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 buying a car and trying to calculate exactly how much you’ll have to shell out. Keep reading for a breakdown of what you’ll have to pay in fees when buying a new car in Canada.
Hidden extra costs when buying a car:
Registration fees
One of the key fees when buying a new car in Canada is registering it 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 around $300 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.
While federal sales tax (GST) applies when you buy from a dealership, each province has its own regulations for charging car sales tax. 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 provincial car sales tax if you buy a new or used car from a dealer.
Province or territory
Car sales tax rate
Alberta
0%
British Columbia
7% (vehicles less than $55,000, purchased from a business)
8% (vehicles between $55,000-$55,999.99, purchased from a business)
9% (vehicles between $56,000-$56,999.999, purchased from a business)
10% (vehicles between $57,000-$124,999.99, purchased from a business)
12% (vehicles up to $124,999.99, purchased in a private sale)
15% (vehicles between $125,000-$149,999.99)
20% (vehicles $150,000 and over)
Manitoba
7%
New Brunswick
10%
Newfoundland and Labrador
10%
Northwest Territories
0%
Nova Scotia
10%
Nunavut
0%
Ontario
8%
Prince Edward Island
10%
Québec
9.975%
Saskatchewan
6%
Yukon
0%
When you buy a car from a private seller, you don’t have to pay federal GST. But provincial sales tax applies in all provinces but Alberta and ranges from 6% to 20%. The amount you pay varies according to where you live and the value of the car you purchase. 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. This is sometimes also known as the dealership documentation fee in Canada. These dealer fees often range from $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 $30 to $80.
Insurance premiums
In Canada, every province and territory requires a driver to have at least 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 direct compensation for property damage coverage.
Average annual car insurance cost by province and territory
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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 fees when buying a new car in Canada 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.
Frequently asked questions
Depending on where you live, most lenders require you to have car insurance before you purchase the 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.
It depends on your province. In some cases, the licence plate stays with the car, so when you buy a used car, it'll come with plates. You will still need to register the vehicle yourself as the new owner.
In other cases, the licence plate stays with the person. So if you're trading in a car, you can keep your plates. But if you're buying a new car and don't already have plates, you'll need to buy them.
There are two vehicle licensing costs you need to consider: the vehicle permit fee and the licence plate fee. The vehicle permit fee in Ontario is $32, while a licence plate with permit costs $59.
Dealership documentation fees in Canada commonly range anywhere from $300 to $800. 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 waive the fee.
Chelsey Hurst is an associate editor at Finder. She loves empowering people to avoid financial pitfalls and make better decisions with their money. Chelsey has a Bachelor of Science from Redeemer University, a Master of Science from McMaster University, and has won multiple awards for research communication. In her spare time, Chelsey enjoys cooking and taking long walks in nature.
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