Find out exactly how much car you can comfortably afford based on your take-home pay, existing debts, and down payment.
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Financial planners in Canada generally recommend that your total monthly car payment — loan payment only — should not exceed 15% of your monthly take-home pay. When you add insurance, gas, and maintenance, your total transportation costs should ideally stay under 20–25% of net income.
This calculator uses your actual take-home pay (not gross income) because that is the money you actually have available to spend. Many online calculators use gross income, which overstates what you can truly afford.
Vehicle purchases in Canada are subject to provincial sales tax on top of the purchase price. In Ontario that's 13% HST, in BC it's 12%, and in Nova Scotia it's 15%. On a $35,000 vehicle, that adds $4,550 to $5,250 in tax — a significant cost that must be financed or paid upfront.
84-month (7-year) car loans have become increasingly common in Canada, but they come with a serious downside: you pay significantly more in interest, and you will likely be "underwater" on the loan (owing more than the car is worth) for most of the term. Where possible, aim for 60 months or less.
Your loan payment is just one part of owning a vehicle. Budget for insurance (often $150–$300/month in Ontario), gas, oil changes, tires, and unexpected repairs. A vehicle that fits your loan budget may not fit your full budget once all costs are counted.