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Extra costs when buying a car

Don't forget to factor in dealer fees, taxes, insurance premiums and other extra costs to figure out how much you'll have to pay beyond a car's sticker price.

In order to drive your new or new-to-you 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 you’re buying a car and trying to calculate exactly how much you’ll have to shell out.

Hidden extra costs when buying a car:

  • Registration fees

    Your car will need to be registered with your province or territory. You may need to register the car as soon as you buy it if the dealer hasn’t done so already. Or if you’re buying used, it may already be registered with the previous owner – in which case you’ll just need to transfer the title. Depending on your province, vehicle registrations fees can range from $15 to $120 a year. It’s important to remember to budget for this particular extra cost when buying a car, since you can’t drive your car without registering it.

    Depending on the age of your car and what province you are in, you may also need to pay to have an emissions test done when you register the vehicle.

  • Car sales tax

    This is one extra cost when you’re buying a car that’s important to budget for, since it can add thousands of dollars to the final cost. The dealership will charge sales tax on top of the advertised sticker price. If you’re buying a used car from a private seller, you’ll likely be required to pay taxes when you register the car.

    Each province has its own regulations for charging car sales tax, and you may be charged different rates depending on whether you’re buying from a dealership or private seller. You can use the table below as a guide when budgeting for car sales tax.

    Province or territoryCar sales tax rate
    Alberta0 – 5%
    British Columbia7 – 20%
    Manitoba7 – 12%
    New Brunswick15%
    Newfoundland and Labrador15%
    Northwest Territories0 – 5%
    Nova Scotia15%
    Nunavut0 – 5%
    Prince Edward Island15%
    Quebec9.975 – 14.975%
    Saskatchewan6 – 11%
    Yukon0 – 5%

    It may be tempting to buy a vehicle in another province to save on taxes but there are other factors you should consider which can add to the overall cost.

  • Dealer fees

    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. These dealer fees often range between $300 to as much as $800. Keep in mind that this is one extra cost when buying a car that is negotiable. Feel free to ask the dealership to reduce or even drop this fee altogether.

  • Freight fee

    If you’re buying a new car, you’ll likely be charged a freight fee, which typically costs anywhere from $850 to $1,700. You’re charged this dealer fee to cover what the dealer pays, plus profits in some cases, for shipping the car from the manufacturer to the dealership.

  • Pre-purchase inspection

    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 when buying a car that you don’t want to avoid. Spending a little extra now on an inspection 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.

  • Gas

    Most cars aren’t going to come fully filled, so you may need to fill your tank as soon as you leave the dealership. Filling up your new car with gas can typically cost anywhere from $20 to $60.

  • Insurance premiums

    In Canada, every province and territory requires a driver to have at least mandatory 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, and direct compensation – property damage coverage.

    Read our guide to mandatory provincial car insurance coverage to lean more. Then get multiple quotes to find how much it will cost to insure a specific car you’re interested in buying. You can compare car insurance providers in our guide to car insurance to help narrow down your options for the lowest rates available to you.

    Average annual car insurance cost by province and territory

Compare your car loan options

Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
Min. income of $2,000 /month, 3+ months employed
Get a new or used vehicle delivered to your door.
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Loans Canada Car Loans
$500 - $35,000
0% - 29.99%
3 - 96 months
Min. income of $1,800 /month, 3+ months employed
Compare rates from multiple lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
$7,500 - $85,000
3.99% - 29.99%
12 - 96 months
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
Coast Capital Car Loan
$10,000 - No Max.
18 - 84 months
Able to service debt payment of $300/month
Competitive rates and flexible terms.
Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
Splash Auto Finance
$10,000 - $50,000
9.90% - 29.90%
24 - 84 months
Min. income of $2,200 /month, 3+ months employed
Apply with any credit score.
Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
goPeer Car Loan
$1,000 - $25,000
8.00% - 31.00%
36 - 60 months
Min. income of $40,000 /year
P2P platform with competitive rates.
Canada's first regulated consumer peer-to-peer lending platform that connects creditworthy Canadians looking for a loan with Canadians looking to invest.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
Min. income of $1,600 /month, 3+ months employed
High application approval rate.
Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
Canada Auto Finance
$500 - $45,000
4.90% - 29.95%
3 - 96 months
Min. income of $1,500 /month, 3+ months employed
Get financing from partnered local lenders.
Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
LoanConnect Car Loans
$500 - $50,000
9.90% - 46.96%
3 - 120 months
No min. income requirement
Pre-approval in as little as 60 seconds.
Get access to 25+ lenders through this brokerage. Get your funds in as little as 24 hours.

Compare up to 4 providers

Bottom line

The sticker price of your car doesn’t include everything you’ll need to pay. Car sales tax, dealer fees and other extra costs when buying a car can start to add up. 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.

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