Ratehub.ca, one of the most popular financial comparison websites, has published a comprehensive analysis of the total cost of owning a car in Canada.
The analysis is based on the 2023 third quarter Price Index from Auto Trader and October 2023 data from Statistics Canada.
Here are the highlights of the report:
- Initial Purchase and Financing (Interest payment – 195/month): The study finds the average price for new cars has risen sharply to $67,817, with financing reaching around $1,091 monthly. Opting for a used car, priced at an average of $39,155, can reduce monthly payments to approximately $765. Ratehub considers an average payment of $800, with interest costs of 195/month.
- Depreciation ($592/month): Car payments primarily cover loan repayment and equity building, not just expenses. However, cars depreciate significantly, often costing more than the payments themselves, with an average monthly cost of $592 due to depreciation.
- Fuel (average: $200/month): The average monthly gas cost for a Toyota RAV4, a popular Canadian family SUV, is about $183, based on an annual driving distance of 20,000 km and a fuel consumption rate of 7.9 litres per 100 km. This cost could rise to $224 with higher fuel prices, whereas electric vehicles like the Tesla Model Y can significantly reduce monthly fuel expenses to $23-$54.
- Maintenance and Repairs ($79/month): The average Canadian household spends $79 monthly on vehicle maintenance, a figure that can vary significantly. New car owners generally face minimal repair costs beyond oil changes during the warranty period. Ratehub says post-warranty, a monthly budget of $100 is advised for maintenance, but exceeding $1,000 annually in repairs may warrant considering a vehicle replacement.
- Administrative Fees ($79/month) and Parking ($200/month): Licensing and registration fees, along with parking costs, especially in urban areas, can add substantially to monthly expenses.
- Insurance ($111/month): A 2022 ICBC report highlights the variability in Canadian car insurance rates, influenced by driving history and province. Ontarians face the highest premiums, with an average cost of $1,796 annually. Nationally, Canadians pay about $1,337 per year, or $111 monthly, for car insurance, with Quebec offering the lowest rates.
This amounts to a total cost of ownership averaging $1,387 monthly.
Ratebub says Canadians should explore all options to minimize expenses, including comparing insurance quotes and considering less expensive vehicle options.
Alternatives such as using public transportation, ride-sharing, or owning fewer vehicles can offer significant savings. For instance, a family of four could spend much less on public transit and occasional ride services than on owning a car.
Ratebub says informed choices about transportation can lead to significant savings and a more manageable budget.