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How To Save for a Car in Canada in 2026

In 2026, the average price of a new vehicle in Canada sits around $50,000-$65,000, while quality used vehicles range from $15,000-$35,000. For many Canadians, buying a car represents months or even years of saving – and that’s before factoring in insurance, fuel, and maintenance costs.

Whether you need a vehicle for work, family obligations, or simply getting around, saving for a car requires a solid financial plan. The good news? With the right strategy, you can reach your goal faster than you think.

Calculate the True Cost of Owning a Car in Canada

The sticker price is just the beginning. In 2026, the average Canadian spends $10,000-$13,000 per year owning and operating a vehicle – that’s $833-$1,083 per month beyond your initial purchase price.

Before you set your savings goal, understand all the costs involved:

One-Time Upfront Costs:

Purchase Price:

  • New vehicles: $50,000-$65,000 average in 2026
  • Used vehicles (3-5 years old): $25,000-$35,000
  • Used vehicles (6-10 years old): $15,000-$25,000
  • Older used vehicles (10+ years): $8,000-$15,000

Sales Taxes (Varies by Province):

  • Alberta: 5% GST only
  • Ontario: 13% HST
  • British Columbia: 12% PST + 5% GST = 17% total
  • Nova Scotia: 15% HST
  • Saskatchewan: 11% PST + 5% GST = 16% total

Registration and Licensing:

  • $75-$150 depending on province
  • Plate fees
  • Drive Clean test (where required)

Dealer or Administrative Fees:

  • $200-$800 at most dealerships

Winter Tires (Recommended/Required):

  • $600-$1,200 for a set (required in Quebec, highly recommended elsewhere)

Average Ongoing Annual Costs:

Average Insurance (Varies Significantly by Province and Driver):

  • Alberta: $1,200-$1,800/year average
  • British Columbia (ICBC): $1,500-$2,000/year
  • Ontario: $1,500-$2,400/year (higher in GTA)
  • Nova Scotia: $800-$1,200/year
  • Saskatchewan (SGI): $1,200-$1,500/year

Fuel or Charging:

  • Gas vehicle (15,000 km/year): $2,000-$3,000/year at 2026 prices
  • Electric vehicle (15,000 km/year): $400-$600/year in electricity
  • Hybrid: $1,200-$1,800/year

Maintenance and Repairs:

  • New vehicle under warranty: $500-$800/year
  • Used vehicle (3-10 years): $1,000-$2,000/year
  • Older vehicle (10+ years): $1,500-$3,000/year

Parking (If Applicable):

  • Monthly parking downtown: $150-$400/month
  • Residential permit parking: $50-$150/month

Depreciation (Loss of Value):

  • New vehicles: 20-30% in first year, 15-18% annually after
  • Used vehicles: 10-15% annually

Use CAA’s Total Cost of Ownership Calculator to estimate your specific costs based on the exact vehicle you’re considering. This tool factors in your province, driving habits, and vehicle choice.

Example Total Cost Calculation:

2020 Honda Civic in Ontario (15,000 km/year):

  • Purchase price: $22,000 (used)
  • HST (13%): $2,860
  • Registration: $120
  • Winter tires: $800
  • Total upfront: $25,780

Annual costs:

  • Insurance: $1,800
  • Gas: $2,200
  • Maintenance: $1,200
  • Total per year: $5,200 ($433/month)

First year total cost: $25,780 + $5,200 = $30,980

This is why it’s crucial to save for both the purchase and the ongoing costs – you need cash available beyond your down payment.

Set Your Savings Goal and Timeline

Once you know the true cost, it’s time to set a realistic savings target and timeline.

Step 1: Decide What You Can Afford

Use the 20/4/10 rule for car buying:

  • 20% down payment minimum
  • Finance for no more than 4 years (if financing)
  • Total monthly vehicle costs (payment + insurance + gas + maintenance) should not exceed 10% of gross income

Example: If your household gross income is $70,000/year ($5,833/month), your total monthly vehicle costs should stay under $583.

Step 2: Choose Your Purchase Price

Based on your budget, determine your target:

Conservative Budget:

  • $10,000-$15,000 used vehicle
  • Lower insurance and maintenance costs
  • Best for first-time buyers or tight budgets

Moderate Budget:

  • $20,000-$30,000 used vehicle (3-7 years old)
  • Balance of reliability and affordability
  • Good for families or daily commuters

Higher Budget:

  • $35,000-$50,000 used or new vehicle
  • Latest features and warranty coverage
  • For those with higher income or specific needs

Step 3: Calculate How Much to Save

Example Calculation:

  • Target vehicle: $25,000 used sedan 
  • Sales tax (ON 13%): $3,250 
  • Registration & fees: $300 
  • Winter tires: $800 
  • Buffer for first year maintenance: $1,000 
  • Total needed: $30,350

If you save $500/month: 61 months (5 years) If you save $750/month: 40 months (3.3 years) If you save $1,000/month: 30 months (2.5 years) If you save $1,500/month: 20 months (1.7 years)

Use the Government of Canada’s Budget Planner to find areas where you can cut spending and increase your monthly car savings contribution.

