Apr 29, 2026
For many Canadians, the cost of owning a car is rising on multiple fronts — from higher purchase prices to more expensive fuel and ongoing monthly costs.
While gas prices have drawn attention in recent weeks, they're only part of a broader shift that has been slowly building since the pandemic.
Vehicle prices and fuel costs are driving the increase
Car prices surged during the pandemic and have yet to fully return to prior levels.
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The average cost of a new vehicle remains well above pre-2020 levels, while used vehicles have also become more expensive due to supply shortages and strong demand.
"Cars are getting bigger and there's more in them," said Dave Power, partner and national automotive sector leader at KPMG in Canada, in an interview with CTV News (1). As a result of higher price points, Power notes that some are opting for much longer terms, sometimes up to eight years.
"It certainly can add to people's debt load," Power told CTV. "It certainly also might mean that people have a car for a lot longer than they might anticipate if they're not fully thinking through what that is."
At the same time, fuel costs have added another layer of strain.
Canadians are now spending an average of about $231 per month on fuel, according to a recent Ratehub report (2), with costs rising following global oil disruptions.
Fuel alone accounts for a significant share of overall vehicle costs, meaning even short-term price spikes can quickly affect monthly budgets.
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The total cost is adding up — with little relief in sight
That combination of factors is pushing the overall price of car ownership higher.
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For many households, the squeeze means less room for savings or discretionary spending. And unlike some expenses, car ownership can be difficult to scale back, especially for those who rely on a vehicle for commuting and daily life.
Even looking ahead, there's little expectation of meaningful relief.
According to AutoTrader (3), monthly payments are likely to remain elevated through 2026. "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," the company said in its latest price index report.
It also warned that payments could climb further if prices rise again amid trade uncertainty. "If new car prices climb due to the trade unclarity with the United States, we may see an increase in monthly payments to over $1,000, which would be a first in Canada."
For now, rising costs mean your car is likely taking up a larger share of your budget — something more Canadians are factoring into their overall financial picture.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
CTV News (1); RateHub (2); Auto Trader (3)
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Steven Brennan is a freelance finance writer based in Vancouver, BC. He holds a BA and an MA from Maynooth University, Ireland. His work regularly appears at Canadian Mortgage Trends, Lowest Rates, Loans Canada and other Canadian and US brands, while also working as a ghostwriter for financial influencers.
