Purchase price, monthly cash flow and ownership cost are different

All guides

Compare the itemized purchase total, borrowing cost and ownership cost over the same period. A smaller monthly payment does not necessarily make a vehicle cheaper.

Sources checked : 2026-11-13. Review due by : 2027-02-13.

Separate the purchase, loan and running costs

The purchase total includes the vehicle, applicable fees, voluntarily selected extras and taxes. Obtain an itemized total before comparing offers.

Economic ownership cost includes depreciation, interest, insurance, energy and maintenance over an explicit horizon. Do not add the full purchase price and depreciation together: depreciation already incorporates resale value. Loan principal repayments are cash flow, not a second economic cost.

Compare cash and financing fairly

Use the same vehicle, initial resources and time horizon. Investment returns after tax and risk are not guaranteed. Do not assume available registered-account contribution room or an automatic financing advantage.

Negative equity means owing more than the vehicle is worth. Rolling it into a replacement loan increases the borrowed principal; a generous-looking trade-in credit can hide this.

Your checklist

Get the itemized out-the-door price.
Compare principal, annual rate, term and total interest.
Specify ownership years, distance, resale and running costs.

Worked example

Hypothetical example: $25,000 purchase, $12,000 resale after five years, $4,000 interest, $6,000 insurance, $8,000 energy and $4,000 maintenance = $35,000 economic cost before unspecified taxes and fees. Do not count $25,000 plus $13,000 depreciation.

Limits

Illustrations are not market prices, tax advice, loan offers or insurance quotes. Resale uncertainty must remain visible.

One question, if you wish

Which number would you like to understand better?

No answer is required. You can save an answer for your advisor in the interactive version; reading does not share anything with a dealer.

Sources

ACFC / FCAC — Shopping around for auto-financing — 2026-11-13
ACFC / FCAC — Financial risks when buying a car — 2026-11-13