As the cost of car ownership in Canada continues to rise, a significant gap has emerged between what Canadians anticipate paying and the actual financial burden, according to a recent survey. This disconnect underscores the growing challenges faced by consumers in the automotive market.
Survey Highlights Misaligned Expectations
More than 80 percent of Canadians expect to pay less than $750 per month for a car payment, with 32 percent anticipating costs under $250, as revealed by a Deloitte Touche Tohmatsu Ltd. survey. However, data from J.D. Power and Associates paints a starkly different picture: the average new car payment is nearly $900 per month, while used car payments exceed $760 monthly.
Projected Increases in Monthly Payments
AutoTrader predicts that these figures are set to climb even higher. In a recent report, the company warned that if new car prices increase due to trade uncertainties with the United States, monthly payments could surpass $1,000 for the first time in Canada. Additionally, used car payments, currently reported at $637 by AutoTrader, are expected to rise as well.
"With no expectation of a significant decline in vehicle prices, limited prospects for meaningful interest rate cuts, and assuming consumer demand remains broadly stable, we expect monthly payments to remain elevated but largely steady in 2026," AutoTrader stated in its analysis.
Loan Durations Add to the Disconnect
The survey also uncovered discrepancies in loan expectations. While 81 percent of respondents expect car loans to last 60 months or less, J.D. Power data indicates that more than half of vehicle loans have an 84-month duration. Only five percent of survey participants anticipated loans of 84 months or longer.
Current Pricing and Market Trends
According to AutoTrader.ca, the average cost of a new car was $63,439 in December 2025, marking a 2.7 percent year-over-year decrease. In contrast, the average used car price rose two percent to $35,201 over the same period. Despite these fluctuations, elevated prices, higher interest rates, and increasing auto insurance costs are deterring potential buyers, leading many Canadians to retain their current vehicles longer.
Insurance Costs Remain a Concern
Insurance rates are projected to stay high, even with an 18 percent drop in auto thefts since 2024, as noted in a RateHub.ca report. "With theft rates on the decline, it can help in achieving a more stable market for pricing insurance in the near future," said Matt Hands, vice-president of Insurance at Ratehub.ca. "However, the cost of claims alone is still higher than pre-pandemic levels, due to more expensive vehicles, repairs and maintenance."
This combination of factors contributes to the ongoing financial strain on Canadian car owners, highlighting the need for greater awareness and planning in automotive expenditures.
