This is the one. You’ve scoured the internet for the vehicle that checks all your boxes: it’s safe, dependable and just a touch sporty—but most importantly, it has ten large cup holders.
Everything is in order, but the price is a little uncomfortable. It’s at the top of your range. You can add another few months of financing to make the monthly payment more manageable, right?
Hold it right there. Before buying your dream car, consider the costs that aren’t included in the advertised price or monthly payment.
We used Statistics Canada’s fuel-price and vehicle-use data, Natural Resources Canada’s fuel-consumption guide and CAA’s driving-cost calculator to prepare this article.
Five Costs to Consider Before Buying a Car
Calculating Your Monthly Car Budget
The monthly loan payment in this example is approximately $1,057. Add the estimated monthly costs of fuel, insurance, maintenance and tires:
| Monthly payment or expense | Amount |
|---|---|
| Car payment | $1,057 |
| Fuel | $164 |
| Insurance | $195 |
| Maintenance and tires | $125 |
| Total ongoing cash flow | $1,541 |
The $1,541 figure shows how much cash you would need each month for the expenses included in the example.
This is different from the vehicle’s economic cost. Part of each loan payment reduces the principal and builds equity in the vehicle. Depreciation reduces that equity as the vehicle loses value.
Read More: Compare Leasing and Financing a Car in Canada
Buying Used
A used vehicle may lose value more slowly than a new one, but maintenance and repair costs may be higher. Your financing rate may also differ.
Read More: Compare Buying a New and Used Car
Buying Electric
If you buy an electric vehicle, you’ll pay for electricity rather than gasoline. The purchase price, charging costs, tires, repairs and insurance may also differ.