Ratehub survey: A snapshot of loans in Canada

Between rising prices, stubborn inflation, and paycheques that don’t seem to stretch quite as far as they used to, managing money has felt like a full-time job.

And just when you think it couldn’t get trickier, there’s this: complaints against so-called “debt advisors” have skyrocketed by more than 170% in recent years, according to the Office of the Superintendent of Bankruptcy. These advisors often promise to magically erase your debt, but here’s the kicker: they’re not actually licensed to give that kind of financial advice. It’s a recipe for trouble, and unfortunately, many Canadians looking for help are the ones getting hurt.

To get a better sense of how people are coping, Ratehub.ca conducted a survey with over 500 Canadians from coast to coast. 

• 41.8% of Canadians are carrying more than $1,000 in non-mortgage debt
• 31.3% are relying on personal loans
• 26.5% still have car loans on the books

It’s obvious that debt has become a regular part of life for Canadians in 2025.

The debt landscape in Canada

Canada’s current debt landscape isn’t pretty. Households are struggling, and the numbers tell the story loud and clear; according to Statistics Canada, the household debt-to-income ratio has climbed past 180%. That means  for every dollar Canadians earn, they owe about $1.80. 

So, what’s driving debt levels this high? A perfect storm of rising consumer prices, inflation, and trade tariff uncertainty has played a part. Add in sky-high housing prices and rising costs for essentials like groceries and gas, and you’ve got the recipe for a nation that’s barely keeping its financial head above water.

It’s no surprise that mortgage debt makes up the bulk of what Canadians owe. But here’s where things get worrying: non-mortgage debt is starting to creep up fast. We’re talking credit cards, car loans, and personal lines of credit. According to data from Equifax, this type of debt has reached levels not seen since 2009.

The problem? These types of debt come with much higher interest rates and can do serious damage to your credit score if you’re not careful. Mortgage debt, on the other hand, can actually help you build equity and typically comes with a lower interest rate.

What types of debt do Canadians have?

Our national survey revealed details on how Canadians are dealing with higher prices. The findings reveal that half of Canadians (48.8%) currently do not have any outstanding loans, while 51.2% are currently carrying some type of loan debt.

Here’s a breakdown of how Canadians are using loans to help get by in their daily lives.

Personal loans

These are the most common types of non-mortgage loans in Canada, and according to our survey, they are used by nearly a third of Canadians.

In Canada, personal loans generally fall into two categories: secured or unsecured loans. Secured loans typically require collateral in the form of assets, such as real estate, vehicles, cash, or even artwork or jewelry. An example of a secured loan is a HELOC, or Home Equity Line of Credit. 

The benefit of a secured loan is that the collateral allows for a higher amount borrowed and lower interest rates. Secured loans are often recommended for major purchases like a new vehicle or a second piece of real estate.

Then there are unsecured personal loans. These do not require collateral from the borrower, and generally are for smaller purchases. 

Both of these loan types differ from credit card debt, which is considered a type of revolving loan, meaning there is no structured payoff timeline, and the borrower can opt to make interest-only payments.

Car loans

Car loans came in a close second to personal loans, with 26.52% of Canadians still financing their vehicles. Given the rising prices of cars, both new and used, as well as other costs of living, it shouldn’t come as a surprise that so many Canadians are financing their car in 2025. 

As with most loans, auto loans are now being offered with longer terms, upwards of six or seven years. The issue is that while the monthly payments get lower, you end up paying more interest over the longer term of the loan. 

Also read: What is the total cost of ownership for a car?

Canada student loans

Having a specialized education and a university degree is one of the fastest ways to get a competitive job in today’s market. Unfortunately, education also comes with a high price tag. Student loans are the easiest way to pay for tuition in the short term, but that interest can add up. 

Ratehub’s Canadian debt survey revealed that approximately 6.8% of respondents still have student debt to pay off. Notably, the number rises substantially among respondents under the age of 35.

Multiple loans

While the group of Canadian respondents with multiple types of loans was the smallest at 3.5%, it is still a red flag for the overall financial health of Canadians. Juggling multiple loans can feel like financial quicksand, especially for those with higher interest rates.

What are the best strategies for paying off debt?

To get out of debt, it’s crucial to develop a strategy to pay it off. This strategy needs to align with your budget, income, and financial goals. 

Let’s take a look at some of the best repayment strategies for Canadians looking to get in control of their debt. 

What repayment strategy should I use?

Two popular debt repayment strategies that are often discussed in the financial community are the debt avalanche and debt snowball strategies. 

• Debt avalanche: The debt avalanche strategy aims at paying off debts that have higher interest rates first. This can minimize the interest paid and allow you to tackle the larger payments. A good debt avalanche strategy is to focus on credit card debt over an auto loan or student loan.
  
  
• Debt snowball: The debt snowball strategy focuses on paying off the smaller interest-rate debts first. This builds momentum and allows you to tackle the higher-interest-rate debt at the end of your plan. 

