Toronto, Ontario — A new report has found there was an uptick in both auto loans and in auto defaults during the first quarter of 2025.
While overall debt levels declined during the first quarter of 2025, non-mortgage debt rose by 8.9 percent, reaching $21,859. This was primarily driven by a strong auto loan market as buyers looked to lock in purchases before anticipated price hikes. As a result, the nation saw a four percent increase in its total debt load, which reached $2.55 trillion.
The average Canadian carried $21,859 in non-mortgage debt in Q1, and repayment rates showed signs of deterioration despite a slowdown in new credit demand.
According to Equifax Canada, auto loan delinquencies among Canadians aged 18 to 25 jumped 30 percent in the first quarter of 2025, higher than at any point since the 2008 financial crisis. Overall non-mortgage delinquencies increased 8.9 percent on a year-over-year basis.
“We often observe seasonal changes in credit usage during the first quarter,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada.
“Generally speaking in the spring, we tend to see mortgage debt rising, however for Q1 2025 we saw mortgage debt levels fall compared to last quarter.”
Declining auto loan payment rates often drive up auto insurance premiums. As delinquencies rise, insurers face higher default risks and often respond by raising premiums or tightening underwriting standards, particularly for younger or financially vulnerable drivers.
