A car can be one of the biggest purchases you’ll ever make. The base price is just the beginning. You will also have to pay for gas, insurance, repairs, and maintenance. Before you buy, make sure you can cover all the costs. Ask yourself:
- Can I afford to buy new? You can save money if you buy a used car instead. Or, buy last year’s model of the new car you like.
- How much can I get for my old car? The Black Book lists the current value of various car models. The Canadian Automobile Association (CAA) provides this information online so that you can easily look up what your car is worth. This guide is also available in most libraries and bookstores, and car dealers may have a copy.
- If I borrow, what will I pay each month, including interest? Ask your bank or dealer for an estimate. Or, use this Auto Loan Calculator to estimate your monthly payment.
- What will my car insurance cost each month? Get a quote from your insurance company. For online quotes, check InsuranceHotline or Insurance-Canada.
- What will it cost to insure my car loan? Loan insurance makes your monthly payment for you if you are sick or out of work. This type of insurance is known as creditor insurance.
- What will it cost to buy gas and maintain the car? Count on at least 16 cents per kilometre for gas and maintenance, and budget even more for a minivan or truck. If gas prices keep rising, your driving costs will go up, too.
Remember: Your car costs must fit your budget.
If they don’t, you may need to look for a less expensive car.
Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca