At almost $5K per year, car costs are crushing Canadians — here are 5 ways to fight back

You can see the strain in how people are behaving. Over half of Canadians have already changed how they use their vehicles to cut costs. And there's more pressure coming: 75% are worried that U.S.-Canada trade tensions will push vehicle prices even higher, and since 2024, the share of Canadians planning to buy a car in the next three years has dropped 11%.

The good news? You're not stuck with these costs. There are practical ways to reduce what you're spending, whether you keep your current vehicle or rethink your next purchase altogether.

5 ways to cut your car costs now

If your car is eating up more of your budget than you'd care to admit, here are five practical ways to start bringing those costs back under control.

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1. Trade down to a more cost-effective vehicle

Not all cars cost the same to own, and the differences can be bigger than most people expect.

Fuel efficiency, insurance costs, and reliability vary widely between models. Before you buy or lease, check out the Canadian Automobile Association's (CAA) Driving Costs Calculator (2) to compare the true annual operating cost of specific vehicles — not just the sticker price.

In many cases, moving from a mid-size SUV to a compact car or a hybrid can significantly reduce both fuel and maintenance costs. And with the average price of new vehicles over $63,000 (3), choosing a lower trim or a reliable used model can also ease your financing pressure.

If you have access to reliable charging, electric vehicles can be even cheaper to run. While hydro rates vary in Canada, the Government of Canada's Fuel Consumption Ratings Tool (4) estimates the cost of powering a Tesla Model Y (standard) at less than $50/month. That's based on driving 20,000 km annually.

2. Shop around for your insurance every renewal

Auto insurance is one of those expenses that tends to increase over time, but depending on where you live, you may have room to negotiate. In some provinces, such as Manitoba, auto insurance is offered through a single public system, so you really can't shop around for basic insurance coverage.

In other provinces, such as Ontario, insurance is delivered privately, so premiums can vary significantly between providers for identical coverage. If it makes sense, consider options like bundling policies, increasing your deductible and maintaining a clean driving record. All of these things can help lower your rate while maintaining critical coverage.

Many insurers reward loyalty, but that doesn't always mean you're getting the best deal. By comparing at least three quotes at renewal, using identical coverage and limits, you can ensure you're not overpaying.

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3. Drive less

This one may sound obvious, but it works, and Canadians are already doing it. In fact, 32% say they are actively driving less to reduce expenses, and the average Canadian is projected to drive 409 hours in 2026, down from 415 hours in 2025.

Consolidating errands, carpooling, cycling, or using transit for shorter trips reduces fuel costs, wear and tear, and can even lower insurance premiums tied to annual mileage. For city dwellers, the math is shifting further. In Toronto, just 72% of residents now own a vehicle, well below the national average of 85%, as transit and car-sharing alternatives reduce the need for full-time ownership.

4. Maintain your car to avoid expensive repairs

Skipping routine maintenance might save you money today, but it almost always costs you more later. Basic upkeep, including oil changes, tire rotations, brake inspections, and fluid top-ups, can help extend your vehicle's life and prevent more expensive problems down the road.