Fees when buying a new car in Canada

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.

  Read our guide to 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. 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

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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

• When do I need to get car insurance?

  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.

• Can I negotiate dealer fees when buying a new car in Canada?

  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.

• Will I need to get a new licence plate?

  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.

• How much are licensing fees when buying a car in Ontario?

  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.

• How much are dealer fees on a used car in Canada?

  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.