Canadians will typically spend between $400 and $800 on the average car payment. Learn more about the different variables that affect your monthly car payments, and find out how you can get the best deal when you sign up for a new loan.
What is the monthly average car payment?
Your monthly average car payment in Canada will depend on a number of factors, such as the price of your vehicle, what interest rate you get and how long you take your loan out for. That said, you can expect to pay the following average car payments based on the national average from Statistics Canada. We used the average price for cars and excluded SUVs and trucks.
| Car | Loan amount | Interest rate (national average) | Term length | Monthly average car payment |
|---|---|---|---|---|
| New | $40,5211 | 7.89% | 72 months | $708 |
| Used | $30,0172 | 7.89% | 72 months | $525 |
1. Based on a $45,023 new car price with a 10% down payment
2. Based on a $33,352 used car price with a 10% down payment
Factors that affect your loan payment
The following factors can cause your monthly average car payment in Canada to fluctuate:
- Down payment. Experts recommend making a down payment of around 10% to 20% to reduce your average car payments. This will shorten your term and save you money on interest in the long run.
- Loan amount. The amount you borrow will affect how much the average car payment in Canada cost. The larger your loan principal, the more your monthly payment will be and the more interest you’ll have to pay.
- Interest rate. Car loan interest rates in Canada are determined by your lender. You’ll usually get a lower interest rate if you have a good to excellent credit score. You’ll typically pay more if your score is below 650. New car loans also tend to come with lower interest rates than used car loans.
- Loan term. The term of your loan is how long you have to pay it back. The longer the term, the smaller your average car payment but the more interest you’ll owe in the long run (and vice versa for shorter terms).
- Fees. You may need to pay loan origination, late payment or early repayment fees depending on your loan. These fees can affect your average car payment if they are built into the overall price of your loan.
Can I afford the monthly car payments?
Use this calculator to find out your potential monthly payment based on the loan amount, loan term (in years) and interest rate.
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How much do Canadians spend on new cars by province?
The average price that Canadians spent on new cars, SUVs and trucks as of December 2022 is outlined below.
| Location | Average car price | Average interest rate | Average car payment per month (72 months) |
|---|---|---|---|
| Canada | $58,895 | 7.89% | $927 |
| British Columbia | $60,858 | 7.89% | $957 |
| Alberta | $63,231 | 7.89% | $995 |
| Ontario | $57,235 | 7.89% | $900 |
| Manitoba and Saskatchewan | $60,941 | 7.89% | $959 |
| Atlantic Provinces | $53,900 | 7.89% | $848 |
| Quebec | $55,660 | 7.89% | $876 |
For the illustration above, we applied a 10% down payment for each car price.
Snapshot of the average car payment in Canada
The table below shows an example of what an average car payment in Canada would look like if the borrower buys a new or used car at different rates.
New car | Used car | |
|---|---|---|
Loan amount | $45,023 | $33,352 |
Interest rate | 4.99% | 7.99% |
Loan term | 72 months | 72 months |
Average car payment | $652 | $526 |
Total interest paid | $6,451.80 | $7,865.71 |
Credit score | Good | Good |
For the illustration above, we applied a 10% down payment for each car price.
Interest rate plays a big role in how much you’ll pay for your loan. Used cars typically come with higher interest rates than new cars, but they also have lower prices, so your monthly payments will be smaller.
What is a good car payment?
A good car payment is one that comes with a low interest rate and gives you a monthly payment that you can afford. When negotiating with your dealer, focus on whittling down the price of your car rather than the payment.
A good rule of thumb is to only spend 10% to 15% of your disposable income on a car payment. This ensures that you have plenty of wiggle room to cover other expenses.
What is the average interest rate for a car loan?
According to Statistics Canada, the average car loan interest rate in Canada is 8.24%. The average buyer can expect to pay anywhere between 6% to 9% interest on their car loan, depending on whether the car is new or used and whether the interest rate is fixed or variable.
How does my term length affect my loan payments?
Your term length will vary depending on how much you can afford to pay per month, as well as how long you’d like to pay off your loan. The average term length is 72 months.
Examples of monthly payments for different loan terms
In the example below, we’ll look at how much your monthly payments will be for the same loan amount based on the length of your term. We’ll also look at how much you’ll pay in interest over the course of your loan.
Loan amount | Loan term | Interest rate | Monthly payment | Total interest |
|---|---|---|---|---|
$40,055 | 3 years | 4.44% | $1,190 | $2,801 |
$40,055 | 5 years | 4.44% | $749 | $4,684 |
$40,055 | 7 years | 4.44% | $556 | $6,620 |
As you can see, the cost of your monthly payments will go up as your term length goes down. That said, you’ll pay less interest over the course of your loan with a shorter term.
Additional expenses to think about
You’ll need to consider the following expenses in addition to your average car payment in Canada when budgeting for a car:
| Expense | Average cost |
|---|---|
| Gas | You can expect to pay between $100 and $160 per month on gas (on average) depending on a number of factors, including your fuel economy and how far you drive. |
| Insurance | You’ll likely pay between $100 and $200 per month on car insurance depending on what type of car you have and how much insurance you need. |
| Emergency repairs | You can pay several hundreds up to several thousands of dollars for emergency repairs to your vehicle depending on the damage. |
| Routine maintenance | You may pay anywhere from $200 to $1,000 per year on routine maintenance. This can include oil changes, tire rotations, filter replacements and other repairs that keep your vehicle running smoothly. |
| Registration. | Registration and licensing fees can cost anywhere from $50 to $250 per year, depending on where you live. |
How to save on your average car payment in Canada
You can take the following steps to lower your average car payment in Canada:
- Make a larger down payment. Put more money down on your car upfront to lower your monthly average car payment.
- Compare prices to get the best deal. Compare multiple lenders and look for the lowest prices on the car you’re interested in to get the best deal on your loan.
- Negotiate with your seller or dealer. Ask your seller if they would be willing to give you a lower price for a quick sale or see if they’ll price match if you find a better deal.
- Trade another vehicle in. You can trade a used vehicle in with many dealers to knock thousands of dollars off of the purchase price of a new vehicle.
- Take a loan with a shorter term. You’ll pay less interest over the course of your loan with a shorter term (though you’ll have a higher monthly payment).
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Bottom line
The amount of money you spend on your vehicle will depend on a number of different factors. As a rule of thumb, you should try to get the shortest term and the lowest possible interest rate. You can also consider buying a less expensive car, making a larger down payment and improving your credit score as ways to help lower your average car payment in Canada.
Frequently asked questions
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That depends on a number of factors. Many Canadians will pay between $400 and $800 per month for their car loans. Your average car payment in Canada will be determined by factors such as your car price, repayment term and interest rate.
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You should aim to get the shortest term for your car loan available because it will help you bring down the amount of interest you pay over time. That said, you should make sure you can still afford your average car payments. If not, it could be a good indication that your loan is too expensive.
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Your credit score can make or break the amount you pay for your average car payment in Canada. It will determine what interest rate you get for your loan. People with bad credit will often pay thousands more for a loan than those with good to excellent credit. This is why it’s important to consider your credit score before signing up for financing.
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Experts recommend that you spend no more than 15% to 20% of your total budget on a vehicle. This amount also includes all of the other costs of car ownership such as car insurance, routine maintenance, emergency repairs and other expenses. To help figure out how much you should spend, you should think about how much room you have to spare in your overall budget.
