Dave Ramsey says ditching car payments is the turning point of building real wealth. Here’s what Canadians can do instead

“Love yourself enough not to go into car debt,” Ramsey told the caller. “If you want to be middle class, stay in car debt. You will never build wealth because it will suck the bone marrow out of your money.”

The caller — identified only as Carl — explained he’d recently landed a salary increase from US$85,000 (C$116,000) to a potential US$95,000 (C$130,000) after six months on the job. His current Honda wasn’t worth fixing, and he had US$20,000 (C$27,300) saved for a new car — but the one he wanted cost US$25,000 (C$34,100).

“Don’t celebrate your new job with a car payment. That’s kind of dumb," Ramsey said. “You have [those savings] and a good job. You can go buy a car for what you have saved and not a dime more.”

His advice: Carl’s budget is whatever he can get for the Honda plus what he has saved. Full stop. No financing. No exceptions.

Skip the flashy car — it’s not worth the debt

Ramsey linked what he called “the affordability crisis” directly to high car payments — and research backs him up. An H&R Block Canada survey released in April 2025 found that 85% of Canadians say living paycheque to paycheque is the new normal, up sharply from 60% in 2024.

“Ford Motor Company screwed you. Lexus and Toyota screwed you,” Ramsey said. “They got you to go far in debt because you had to have something shiny with a toxic plastic smell.”

Ramsey then referred to his own company’s internal research of more than 10,000 millionaires that showed how 84% credited ditching car payments as key to building their wealth.

Ramsey pressed the caller to think about who he was actually trying to impress — and why.

“Decide who you want to impress. People you’re likely never going to meet, or your grandchildren,” he said. “Because you can change your family tree if you don’t impress the people at the stoplight.”

“You are upgrading so far from the car you’ve been driving, you ought to be dancing in the streets with those savings, acting like you have got a new Porsche,” Ramsey added.

Co-host Jade Warshaw agreed, calling buying a car in cash “countercultural,” to which Ramsey replied that most people who live with car payments are stretched thin, financially speaking.

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Car debt is draining Canadian pockets

Canadians aren’t immune to the financial strain of car payments. According to Equifax Canada’s Q2 2025 Market Pulse report, the average new auto loan reached C$35,586 — up C$1,567 from the previous year. Meanwhile, Statistics Canada data shows the average car loan interest rate climbed to 6.72% as of February 2026, up from 4.45% in December 2017.

Put it all together and the monthly bill is steep. According to Ratehub.ca’s 2026 cost-of-ownership analysis, the total monthly cost of owning a new car in Canada — including financing, insurance, fuel and maintenance — averages C$1,373. For context, the average new vehicle price in Q3 2025 was C$63,264 before taxes, and financing a vehicle at the average APR of 6.45% works out to roughly C$955/month in loan payments alone.

The data shows the financial strain on households. In Q3 2025, more than 1.45 million Canadians missed a credit payment — a delinquency level not seen since the financial crisis of 2008, according to Equifax Canada. Among Canadians under 36, the 90+ day non-mortgage delinquency rate hit 2.35%, a 19.7% jump year-over-year.

The Globe and Mail reported in December 2025 that the most popular auto loan term in Canada has stretched to seven years — as buyers extend amortizations just to keep monthly payments manageable. In smaller cities, the gap between a mortgage payment and a car payment has become alarmingly small. In Saguenay, Québec, for example, the average mortgage payment is C$886/month while the typical auto loan charge is C$547.