You’ve saved and shopped, and finally found the car of your dreams. However, the cost of owning a car in Canada is more than you think. You know you’ll have to buy gas and pay for insurance, but what about hidden expenses that catch car owners in Ontario by surprise? Cars are no longer a luxury. Vehicle expenses take about 20 percent of the total annual income of the average middle-class Canadian. It’s even higher if you live in a rural area. According to LowestRates.ca, auto insurance costs more than ever in Ontario, too. Don’t worry. The good news is, you can still afford your dream car if you learn about all of the expenses you’ll face and budget accordingly. Before you buy, find out what goes into Canadian car ownership and the true cost to you.
Getting to the Bottom Line
You can easily create an annual and monthly budget for your total expenses, and use that estimate as a baseline for comparison shopping. For the monthly total, add up the cost of fuel, insurance, and financing (your monthly car payment). That will provide you with an approximate amount per month. Next, multiply that amount by 12, and add in an estimate for maintenance, tires, registration and licensing fees, and depreciation. This gives you an annual total. Now, you have a realistic figure to base your total purchasing and ownership cost for each year.
Depreciation
Depreciation is something that most people don’t take into account until it’s time to sell or trade your vehicle for a new one. This is a hidden cost that reduces your vehicle’s value. Figure out the cost of depreciation by deducting 10 percent from the total cost of your car after financing. This total assumes that the car is kept in good repair, which brings us to our next expense.
Estimating Vehicle Maintenance
The best way to hold your car’s value and keep it running for as long as you own it is to keep it maintained. All car manufacturers include an estimated schedule for routine maintenance like oil changes and tire rotation. New car websites and independent reviews usually list an estimated cost for annual maintenance on the page for each model. You can use this as a baseline for figuring an annual car budget and keep an eye on your account as maintenance fluctuates throughout the year. On average, it will cost $500 – $700 per year for routine maintenance, and another $800 – $1,500 for a good set of new tires.
Insurance and Interest
These are two monthly expenses that aren’t always included in the car sales ads, except in the small print. Your interest rate depends on your credit and source of financing. Basically, you’ll pay less if you have better credit. Monthly payments will also be lower if you have a good trade-in or a large down payment. Insurance rates depend on your driving record, age, and any discounts you’re eligible to use. You can get better rates by performing a comparison search. Annual car insurance rates in Ontario are about $1,878. Check during the year for additional discounts as they become available.
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