Leanne Escobal is a publisher for Finder. She has spent over 11 years working with financial products and services, specializing in content and marketing. Leanne has completed the Canadian securities course (CSC®) as well as the personal lending and mortgages course by the Canadian Securities Institute. She has a Bachelor of Arts (Honours) in English literature and creative writing from Western University. See full bio
' > Leanne Escobal Updated Aug 27, 2024 Fact checked Navigate Car Loans In this guide In this guideTo drive your new car off the lot, you’ll need to pay the dealer, the government, the gas station and maybe even a mechanic. Aside from looking at the price of the car itself, don’t forget to factor in these dealer fees and other extra costs when buying a car and calculating exactly how much you’ll have to pay.
Ever wonder why the price you end up paying for a car isn’t the same as the manufacturer’s suggested retail price (MSRP)? That’s because taxes and extra fees are added on top of the MSRP, so the sale price you see advertised is not the same as what you have to fork out. Keep reading for a breakdown of what you’ll have to pay in fees when buying a new car in Canada.
There are two taxes to be aware of when buying a car. The first is a 5% federal goods and services tax (GST), which applies when you buy a new or used vehicle from a dealership.
The second is provincial sales tax, which applies in all provinces except Alberta and ranges from 6% to 20%.
You may be charged different rates depending on whether you’re buying from a dealership or private seller. Use the table below as a guide when budgeting for provincial car sales tax if you buy a new or used car from a dealer.
No. There are two certainties in life—and tax is one of them.
If you’re buying a new or used car from a dealership, you may be charged administration fees, which cover the time the dealer spent preparing the final documentation and licensing. This is sometimes also known as the dealership documentation fee in Canada. These dealer fees often range from $300 to as much as $1,000.
Yes, you can negotiate with the dealer to reduce this fee.
You’re charged this fee to cover the cost of shipping the car from the manufacturer to the dealership. It’s sometimes also referred to as a delivery fee.
Some dealers also include a PDI, or pre-delivery inspection, as part of this fee. This covers the cost of checking to make sure the vehicle does not have any defects and is safe to be sold to you.
Generally, no. This fee is unlikely to be changed.
Every province requires you to pay registration and licensing fees before you can drive your vehicle. If you’re buying from a dealership, they can walk you through all the necessary paperwork. However, the amount you need to pay varies depending on where you live.
No, these fees are payable in every province.
The federal government applies a tax of $100 on new vehicles with air conditioning. Expect the dealer to pass on this cost to you.
If you’re buying a used car, it’s a good idea to have it checked out by an independent mechanic to make sure the car doesn’t have any defects you should be aware of. This is one extra cost that you don’t want to avoid when buying a car. Spending a little extra on an inspection now can save you a lot in the future. A pre-purchase inspection usually costs around $100 to $200, but charges vary based on the mechanic.
Mechanics typically charge a flat fee for inspections, but you can shop around to find the most affordable option.
There are a couple other costs you may need to pay when buying a new car. One is a levy charged by your province’s motor vehicle sales regulator. For instance, OMVIC in Ontario charges a $12.50 transaction fee to dealers, who usually pass this on to the consumer. AMVIC in Alberta charges a similar fee.
Environmental handling fees may also apply to cover the cost of recycling products used in your vehicle. As an example, in Ontario fees apply for oil filters and tires, and you can expect these to total around $25 to $30.
No—but these are not major expenses.
The cost of a tank of gas varies depending on the size of your car’s fuel tank, the type of fuel you buy and current gas prices. With regular unleaded fuel selling for around $1.64 per litre at the time of writing, a 50-litre tank will cost $82 to fill up from empty.
Over the course of a year, gas costs can quickly add up. We used the CAA’s Driving Costs Calculator to work out how much you can expect to spend on gas over 12 months. The figures in the table below are for vehicles in Ontario that travel 20,000km per year and do 45% city driving and 55% highway driving, assuming gas is priced at $1.64 per litre.
| Vehicle type | Average model | Fuel cost per year |
|---|---|---|
| SUV | Ford Escape | $2,558.19 |
| Compact | Honda Civic | $2,218.74 |
| Crossover | Buick Encore | $2,807.45 |
| Intermediate | Hyundai Elantra | $2,149.86 |
| Luxury | Cadillac CT5 | $3,399.44 |
| Pickup truck | Chevrolet Silverado 2500 | $4,608.02 |
| Sport | Ford Mustang | $4,230.85 |
| Subcompact | Kia Sportage | $3,068.19 |
| Van | Toyota Sienna | $2,146.58 |
Source: CAA Driving Costs Calculator
No. But you can cut down on fuel costs by buying a fuel-efficient car, using apps that track gas prices to find the cheapest fuel near you, driving more sedately and staying on top of regular maintenance tasks.
