Canada Auto Loan Crisis: Ontario Woman Still Owes $30K After 3 Years of Payments

Buying a car in Ontario has become financially overwhelming, highlighting the growing Canada auto loan crisis. Marva Yeboah, a resident of Bolton, financed a 2016 Mazda CX-5 three years ago. Due to her poor credit score—below 600 points—she was offered financing at a steep 12.64% interest rate. She borrowed $40,064 over six years. The interest alone amounted to $17,194, pushing the total loan obligation to $57,258.

Despite making nearly $800 in monthly payments for three years, Yeboah was shocked to find she still owed almost $30,000, far exceeding the car’s current market value.
“I’m really frustrated. I don’t know what to do,” she told reporters.

According to Autotrader.ca, the average price of a new vehicle in Canada now exceeds $66,000. Most buyers rely on loans, where the average interest rate is around 7%. But those with weaker credit, like Yeboah, face significantly higher costs.

And car ownership involves more than loan repayments. A survey by ratehub.ca found that even with good credit, the average cost of owning a car in Canada is $1,370 per month.

Car Help Canada’s Shari Prymak warns that many Canadians are stuck in “negative equity” situations, where the loan balance surpasses the car’s value.
“The interest costs can be so high that consumers end up deeply in debt, while their vehicle is worth far less than what they’re paying for it,” Prymak explained.

Tina Filion of the Credit Counselling Society emphasized the importance of maintaining a strong credit score. Missing even one payment can damage credit and make future borrowing far more expensive. “There’s no easy fix. The best solution is to pay off the debt as quickly as possible and keep the car for as long as you can,” she advised.

According to Statistics Canada, owning a car now consumes about 15% of household income, making it the third-largest household expense, just after housing and food. For many families, cars have shifted from being a necessity to a heavy financial burden.

AiF Insight

This case highlights how poor credit can trap families in high-interest loans that quickly turn into long-term debt. At Ai Financial, we remind Canadians to:

• Monitor your credit score and take steps to improve it before applying for major loans.

• Differentiate between good debt (investments or assets that appreciate) and bad debt (high-interest loans like auto financing or credit cards).

• Focus on building a financial strategy that minimizes unnecessary borrowing and maximizes long-term wealth growth.

Maintaining strong credit and making smart borrowing decisions are essential to avoiding debt traps like this one.