We spoke with Dan Park, CEO of Clutch, Canada’s largest online used automotive retailer, in regards to the company’s latest developments Annual Used Car Price Report. We also desired to find out how Canadians are coping with higher used automotive prices as automotive insurance costs rise. Could you profit from these changes or do you could adapt your approach to vehicle purchasing?
What to expect from used automotive prices in 2026
As we reported this winter, the worth of used cars (even for year-end deals) reached over $33,000 in 2025 – a 3.5% increase in used automotive costs in comparison with the previous yr.
However, there was a shiny spot: Used automotive prices began to say no toward the tip of the yr as a result of lower gasoline prices and more electric vehicles available across all used automotive segments.
Unfortunately, the trend toward purchasing larger, newer and more luxurious models means Canadians will experience higher used automotive prices by 2026. Buyers will proceed to contend with tariffs that increase competition for used cars while driving up the price of recent vehicles.
Park says the used automotive market is more insulated from inflationary pressures than the brand new automotive market; However, “affordability is putting additional pressure on household budgets,” so we will expect higher prices for vehicles at the same time as supply has normalized.
Related: Should you purchase a brand new or used automotive?
The Impact of High Insurance Prices on Car Purchasing
Higher automotive prices are only one in all the foremost issues driving up transportation costs for Canadians. Since the pandemic, drivers have been paying more for insurance coverage. Part of that is as a result of the upper cost of the vehicle – the dearer the automotive, the dearer the repairs are and the more you pay for insurance coverage.
According to the January 2026 Consumer Price Index, Canadians are paying 5.5% more for automotive insurance than last yr. But there are regional differences. Drivers in Alberta can expect to pay about 17% more for his or her automotive insurance year-over-year, in comparison with drivers in British Columbia, who only needed to pay 0.3% more year-over-year.
The article continues below promoting
X
In many cases, these higher costs influence the choice to buy a automotive. “Higher premiums can deter buyers or prevent deals altogether.” Park continued that families with latest or young drivers often see the most important increases in insurance costs. Therefore, finding insurance coverage and finding the fitting used vehicle is crucial.
It could also be value checking out if a automotive is at high risk of theft, as insurers are inclined to charge more and you’ll likely want comprehensive insurance. Park shared that popular models comparable to the Honda CRV, Honda Civic, Toyota Highlander and Toyota Rav-4 are at higher risk of theft.
Related: The biggest automotive insurance myths, in response to experts
How Canadian buyers react
Between higher vehicle costs and better insurance premiums, Canadians are feeling the pinch. Park says he’s seeing lower down payments, higher amounts financed and more drivers defaulting on their existing loans.
Consider the changes in down payment amounts in recent times. Just two years ago, buyers could invest $1,600 more in comparison with today. This suggests that drivers do not need room of their budgets to make a bigger contribution.
Smaller down payments mean buyers are financing a bigger portion of their automotive purchase. Canadians now finance cars at about $31,000 (up from $28,000 a couple of years ago). Lenders are also getting creative with the loans they provide. Loans with a term of as much as 96 months (8 years) are increasingly being offered. This allows them to cut back monthly payments despite the fact that the general cost of the loan is higher for the customer.
Difficulties with trade-ins
Drivers who need to trade in a automotive are sometimes unpleasantly surprised once they discover that their loan isn’t any longer valid. This happens while you owe more on the automotive than it’s currently value. Park notes that he has seen an enormous increase in negative equity. While negative equity rates of interest were around 7% in 2024, around 18% of automotive owners are actually within the red on their loans.
Unfortunately, the quantity owed has also skyrocketed. A troubled automotive owner had negative equity of around $5,000 in 2024, but today that quantity has increased to $8,000.
Paying less for a down payment or exploring trade-in options are only a couple of of the ways buyers are setting themselves up for affordability issues. They also keep their vehicles longer and decide to repair them and be pleased with them before eventually replacing them.