Realistic Timeline Tips:

Adjust as income changes: Raises, bonuses, or side income can accelerate your plan.

Be honest about your timeline: Saving $1,000/month sounds great but isn’t realistic for most Canadians. 

Account for setbacks: Add 10-15% to your timeline for unexpected expenses that might slow savings.

Start with what you can: Even $200/month gets you to $10,000 in about 4 years

Build a Savings System That Runs On Autopilot

Automate Every Paycheque

Set an automatic transfer from your chequing account to a dedicated car fund the same day your income arrives. You can typically do this right from your banking app. Look for Automatic Transfer options and you can set this up yourself. The “Pay yourself first” strategy protects your goal from impulse spending. Use tools that can help you set targets and track progress.

Park Funds Where You Won’t Touch Them

In order to avoid using the money you’re saving for your car, use a separate high-interest savings account to hold this money. Name it “Car Fund – Spring 2026” so the goal feels concrete.

The wrong place to save: Your regular chequing account where you can easily spend it.

The right place to save: A separate high-interest savings account that you don’t touch.

Trim, Swap, and Stack to Accelerate Your Fund

  • Cut non-essentials for a season: subscriptions, food delivery, specialty coffee.
  • Lower recurring bills where you can: phone plans, insurance shopping, streaming bundles.
  • Sell gear you no longer use.
  • Redirect windfalls like tax refunds or work bonuses straight to the car fund.
  • Consider a cheaper interim vehicle or certified used option. Natural Resources Canada offers tips to choose more efficient vehicles that lower long-term costs.

Consider All Fees Before You Lock Your Savings Target

Big purchases are won in the planning. Before you dive into taxes, fees, and tariffs, make sure your goal reflects the true out-the-door cost in Canada. That can include sales taxes, registration and dealer fees, and in some cases, duty and the RIV process if you import from the United States. High-end vehicles may face a federal luxury tax. Exchange rates and province-by-province insurance differences can also shift your monthly number. Build a small buffer so your car fund stays on track even if one of these costs moves.

Taxes, Fees, and Tariffs You Will Pay On Top Of The Price

The window sticker is not the final number. Add sales taxes (GST/HST and any applicable provincial tax), registration, plate, and dealer administration fees, environmental or tire-recycling fees, and insurance set-up. For new vehicles in Canada, any tariffs tied to the car’s country of origin are usually included in the retail price. If you plan to import a vehicle yourself, duties and other charges may apply at the border. Build a cushion so your savings plan stays on track.

Important Note on Importing Vehicles:

Importing a vehicle from the United States involves significant complexity, costs, and risks. For most Canadians, buying locally is simpler and often more cost-effective once all fees are included. Only consider importing if:

  • The vehicle is significantly cheaper (20%+ after all costs)
  • You’re comfortable with extra paperwork and potential delays
  • The vehicle meets Canadian safety and emissions standards
  • You have time to handle the RIV process

If you’re considering importing, read these sections carefully and calculate all costs before committing.

Cross-border Buying? Duty, Origin Rules, and the RIV Checklist

Thinking about bringing a used car from the United States? Whether duty applies often depends on where the vehicle was built and whether it meets current North American origin rules. Most private imports also go through the Registrar of Imported Vehicles (RIV)process to confirm safety compliance, which adds paperwork, cost, and time. Before you commit, price out duty, the RIV program, required modifications, currency conversion, and transport. If those push you over budget, consider a Canadian purchase and keep your savings plan intact.

Exchange Rate and Insurance Quote if Importing

Import math changes with the exchange rate. A stronger U.S. dollar can add thousands to your out-the-door cost once you convert to CAD and pay taxes and fees. Get an insurance quote for your province before you buy. Premium differences by province can shift your monthly budget more than you expect.

When Unexpected Expenses Threaten Your Car Fund

You’re six months into saving for your car, building momentum with $600 saved per month. Then your current vehicle needs a $1,200 repair, or an emergency dental bill arrives. These unexpected costs can derail months of progress if you have to raid your car fund.

If a short-term financial gap threatens your car savings progress, Speedy Cash offers payday loans designed to help cover urgent expenses so you can keep your car fund intact. This lets you handle the emergency without restarting your savings timeline.

