factor to be aware of. The value your car loses due to depreciation can cost almost as much as the principal on your car payment. This means that even though you're building equity, your car's overall worth is decreasing, which reduces its resale or trade-in value. This holds true even while used car prices remain somewhat elevated compared to historical norms.

To investigate depreciation in 2025, let’s look at a vehicle commonly available for close to the average new vehicle price of $66,807: the 2025 Audi Q5 Progressiv. At the time of writing, 78 are listed on Autotrader in Canada within the range of $66,000 to $67,000.

After two years, 2023 comparable models are selling for a range of $41,000 to $50,000 – a depreciation range of $16,500 to $25,500 or 25% to 38% of their original sale price.

Comparable five-year-old vehicles range in asking price from $25,000 to $34,000 – a total depreciation over five years of around $37,000 or 56%. After five years, your new vehicle will have lost an average of $7,400 or 11.1% per year. If we apply this percentage to our vehicle price used in our financing scenario, that works out to $473 per month.

What is the total cost of ownership for a car?

The total cost of car ownership in Canada is based on our 2024 data and shows an actual cash expense of $1,370 including all car payments, gas, maintenance, and auto insurance costs.

Check out the split expenses in the table below:

How to save money when you buy a car

• Consider buying a used car to reduce the hidden expense of depreciation
• Choose a car that’s smaller, more fuel-efficient, and more affordable
• Consider using ride-sharing or public transportation instead of buying a second car
• Increase the size of your down payment to reduce monthly payments and reduce the cost of borrowing
• Finance your car over a shorter term to save money on interest, or over a longer term to reduce monthly payments
• Save on routine maintenance like oil changes using local mechanics rather than the dealership
• Compare car insurance quotes online to get the best deal for your needs
• Bundle your car and home insurance together for a potential 10 to 15% in savings

You can also offset the cost of owning a car by using your car to make extra income. Rent out your vehicle using Turo car rental or start driving for Uber or Lyft to make some money with your car – just make sure you have ride-share insurance in place.

Is it worth the cost of owning a car?

A reliable vehicle is a non-optional expense for many Canadians. Many of us live in places where public transit is an afterthought, and it’s not exactly feasible to rely on taxis or ride-sharing to get kids to activities. It’s also difficult to make longer trips, like visiting family a few hours down the road or getting to a weekend getaway, without a car.

Depending on your needs, however, it could be entirely reasonable to choose to own one car instead of two – or go without. In areas where public transportation is relatively quick and reliable, going car-less makes sense. For the $1,370 we estimate it costs to own a car, a family of four can get unlimited travel on the TTC for as little as $286 per month. That leaves well over $1,000 for Ubers and occasional car rentals.

Cost of car ownership in 2025 is expected to rise 

On February 1st, President Donald Trump ordered 25% tariffs on Canadian imports to the US, to begin on February 4. Prime Minister Justin Trudeau has since announced retaliatory 25% tariffs on American imports. The implications of these tariffs are expected to hit all areas of the Canadian economy, in particular the automotive industry. 

While it is premature to state what specific increases could be, there is a potential risk that the cost of car ownership will increase throughout 2025. This is attributed to the soon-to-be disrupted supply chain which is expected to hike the prices of new cars, along with maintenance costs, gas prices, and auto insurance. 

Only time will tell what the actual increases will be. 

Update: On February 3, Trudeau announced the Canada-US tariffs will be paused for 30 days. 

Also read: How US tariffs on Canada could impact you — and what you can do

The bottom line

Owning a car is becoming more expensive in Canada, and each vehicle now costs us an average of $1,370 per month in cash expenses. Save on your car expenses by choosing a more affordable option, using alternative transportation when possible, and getting the best deal on car insurance by comparing quotes online.

Also read:

• Inflation and your car insurance – what you need to know
• How to get the cheapest car insurance in Canada
• The best-selling cars in Canada