There are other costs to consider if you’re buying an electric vehicle. While you’ll typically spend far less over the course of a year to charge an EV compared to running a gasoline-powered vehicle, you’ll most likely need to budget for the cost of installing a Level 2 charger at home—this generally starts in the $800 to $1,000 range. There are also federal and provincial government incentives that can help cover the cost of buying an EV, so check out our guide on EV rebates in Canada for more information.
In Canada, every province and territory requires a driver to at least have mandatory insurance coverage. In fact, you may not be able to register your car after buying it until you prove that you have at least the minimum required car insurance coverage.
In provinces like Ontario, for example, every insurance policy also needs to include third-party liability coverage, statutory accident benefits coverage, uninsured motorist coverage and coverage for direct compensation for property damage.
Of course, the cost of insurance also depends on factors like your age and driving history, the type of vehicle you drive, how much you drive and where you live. To give you an idea of how much your premiums may cost, we used the CAA’s Driving Costs Calculator to find out how much you could expect to pay to insure different classes of vehicles in Ontario.
| Vehicle type | Average model | Insurance cost per year | SUV | Ford Escape | $1,447.59 |
|---|---|---|
| Compact | Honda Civic | $1,757.39 |
| Crossover | Buick Encore | $1,543.51 |
| Intermediate | Hyundai Elantra | $1,526.01 |
| Luxury | Cadillac CT5 | $1,632.38 |
| Pickup truck | Chevrolet Silverado 2500 | $1,647.15 |
| Sport | Ford Mustang | $1,878.30 |
| Subcompact | Kia Sportage | $1,562.37 |
| Van | Toyota Sienna | $1,377.59 |
Source: CAA Driving Costs Calculator (vehicle is driven 20,000km per year by a driver under the age of 65 who has six years of driving experience with no accidents, who lives in a suburban/urban location and who pays a $500 deductible).
Read our guide on mandatory provincial car insurance coverage to learn more. Then get multiple quotes to find how much it will cost to insure a specific car you’re interested in buying. Compare car insurance providers in our guide to help narrow down your options.
No, but you can compare car insurance quotes and shop around for the best deal. There’s also plenty you can do to lower your premium like choosing a higher deductible, maintaining a clean driving record and taking a defensive driving course. If you don’t drive all that much, consider pay-per-kilometre insurance.
Tom is ready to buy his first car, and he’s got his eye on a 2024 Toyota Corolla L CVT sedan. The Toronto native knows that prices for the Corolla start at $23,490, but using Honda’s online Build & Price calculator, he soon realizes that the vehicle will cost significantly more to purchase than its sticker price. The cost breakdown is shown below.
| Vehicle | 2024 Toyota Corolla L CVT |
| MSRP | $23,490 |
| Dealer fees | $999 |
| Freight and delivery | $1,760 |
| Air conditioning charge | $100 |
| OMVIC | $12.50 |
| Environmental handling fee – tires | $22.50 |
| Environmental handling fee – filters | $1.08 |
| Sales tax | $3,430.06 |
| Total cost | $29,815.14 |
Tom’s new car will cost him $29,815.14 to purchase. Finally, there are also ongoing running costs to consider. The CAA Driving Costs Calculator says that if Tom drives 20,000km per year, he’ll pay:
The sticker price of your car doesn’t include everything you’ll need to pay. Car sales tax, dealer fees and other extra charges add up when buying a new car in Canada. Make sure you understand the total amount you’ll be on the hook for before getting a car loan so you don’t end up short on cash.
Most lenders require you to have car insurance before purchasing a car. Without it, you likely won't be able to drive the car off the lot.
Yes, dealer fees can sometimes be negotiated down. You'll generally have more luck asking a salesperson to waive the administration fees than the freight fee when buying a brand new car. This is because the dealership has to pay to have the car shipped, so it typically passes that cost on to you.
There are a few vehicle licensing costs in Ontario that you need to consider. The vehicle permit fee in Ontario is $32, while a plate and vehicle permit is $59. Previously, a licence plate renewal cost $120, but it now costs $0.
Yes, you'll need to pay a federal goods and services tax of 5% plus the provincial sales tax rate that applies where you live. Rates vary by province and depend on whether you buy from a dealership or a private seller, but there is no provincial tax to worry about in Alberta, the Northwest Territories, Nunavut or Yukon.
No, the MSRP does not include car sales tax. Dealer fees and registration costs are also not included in the manufacturer's suggested retail price.
Dealership documentation fees in Canada commonly range anywhere from $300 to $1,000. This fee covers the cost of preparing and finalizing all the paperwork for your purchase. However, it's worth noting that this is not a compulsory fee, so it's worth negotiating to try to get the dealer to reduce it.
This is essentially an admin fee that covers the cost of preparing your paperwork as well as licensing and registration documents. The fee varies depending on the dealer but can be as much as $1,000. The good news is that it's negotiable if you think you're being charged too much.
You'll need to pay 13% sales tax on the purchase price, while a dealer documentation fee of $300–$1,000 will apply. The vehicle permit fee in Ontario is $32, while a plate and vehicle permit costs $59. Find out more in our guide to buying a used car in Ontario.