Canada Car Loan Calculator — With Provincial Sales Tax 2026
Car loan payment per month, bi-week or week with sales tax by province (HST, GST + PST/QST, BC luxury bands), trade-in tax savings, dealer fees, total interest at 36–96 months, a negative-equity check and the federal luxury tax.
| Taxable amount | — |
|---|---|
| Sales tax | — |
| Trade-in tax saving | — |
| Amount financed | — |
| Total interest | — |
| Total cost of the car | — |
| Monthly equivalent | — |
| Balance after 2 and 4 years (negative-equity check) | — |
| Same loan at 48 / 60 / 72 / 84 months | — |
| Federal luxury tax | — |
In short
A Canadian car loan is calculated on the price plus dealer fees plus provincial sales tax (13% HST in Ontario, 12% in BC, 14.975% in Quebec, 5% in Alberta) minus the trade-in and down payment — the trade-in also reduces the tax; a $42,000 car in Ontario with a $10,000 trade-in and $3,000 down at 6.99% over 72 months costs about $608 a month and $8,100 of interest, and 84-month terms leave most buyers in negative equity for years.
Who this is for: New and used car buyers comparing dealer and bank financing, trade-in offers and loan terms in any province.
Financing a car in Canada: taxes, trade-ins and the 84-month trap
A Canadian car loan is calculated on the price plus dealer fees plus sales tax, minus your trade-in and down payment. Sales tax is the province's GST/HST or GST + PST — 13% in Ontario, 12% in BC (rising to 20% on cars over $150,000), 14.975% in Quebec, 5% in Alberta — and in every province the trade-in reduces the taxable amount, so trading in a $10,000 car saves $1,300 of HST in Ontario on top of its value.
- Rates in 2026: prime-based bank loans and dealer financing typically run 5–9% for good credit; manufacturers offer 0–3.99% subvented rates on new cars in place of cash rebates — compare the rebate with the interest saved.
- Term: 72 and 84 months are now standard and keep the payment low, but you pay far more interest and owe more than the car is worth for 3–5 years — a problem if you write it off, want to trade, or lose income.
- Negative equity rolled from the old loan into the new one is taxed and financed again; a cycle many buyers never escape.
- Fees: freight and PDI ($1,800–$2,500), admin/documentation ($300–$800), tire and air levies, and optional extras (extended warranty, rust-proofing, gap insurance) are all taxable and often negotiable.
- Luxury tax: cars over $100,000 attract a federal tax of the lesser of 20% of the excess or 10% of the price, with sales tax charged on top.
See also: Canada Take-Home Pay Calculator 2026, Car Lease vs Buy Calculator.
Assumptions
- Taxable amount = price + fees − trade-in; tax = HST, or GST + PST/QST (BC PST by price band); luxury tax = lesser of 20% over $100,000 and 10% of price.
- Financed = price + fees + tax + luxury tax − trade-in + amount owed on trade − down − rebate; payment by the standard amortisation formula at the chosen frequency.
- Equity check compares the balance after 2 and 4 years with 60% and 42% of the price (generic depreciation).
Worked example
Taxable amount $42,000 + $2,200 − $10,000 = $34,200 → HST 13% = $4,446 (the trade-in saves $1,300 of tax). Financed: 44,200 + 4,446 − 10,000 − 3,000 = $35,646 → $608 a month for 72 months; total interest $8,098; total cost $56,744. After two years you owe about $25,400 against a car worth roughly $25,200 — barely at break-even; at 60 months the payment is $706 but interest falls to $6,694.
Frequently asked questions
How much tax do I pay on a car in Ontario?
13% HST on the price plus dealer fees, less any trade-in — $4,446 on a $42,000 car with $2,200 of fees and a $10,000 trade. Private sales pay 13% RST on the higher of price and wholesale value at ServiceOntario.
Does a trade-in reduce sales tax in Canada?
Yes — on dealer purchases in every province the trade-in value is deducted before tax, which makes trading in worth more than its cash value for tax purposes (worth 12–15% extra depending on the province).
What is a good car loan rate in Canada in 2026?
Roughly 5–7% for prime borrowers at banks and credit unions, 0–3.99% on manufacturer-subsidised new-car financing, and 10–25% for subprime credit; dealers mark up bank rates, so get a pre-approval first.
Is an 84-month car loan a bad idea?
Usually — it lowers the payment by about 25% versus 60 months but adds 40%+ more interest and keeps you in negative equity for most of the term; choose a cheaper car or a shorter term if the 60-month payment doesn't fit.
Can I pay off a car loan early in Canada?
Yes — most bank and manufacturer loans are open or allow prepayment without penalty, and interest is simple, so paying extra shortens the term; check the contract for a prepayment clause.
What is the luxury tax on cars?
A federal tax on vehicles over $100,000: the lesser of 20% of the amount above $100,000 or 10% of the full price (e.g. $4,000 on a $120,000 car), charged by the seller with GST/HST on top.
Is interest on a car loan tax-deductible?
Only for the business-use portion of a vehicle used to earn self-employment or commission income (up to a monthly cap); personal car loans are not deductible.
What is gap insurance?
Cover that pays the difference between the insurance payout and the loan balance if the car is written off while you are in negative equity — worth considering on long terms with little down.
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