Each strategy works for different people: that is, the best choice likely depends on your personality and financial discipline. For those who need encouragement and motivation, the debt snowball strategy is more appropriate. But for those who are determined to get rid of their debt in any way possible, the debt avalanche is better. 

The debt avalanche also has the potential to save more money over the long term, which is one benefit of choosing this strategy. Both strategies have their pros and cons, and only you know which best suits your financial situation and risk tolerance. 

Read more: How to pay off your credit card debt

How do I make monthly payments more manageable?

Even once you’ve chosen a debt management strategy, putting that strategy in action is another thing altogether. If you still find that you are struggling with keeping up on payments and managing your debt, consider some of the following options: 

• Consolidate your debt: This is a great way to combine all of your debt while lowering the interest rate on your payments. Combining multiple loans or outstanding credit card balances into one personal loan can have a strong impact on the repayment of that debt.
  
  
• Negotiate with lenders: Did you know that many creditors can be negotiated with? Most will even offer hardship programs or temporary payment deferrals that you can take advantage of.
  
  
• Extend the term of your loan: One of the negotiations you can make with lenders is to extend the loan term. This will make monthly payments more manageable, but it can also add more interest paid in the long run.
  
  
• Set up automatic payments: One of the best things you can do to tackle your debt is to set up automatic payments. Having that money leave your account before you even get a chance to touch it is an efficient way of getting on top of your debt.
  

Also read: Compare the best personal loans in Canada

How can I budget, save, and pay off debt?

Well, what about your savings, investments, or day-to-day expenses? How can you possibly do all of those while also paying off your debt? Being disciplined and sticking to your strategy are keys to managing your finances when trying to pay off your debt. Here are some ways to stay organized while keeping your goals in sight:

1. Track your spending: Get organized. Using spreadsheets or a budgeting app to track your spending can help put into perspective where your money is going.
   
   
2. Prioritize high-interest debt: The debt avalanche strategy will help with this. Prioritizing the high-interest debt can help reduce interest payments and get you back on track with your finances.
   
   
3. Automate savings: Again, any money that can be automatically allocated away from a spending account is well worth it. You can divert funds to a savings account or directly to your debt payments.
   
   
4. Cut discretionary spending: You might be surprised at how many unnecessary things you spend money on each month. Things like subscriptions or premium accounts can be eliminated to help focus on your debt first. 

Also read: What is budgeting?

Resources for paying down debt

There is no one right way to manage your debt, as the best approach will always depend on your unique financial situation and personality. It doesn’t hurt to have some urgency in managing your debt, but also be realistic. Debt won’t disappear overnight. It will take months or even years of financial discipline to achieve your goals. But once you get started on the right foot, each step becomes a little easier to handle.

Should I use a consolidation or personal loan?

Both of these loans can be used for different situations. A debt consolidation loan is an excellent strategy for eliminating multiple high-interest debts like credit cards. Rather than making multiple payments each month, a debt consolidation loan requires just one payment at a much lower interest rate.

A personal loan can be used for general purchases or for larger costs that you’d prefer to pay down over time. Things like home repairs or renovations, or a family vacation, can be paid for by a personal loan. 

When deciding on which loan to use, consider the following things: 

• Interest rates: Does the loan offer a fixed rate or a variable rate?
• Loan terms: Longer terms offer lower monthly payments but higher interest rates paid over the loan's duration. 
• Fees or penalties: Are there any fees or penalties for paying off the loan early or late?
• Lender negotiation: Does the lender offer any hardship programs or payment deferrals?
  
  

Tools like Ratehub’s Loan Finder can help you compare offers and find the best loan for your financial situation. 

When should I reach out to a professional?

If the debt you have begins to feel overwhelming and you find yourself falling behind on payments, it might be time to reach out to a professional. 

Before you do, make sure you do your research into who you are seeking help and advice from. Many companies will market themselves as a debt relief business, but far too many of them are not even legally authorized to assist Canadians. In Canada, only a company with the designation of a Licensed Insolvency Trustee (LIT) can legally assist with debt management. 

If you come across any of these hiccups in your debt management plan, it’s probably time to seek some assistance: 

• You’re missing or delaying multiple payments or struggling to make them each month
• Creditors are calling or threatening legal action because of your inaction 
• You’ve maxed out credit cards or lines of credit, and still cannot make any progress with your debt repayment
• You’re borrowing new money to pay off existing debts and furthering the cycle 

A trusted credit counsellor or LIT can help you explore legitimate options like consumer proposals, credit counselling, or, as a last resort, personal bankruptcy. There’s no shame in seeking help with debt. Sometimes, it’s the only way to get back on your feet. 

Also read:

• Personal loans vs balance transfers
• Personal loans vs lines of credit
• Should you take out a loan?
• Match with a personal loan with LoanFinder