If you are looking for a long-term stay in Canada, getting a car loan is one of the best ways to establish a credit history. It will prove extremely valuable later when you decide to buy a house.
Owning a car helps you avoid the hassle of long, inconvenient trips to school, catching buses in the cold, and trying to get to class on time.
Although owning a car seems quite desirable, you should be aware of how many dents car financing can put in your wallet.
To help you make a financially sound decision, we researched annual car costs for you.
How Much Does It Cost To Own A Car In Canada?
Most of the time, students just consider the vehicle’s cost price without actually grasping the considerable chunk of money that leaves their bank account each year on account of their precious vehicle.
Here’s how much the individual expenses—in terms of insurance, gas, maintenance, licensing, insurance, and depreciation—contribute to the total cost of owning a car.
Several factors will determine how much you pay for your car insurance. These include the type of vehicle you choose, your driving record, and even your address.
You can extend your monthly loan payments for up to 8 years. Although you have to pay a lesser amount monthly, you eventually pay very high interest.
Your car insurance just doesn’t change from one province to another but also from one neighborhood to another. So research and explore your options to get the best interest rates and terms.
The money you spend on gas will depend on three factors—your vehicle’s fuel efficiency, mileage, and gas price. It varies from vehicle to vehicle, with a small car costing you around $1742 per year.
Although many people overlook maintenance cost, it contributes a reasonable chunk to your car cost and is necessary to prevent future expensive repairs. It includes oil changes, tire rotations, and new brakes.
The amount you spend on maintenance will increase with the age of your car. For the initial five years, your car maintenance can cost you anywhere between $800 and $1200 per year.
You should also consider parking, which may put you back by around $600 per year.
Licencing And Registration Fees
Small expenses like annual motor vehicle registration fees, emissions testing, tolls, and other minor fees can add up to a significant amount.
Renewing your car’s license plate sticker can cost you around $120/year, but failure to pay will be much costlier.
How much you spend on insurance will depend on several factors like the coverage, your driving history, and your place of residence, but it will typically be anywhere from $1000 to $2000.
A car is an asset whose value depreciates over time, with the highest depreciation in the first year. It is always better to choose a vehicle with a slower depreciation rate.
The Implication For Students
Many students already have an extensive list of expenses for rent, tuition, food, and other things. The costs of buying and owning a car will prove more stressful than helpful.
So unless you want to establish a credit history or are filthy rich, keep in mind that public transport is at least 10 times cheaper. And you can always choose to walk or cycle your way to your destination.
If you have decided upon buying a car, let’s get you started. Follow these easy steps given below to get your car.
Step 1. Getting A Social Insurance Number
If you are purchasing your car through a student loan, you need a SIN number. This is a 9-digit number that you also need to get a job and to avail other governmental facilities.
The revenue agency requires the SIN number for all big-ticket purchases (over ten thousand dollars).
You can receive your SIN by submitting the following documents to your closest Service Canada location.
- A student permit indicating your acceptance to work in Canada issued by the CIC (Citizenship and Immigration Canada)
- A visitor permit authorizing you to work in Canada issued by the CIC.
- Diplomatic ID card and a note permitting your employment in Canada. This is issued by The Global Affairs Canada or Foreign Affairs, Trade and Development Canada.
Step 2. Getting A Valid Driver’s License And Vehicle Insurance
A valid driver’s license and insurance are mandatory if you want to buy a car in Canada.
If you have a foreign driver license, take it to a Service Canada location to find out if your country has a reciprocal agreement. This gives you a free pass to obtain a license without going through the regular procedure.
If not, you will need to have your driving experience verified by the authorized embassy, pass a vision test and written knowledge test. And finally, you’ll need to go through a road test and gain a minimum of 12 months of experience driving.
Step 3. Take A Student Car Loan
After taking care of all the above requirements, the only thing between you and your car is a car loan. But, if you are a new resident, you may not have enough credit history, which is required to assure your lender of your ability to make timely repayments.
Here are some things you can do to get around this obstruction.
- Student permit: This guarantees that you will be able to pay off your loans before leaving the country.
- An income: Students who work are more likely to repay their loans. A steady income also lowers their interest rates.
- Down payment: Making a down payment assures the lenders that they will receive their money before your permit expires.
Once you have followed all the above steps, you can easily get a car in Canada. You can also opt for a used or pre-owned car as they are available at more affordable prices and are a better investment due to their low depreciation rates. And if you decide that you want to make some extra money on the side, you can start driving for Uber on Weekends or at night time.