There are plenty of hidden costs and ongoing expenses that come with owning a car. So don’t buy a used vehicle until you know exactly how much it will cost you on a monthly and yearly basis.

Besides the sticker price (the amount you pay to drive your car away from the sale), here’s everything else you’ll need to pay for once that used car is yours. Familiarize yourself with these expenses and choose a used vehicle that’s within your means—one you can afford upfront, and one you’ll be able to pay for comfortably in the years to come.

Monthly financing

If you finance the purchase of a used car, the monthly payment on your loan or lease will be one of the biggest expenses to factor into your budget.

The monthly price you pay will depend on your credit score. And you can extend the loan to lower your monthly payments. Just keep in mind that this won’t reduce your expenses. In fact, it will increase the amount of interest you pay over time.

In 2015, the average monthly payment for a new car in Canada was $570 for a loan and $490 for a lease. To determine the monthly financing cost of buying a used car, use an online auto loan calculator from Scotiabank or Go Auto.


Fuel is the second highest expense for car owners (it typically accounts for about a fifth of car operating and ownership costs). The average retail price for fuel depends on where you live. And, unfortunately, Ontario tends to be one of the more expensive provinces when it comes to gas prices.

According to GasBuddy, the annual cost of fuel in Ontario is around $2,098. This estimate is based on the Canadian average annual driving distance of 15,200 kilometres and a fuel economy of 9.8 litres per 100 kilometres.

The type of used vehicle you buy and your daily driving habits will impact how much you end up paying for fuel each year. You’ll spend far less on gas each year if you buy a hybrid than you would if you bought a used vehicle that’s known for guzzling fuel.

To calculate how much the fuel for a used car will cost you annually, use the CAA’s Driving Cost Calculator and this list of the most fuel efficient vehicles by category.


Car insurance protects you in the event of an incident, and you’ll need it to drive legally on the roads here in Canada.

According to Thinkinsure, the average auto insurance cost in Ontario is $1,634 per year; most Canadian drivers pay in the range of $1,300 to $1,800 for annual car insurance. 

Although it can sometimes be cheaper to insure older vehicles than newer vehicles, the amount you ultimately pay for car insurance will depend on your location, driving history, and the type of used vehicle you purchase. 

Find a car insurance policy that works for you to determine the exact cost.

Vehicle Registration

Although vehicle registration fees won’t cost nearly as much as some of the other expenses on this list, you’ll need to renew your registration every one to two years. So make sure you factor the fees into your calculations.

When you buy a used vehicle in Ontario, you need to register the vehicle within 6 days of the sale at a ServiceOntario centre.

Here are the fees you’ll incur:

  • Vehicle permit (all vehicles): $32
  • Licence plate (new and replacement), with permit: $59
  • Licence plate sticker (passenger vehicles): $60 (Northern Ontario) or $120 (Southern Ontario)


You’ll need to pay for maintenance when your vehicle’s manufacturer’s warranty expires.

According to Canada Drives, maintenance costs tend to average out to around $1,400 to $1,500 each year (or: $100 to $125 each month) for owners that drive a minimum of 20,000 kms per annum. Older cars tend to need more maintenance. And luxury vehicles are typically more expensive to maintain. 

Calculate your monthly maintenance expenses with these factors in mind.

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Repairs and Breakdowns

Statistically speaking, older cars require more repairs. And they’re more likely to break down.

If you’re considering a used car that’s still relatively new and covered by the original manufacturer’s warranty, you won’t have to worry too much about these costs.

But as soon as the manufacturer’s warranty expires, you’ll need to pay for these expenses yourself—so don’t overlook them when you’re adding up the true cost of buying a used car.

It’s impossible to know how much you’ll need to set aside for repairs and breakdowns each year, as this expense will vary based on your car’s age, make, and mileage.

A good rule of thumb is to save $1,200-$2,000 for repairs and maintenance every year. And you can also use Google and online forums to see if other drivers have shared anything about the (hopefully minimal!) repair and breakdown costs associated with the type of used car you’re looking to buy.

Read more: How to budget for repair costs and breakdowns

Extended Warranty

If the manufacturer’s warranty has expired on the used car you’re looking to buy, an extended warranty can protect you from the cost of surprise breakdowns.

Extended used car warranties offer different types of protection, and warranty providers all have different pricing structures. You’ll need to do your research and choose an extended warranty that’s right for you.

For example, a Guardtree extended used car warranty subscription provides protection from most major electrical and mechanical repairs. Our subscriptions include additional benefits like roadside assistance and car rental and trip interruption costs to keep you on the road. Pricing starts at $49.95 a month. And because we’re Canada’s first subscription-based warranty, you’re never locked into a contract; you can pause, start, or cancel your subscription at any time.

See what we cover and use our price calculator to decide if an extended car warranty is right for you.

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How to calculate the true cost of owning a used car

Now that you’ve calculated the above numbers based on the used vehicle you’re looking to buy, it’s time to add them all up.

The sum total of the following expenses is the true cost of owning a used car:

  • Monthly financing
  • Fuel
  • Insurance
  • Vehicle registration
  • Maintenance
  • Repairs and breakdowns
  • Extended warranty

Reduce the risk of buying a used vehicle with GuardTree

Extended car warranties aren’t for everyone. But depending on your situation and the type of used car you buy, a used car warranty could help save you time and money in the long run.

If you’re in Ontario and you’re looking for a reputable third-party warranty with comprehensive coverage and awesome benefits, try GuardTree—Canada’s only used car warranty subscription.

With pricing as low as $49.95 a month and protection for most major electrical and mechanical repairs, GuardTree gives you peace of mind with a monthly extended car warranty subscription that you can cancel at any time.

See what’s covered and use our price calculator to decide if an extended car warranty is right for you.