Here’s 1 hidden financial drag no one talks about in Canada: It isn’t housing, taxes or food: Is it cutting into your net worth?

If we look closely at the average Canadian household’s spending, you’ll see where their money really goes. And one of the biggest drains might shock you.

For most families, transportation is the second-largest expense after housing — and it's largely driven by car ownership and operating costs that can quietly eat up your long-term wealth.

Unlike a home, which can appreciate over time, a vehicle immediately loses a chunk of its value once it leaves the lot. Combine that depreciation with rising vehicle prices, high borrowing costs and record levels of auto loan debt, many Canadians are spending far more than they realize just to stay mobile.

Here’s what the numbers show, why transportation costs keep rising in Canada and what you can do to avoid becoming “car poor.”

Transportation is the second-largest expense in the Canadian household budget

According to the most recent data from Statistics Canada, the average Canadian household spent $76,750 on goods and services in 2023 (1). Here’s a breakdown of how that money was allocated.

• Housing: 32.1%
• Transportation: 15.8%
• Food: 15.7%
• Household operations/furnishing/accessories: 11%
• Health care: 3.6%

Where transportation costs are concerned, households owning their own vehicle account for the majority of spending. This includes:

• Purchase price (new or used)
• Fuel
• Insurance and registration fees
• Maintenance and repairs

Private transportation, such as owning and operating a vehicle, dominates transportation expenses for Canadian households at $10,292, far outpacing other public options including buses, subways, street cars and even airfare at $1,799 (2).

Owning and operating a car is one of the single greatest day-to-day expenses, outside of the cost of shelter, while also being a major influence on long-term financial wellbeing.

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A growing problem: high prices, high rates and heavier debt

The cost of buying a new vehicle in Canada has jumped sharply in recent years. AutoTrader data says prices peaked at $67,817 in September 2023 and remained high through 2024 — averaging around $66,807 in mid-2024. And although prices dipped slightly toward the end of 2024 (to $65,219), the average price tag still sits well above pre-pandemic levels (3).

As of Q2 2025, total consumer credit debt — including mortgages, vehicle loans, credit cards and other credit — stood at about $2.52 trillion, with the average auto loan spiking 5% year-over-year to $30,029 (4) — the highest amongst loans.

For households already stretched by rising housing, food and transportation costs, taking on larger and longer auto loan obligations can make it hard to build savings and fulfill long-term financial goals like retirement planning.

Meanwhile, in October, insurance premiums for passenger vehicles rose 7.3% year-over-year, according to Ratehub, lead by the 17.8% increase in the Alberta market (5).

How to avoid car poverty

If you’re trying to avoid falling into the auto-loan debt trap, start thinking of your vehicle as a practical necessity rather than a status symbol.

One of the most effective ways to lower costs is to choose a used vehicle rather than buying brand-new. AutoTrader's third-quarter 2025 Price Index found the average used car price was $36,911, significantly lower than the $63,264 average you’d need to buy a new car (5).

You could also target your vehicle loan’s interest rate to find savings. Consider putting a larger down payment on the car to reduce your debt burden. Shop around for better rates, and take the time to build your credit rating so that you can lock in a better interest rate over the term.

Moreover, avoid rolling over old debt into new loans and consider the total cost of ownership — not only the monthly payment.

If you find that your insurance is too expensive, try shopping around different providers using a comparison tool, which will present to you a bevy of options within mere minutes. Also, you can try bunding your insurance with your home coverage or other products to save more.

For most families, reducing the cost of transportation could be the single most effective way to free up money to redirect to savings and investing. Every dollar not tied up in car payments, insurance, fuel or repairs can instead go toward building genuine wealth — the kind that grows instead of depreciates.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Statistics Canada (1, 2), Autotrader (3, 6); TransUnion (4); Ratehub (5)