How Economic Stress in Ontario Is Impacting Auto Coverage & Loans
Canadians are feeling the squeeze—and Ontario drivers are feeling it even more. A recent Equifax Canada report for Q1 2025 shines a light on rising financial stress and its ripple effects across auto loans and insurance.
1. Auto loan delinquencies on the rise
Youth hardest hit: Auto loan delinquencies for drivers aged 18–25 climbed 30 % year-over-year to 1.95 % well above the 1.08 % average for all consumers.
Ontario under pressure: The province saw a 24 % increase in non-mortgage delinquencies, topping the national charts.
Debt levels: Ontario’s average non-mortgage debt stands at $22,543, rising 3.1 % from Q4.
2. Why auto debt and insurance are entwined
Pre‑tariff purchasing: Canadians rushed into auto loans early in 2025 to beat looming U.S. tariffs on vehicle parts—pushing up loan volumes and delinquencies .
Tariffs’ knock-on effects: With new U.S. steel tariffs in March 2025, Ontario is bracing for increased repair and replacement costs—translated into steeper car prices and insurance.
3. Insurance stressors amplify the problem
Theft woes: Ontario led the nation with a 524 % jump in auto theft claim costs from 2018–2023, adding roughly $130 to the average annual premium.
Consumer behaviour under strain: Brokers report an increase in inflated claims for minor mechanical issues—likely a symptom of financial stress.
4. What happens when auto insurance lapses
Licensed broker Steven Harris of LowestRates.ca highlights several policy cancellation triggers many stemming from financial strain:
Missed payments (even one).
Frequent claims.
Undisclosed vehicle modifications.
Outdated policy info (address change, rideshare use).
License suspension or expiration.
Misrepresentation on policy documents.
The fallout can be serious:
A short lapse can lead to coverage cancellation.
Reinstating coverage later becomes complex risking higher premiums, limited policy choices, or denied coverage altogether.
5. Ontario-specific trends: rideshare & gig economy
Rising living costs have pushed many Ontarians toward part-time work like Uber or food delivery.
Using personal vehicles for gigs without updating insurers is a fast track to policy cancellation, which can scar driving records for years.
6. Real economic headwinds in Ontario
Aside from auto-related pressure, Ontario is seeing:
A 71.5 % spike in 90-day mortgage delinquency rates highest in.
Broader financial strain reflected in skyrocketing consumer delinquencies. More than 1.4 million Canadiansmissed credit payments in Q1 2025.
What Ontario drivers can do today?
1. Budget for insurance, not just loans
When renewing auto loans or insurance, factor in possible increases from tariffs, theft rates, and repair costs.
2. Communicate with brokers early
Let them know if you're taking your car into rideshare or delivery. Keeping insurers informed helps avoid coverage lapses.
3. Prioritize payments smartly
Even one missed insurance premium or loan payment can trigger financial consequences.
4. Shop smart for coverage
Comparison shopping can uncover lower rates or bundling options especially vital now that premiums from theft and inflation are increasing .
5. Build an emergency buffer
Even a small savings cushion can keep coverage intact and prevent penalties during tough months. Ontario's mortgage delinquency spike shows unemployment and inflation leave little room for financial shock.
Final thoughts
Ontario is navigating a uniquely tough financial landscape in 2025 from soaring auto-loan delinquencies to rising insurance costs. Awareness is the first defense: a clear budget, open communication with insurers, and timely payments can help drivers stay covered and financially stable.
Want help tailoring budgeting tips or exploring policy options for Ontario drivers? I'm happy to help shape your next blog piece or resource guide!