How It Works:

  • Apply online 24/7: Our application is always available
  • Fast funding: E-Transfer funding can be near real-time once processed if your account has Autodeposit enabled
  • In-store option: Cash pickup available at our 19 locations if you prefer

Learn more about e-Transfer funding with Speedy Cash.

Where Speedy Cash Operates

Speedy Cash offers 19 store locations in the provinces of  Alberta, British Columbia, Nova Scotia, and Saskatchewan. We also offer online loans in these provinces, where we accept applications 24/7. We also offer online loans in Manitoba, New Brunswick, Newfoundland & Labrador (NL) and Ontario.

Repayment at Speedy Cash

Repayment is a single lump sum due on your next paycheque (except in Alberta). For details on timing, methods, and what to expect, see our Loan Repayment guide.

What You Need To Apply with Speedy Cash

  • One piece of Government Picture ID
  • Pre-Authorized Debit Form (PAD)
  • 30-60 Day Bank Statement
  • Proof of Address
  • Your most recent Pay Stub (if your income is not Direct Deposit)

Quick Checklist Before You Buy

  • Confirm the total cost of ownership for at least 3 different vehicles.
  • Stress-test your budget for fuel, maintenance, and insurance.
  • Save for taxes, registration, and winter tires.
  • Get pre-purchase inspections for used vehicles.

Read the fine print on financing if you plan to finance any portion. The FCAC outlines key points to compare and negotiate.

  1.  How much should I save for a car in Canada?
    • Add your target vehicle price and all ownership costs like insurance, fuel, maintenance, and taxes. Use a total-cost calculator to estimate yearly costs, then divide your savings goal by the months to your purchase date.
  2. Is it better to buy new or used?
    • Used often has a lower upfront cost, while new may have warranty coverage and higher resale for some models. Choose what fits your budget and needs, and factor in fuel efficiency and maintenance.
  3. How can I make saving easier?
    • Automate transfers each paycheque into a separate car fund and review your budget monthly with the Government of Canada’s Budget Planner. 
  4. Does Speedy Cash fund loans instantly?
    • Funding by e-Transfer can be near real-time once processed if you have Autodeposit. If you do not have Autodeposit, we recommend in-store cash pickup (if available in your area). Our online application is available 24/7.
  5. Does Speedy Cash offer flexible repayments for payday loans?
    • No. Repayment is a lump sum due on your next paycheque, except in Alberta.
  6. How much should I save for a down payment?
    • Aim for at least 20% of the purchase price as a down payment if you’re financing. For a $25,000 vehicle, that’s $5,000 down. A larger down payment reduces your monthly payments and the total interest you’ll pay over the life of the loan. If buying outright, save the full purchase price plus 15-20% for taxes and fees.
  7. Should I buy new or used in 2026?
    • New vehicles in 2026 average $50,000-$65,000 and depreciate 20-30% in the first year. Used vehicles (3-5 years old) cost $25,000-$35,000 and have already gone through the worst depreciation. For most Canadians, a quality used vehicle offers better value. Only buy new if you want the latest technology, specific features unavailable used, or a full warranty.
  8. Is it better to save or finance?
    • Saving the full amount (buying outright) costs less in the long run since you avoid interest charges. However, saving $25,000 might take 3-5 years, during which you may need transportation. A balanced approach: save 20-30% down payment, finance the rest with the shortest loan term you can afford (2-4 years maximum), and keep building your savings for ongoing costs.
  9. What if I need a car now but don’t have enough saved?

Options if you need a vehicle before hitting your savings goal:

  • Buy a cheaper interim vehicle ($5,000-$8,000) while continuing to save for your ideal car
  • Finance with the largest down payment you can afford
  • Look at vehicles in a lower price range
  • Consider lease options (though typically more expensive long-term)
  • Explore public transit or car-sharing temporarily

Avoid: Buying beyond your budget or taking on unaffordable payments just to get a car sooner.

10 How can I save faster while already driving a vehicle?

If you own a car and want to save for a newer one:

  • Maintain your current vehicle well to avoid expensive repairs
  • Drive less to reduce fuel costs
  • Increase insurance deductible to lower premiums
  • Sell your current vehicle when your savings reach 70-80% of your goal
  • Trade in your current vehicle (though private sale usually gets more money)
  • Redirect your current car payment (if any) straight to savings when the loan ends

Short-term Help to Keep Your Car-Saving Plan on Track

Ready to keep your car-saving plan moving? If a short-term cash gap pops up, Speedy Cash offers payday loans in eligible provinces so you can handle urgent expenses and stay focused on your goal. Find a location near you or start an online application today!

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