How Much It Really Costs to Own a Car and Why You Should Care

Before buying a vehicle, you should know how much it will cost you to own one. By this point, you should have a solid idea of how much you would be able to spend on a vehicle each month and a short list of vehicles that interest you. We also suggest obtaining price quotes from dealerships for each vehicle on your list.

The reason for knowing the cost of ownership is to make sure that your budget can in fact accommodate the vehicles on your list. If not, then you can readjust one or the other, depending on how much you can realistically afford to pay regularly.

Unavoidable Vehicle Expenses

1. Fuel

Unless you are planning to own an all-electric vehicle, you will need to spend money on fuel. Larger vehicles, like SUVs, minivans and pickup trucks, tend to be more expensive in this department, while smaller cars like hatchbacks and sedans tend to be cheaper. However, even similar-sized vehicles can vary in fuel costs. has calculated that the Jeep Liberty can cost up to $15,000 to fill up over five years, while the very similar Toyota RAV4 may cost only $11,000 over the same time period. The resource also points out that fuel is the second-biggest ownership expense (behind depreciation), accounting for 24 per cent over five years on average. estimates that the annual cost of fuel in Ontario is $2,098. The data considers the Canadian average annual driving distance of $15,200 kilometres and fuel economy of 9.8 litres per 100 kilometres. Ontario is the most expensive province when it comes to fuel expenses.

To calculate how much you are likely to spend on fuel, use this calculator on

2. Maintenance

While the manufacturer’s warranty should cover most of your maintenance needs for the first few years of ownership, you will need start paying for them eventually. The good news is that maintenance accounts for only four per cent over five years, according to The resource lists the Porsche Cayenne SUV as the most expensive vehicle to maintain since, costing more than $4,000 over the first five years. However, many vehicles may cost you half of that, if not less. Recent DesRosiers Automotive Consultants’ Light Vehicle Study estimates that Canadians pay $796 for vehicle maintenance each year on average. You can use this number when calculating your total monthly and annual expenses.

3. Tires

Most people would probably consider the cost of tires as a maintenance expense, but since changing them is a separate task, we have listed it as such. It costs $60 to $125 to change a single tire, which includes the cost of installation and balancing. Experts recommend changing tires every three to six years, but you should check them regularly yourself to make sure the tread has not worn down sooner.

Tire prices do not vary from vehicle to vehicle as much as fuel costs do, but if you are curious how much you may spend on specific tire sets, you can use or any other resource that specializes in this area.

4. Insurance

It is illegal to drive without insurance in Canada, regardless of how careful you think you are as a driver. This means that you need to add it to your ownership expenses. Recent reports have deducted that Ontario and Alberta have the highest insurance rates in the country. According to, Ontario takes the first spot, boasting an average annual rate of $1,878. Alberta is not too far behind, with the average resident paying $1,476 per year.

To find out how much your insurance will end up costing you, you can obtain a quote from a website like

5. Financing/Loan

Your monthly car loan payment is likely be one of your biggest vehicle expenses. You can lower your monthly payments by extending the loan, but in doing so, you will also increase your long-term expenses since you will have to pay interest on each monthly payment. has calculated that interest accounts for 11 per cent of all ownership expenses over five years, while the latest data from J.D. Power & Associates puts the average car loan payment at $549 a month.

If you want to learn how much you will spend, configure your prospective vehicle with our free dealer cost report and then use our Monthly Payment Calculator:

Alternatively, you can calculate your monthly payments manually as shown in this article, though that would probably take more time.

6. License and Registration Fees

License and registration fees are relatively insignificant when compared to everything else on this list, but they are worth including in your budget. A car owner has to renew their license annually, which costs $100 in Canada. Registration renewal is a bi-annual fee that costs roughly the same amount as license renewal.

7. Depreciation

Depreciation may not be a monthly or annual fee that you have to pay, but it does have an enormous impact on your total cost of ownership. It is the value your vehicle will lose off the price you paid for it after a certain period of time. Depreciation is also the difference between what you paid for the vehicle and what you will get for it once you sell it after a specific period of time. The longer you wait, the more value the vehicle will lose. According to, a vehicle loses about 65 per cent of its value over five years on average and amounts to 48 per cent of all ownership expenses.

To find out how fast your prospective vehicle will depreciate, configure it on and you will be able to see its future value.

Calculating the Total Cost of Ownership

To make sure you know exactly how much you will regularly spend on your vehicle, you should calculate your total monthly and yearly expenses. Your monthly budget should account for fuel, insurance and financing. Figure how much each of them will cost you per month and add them up. The resulting value should be your monthly vehicle budget.

After that, find out how much fuel, insurance, financing, maintenance, tires, depreciation and licensing/registration will cost you annually and add them up as well. The resulting amount is what you need to make room for in your annual budget. You may also subtract fuel, insurance and financing, if you want to know how much you will need to account for without your monthly expenses.

Do this for every vehicle on your short list.

What to Do Next

Once you know how much every vehicle on your list will cost you to own, start thinking which vehicle you would like to buy before going off to negotiate your final price.