We spoke with Dan Park, CEO of Clutch, Canada’s largest on-line used automobile retailer, in regards to the firm’s newest annual used automobile pricing report. We additionally wished to find out about how Canadians are dealing with greater used automobile costs at a time when automobile insurance coverage prices are climbing. May you profit from any of those modifications or do it’s good to regulate your strategy to purchasing a automobile?
What to anticipate with used automobile costs in 2026
As we reported this winterthe worth of used automobiles (even end-of-year offers) reached over $33,000 in 2025—a 3.5% enhance in used automobile prices over the earlier yr.
There was a silver lining, although: used automobile costs had been beginning to fall by the top of the yr on account of decrease gasoline costs and extra EVs obtainable throughout all used automobile segments.
Sadly, the development towards buying bigger, newer, and extra luxurious fashions implies that Canadians will see greater used automobile costs by means of 2026. Patrons may also proceed to deal with tariffs that enhance competitors for used automobiles, whereas driving up the price of new autos.
Park says that the used automobile market is extra insulated from inflationary pressures than the brand new automobile market; nevertheless, “Affordability locations further strain on family budgets,” so we will anticipate to see greater costs for autos though provide has normalized.
Associated: Must you purchase a brand new or used automobile?
The impact of excessive insurance coverage costs on automobile shopping for
Greater automobile costs are simply one of many key points driving up transportation prices for Canadians. Because the pandemic, drivers have been paying extra for insurance coverage protection. A part of that is because of the greater value of autos—the dearer the automobile, the extra pricey the repairs, and the extra you’ll pay for insurance coverage protection.
In keeping with the January 2026 Shopper Value Index, Canadians are paying 5.5% extra for auto insurance coverage than they did the yr earlier than. However there are regional variations. Drivers in Alberta can anticipate to pay nearer to 17% extra for auto insurance coverage year-over-year, in comparison with drivers in B.C., who’re solely paying 0.3% extra over the earlier yr.
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In lots of instances, these greater prices are impacting the choice to purchase a automobile. “Greater premiums can deter patrons or cease offers altogether.” Park went on to say that households with new or younger drivers typically see the biggest enhance in insurance coverage prices. This implies procuring round for protection and the fitting used automobile are essential.
It may be value it to seek out out if a automobile has a excessive theft threat as a result of insurers will usually cost extra, and also you’ll possible need complete automobile insurance coverage. Park shared that standard fashions just like the Honda CRV, Honda Civic, Toyota Highlander, and Toyota Rav-4 are all at greater threat of theft.
Associated: The largest automobile insurance coverage myths, based on consultants
How Canadian patrons are responding
Between greater automobile prices and elevated insurance coverage premiums, Canadians are feeling the pinch. Park says he’s seeing decrease down funds, greater financed quantities, and extra drivers underwater on their current loans.
Contemplate the modifications to downpayment quantities over the previous couple of years. Simply two years in the past, patrons had been capable of put down a further $1,600 in comparison with now. This means that drivers don’t have room of their budgets to make a extra sizable contribution.
Smaller down funds imply patrons are financing extra of their automobile purchases. Canadians are actually financing automobiles to the tune of about $31,000 (up from $28,000 a few years in the past). Lenders are additionally getting artistic with the loans they’re providing. It’s changing into extra frequent to see loans with phrases of as much as 96 months (8 years). This enables them to cut back month-to-month funds though the general value of the mortgage is greater for the client.
Commerce-in difficulties
Drivers who plan on buying and selling in a automobile are sometimes unpleasantly stunned to be taught that they’re underwater on their mortgage. This occurs if you owe extra on the automobile than it’s at present value. Park notes he’s seen an enormous uptick in destructive fairness. Whereas destructive fairness charges hovered round 7% in 2024, round 18% of automobile house owners are actually underwater on their loans.
Sadly, the quantity owed has additionally shot up. A struggling automobile proprietor in 2024 had round $5,000 in destructive fairness, however right this moment, that quantity has climbed to $8,000.
Placing down much less for a down cost or exploring trade-in choices are only a few of the methods patrons are adapting to affordability points. They’re additionally holding on to autos longer—selecting to restore and make do earlier than lastly changing them.
