Are Affordable First Cars Still Available in 2026?

“There aren’t really any affordable new starter cars on the market anymore,” said Michael Bettencourt, a longtime automotive journalist and co-author of a forthcoming guide to buying an electric vehicle in Canada. He’s also a parent of two sons, ages 17 and 20, and he’s already thinking about the costs his younger son will face when he starts shopping for a car.

Insurance can be especially painful for young drivers, Bettencourt added. If you’re considering a few different models, check insurance rates for those exact vehicles before you begin negotiating or test-driving.

“Use a comparison site that shows multiple insurance quotes at once,” he advised. “Between two otherwise similar cars you could easily face thousands of dollars’ difference in annual premiums — money that might be better spent paying down student loans or building savings.”

How much does a car cost today?

“Five years ago you could still find a new car for under $10,000 before fees. Today, that price point has largely disappeared — now, new cars typically start closer to $20,000 before fees,” said Stephanie Wallcraft, a freelance automotive journalist and co-host of Modern Motoring on YouTube.

When she can afford it, Wallcraft prefers buying new or certified pre-owned vehicles because of the warranty coverage that comes with them. She doesn’t recommend private sales or cheap, older cars for buyers on tight budgets, because unexpected repairs can be costly and many young buyers lack an emergency fund.

“If you have to put a major repair on a credit card, the interest can make a temporary problem into a long-term financial burden,” she warned.

Used cars versus new cars

“A new or certified pre-owned vehicle gives you a warranty window during which major defects are covered,” Bettencourt explained. He tends to favour off-lease cars that are a couple of years old, arguing that leases usually require proper maintenance and penalize careless owners — so these vehicles are often well looked after. They may not be the absolute cheapest on the lot, but they often represent a good balance of condition and value.

“If you do buy privately, insist on a mechanic’s inspection as a written condition of the sale,” he added.

Subsidies for electric vehicles

While the federal EV rebate was paused in January, provincial incentives remain in several provinces and territories, including British Columbia, Newfoundland and Labrador, Nova Scotia, Yukon, New Brunswick, Prince Edward Island and Manitoba, Bettencourt noted. For many buyers, pre-owned EVs remain an attractive option.

“EVs have tended to depreciate faster than comparable gasoline cars, which can make slightly used or off-lease electric vehicles more affordable,” he said.

How to deal with common sales tactics

Wallcraft cautioned buyers against answering a dealer’s question about what monthly payment they can afford. That approach often steers negotiations toward the most expensive vehicle the salesperson can sell you while stretching the loan term until the monthly payment looks manageable.

“When dealers focus on monthly payments, they can extend the financing term so far that you end up paying far more in interest or being stuck with a car that no longer meets your needs,” she said. She’s heard of nine- and ten-year financing terms becoming more common — a worrying trend given today’s lack of inexpensive starter cars.

Long loan terms are risky when you buy a depreciating asset: you might face major mechanical failures, changes in lifestyle, a move, or a different family situation before the loan is paid off. If you still owe money when you need a different car, dealers will often roll the remaining balance into a new loan, which increases what you owe and makes it harder to recover financially.

“Paying off a car more quickly is safer,” Wallcraft advised. “Once you own it outright, you have no monthly payment and you can sell or replace it on your own terms.”

At the dealership, Wallcraft suggests telling the salesperson the financing term you want rather than a monthly payment you can tolerate. If possible, match or come close to the length of the vehicle’s warranty — for example, if the warranty is four years, aim for a five- or six-year loan rather than stretching to eight or nine years.

Bring a partner or someone who will share driving duties when you shop — they may notice things you miss. Take a long test drive and connect your phone to the car’s Bluetooth to confirm the infotainment and hands-free functions work the way you need them to.

“If setting up your phone on Bluetooth makes the vehicle a hassle to use, you’ll want to know that before you buy,” Bettencourt said.

When it comes to dealer add-ons, Wallcraft advised skipping rust protection in many cases and considering extended warranties with care. Bettencourt agreed: extended warranties can cost thousands, and if you can build up that cash yourself in an emergency fund you may be better off — at least you’ll still have the money if you never make a claim.

Don’t be afraid to walk away if a dealer is pushing add-ons as mandatory. Wallcraft has heard of tactics where buyers are told the dealer won’t sell without extra products; she says that’s a red flag and one good reason to try another dealership.

Read more about cars:

• Fewer Canadian drivers planning to buy an EV or hybrid
• How to buy a car in Canada and get the best loan rate
• Should you buy or lease your new car in Canada?
• Driving underwater: Is your car worth less than what you’re paying for it?