Canada’s end-of-summer car-buying spike could be near: Tips to get a deal when car shopping

Car dealer talks to client as she reviews options at the dealershipImage: Car dealer talks to client as she reviews options at the dealership

In a Nutshell

Canadians seem to prefer buying new cars as the summer comes to a close, a Credit Karma analysis found. If you’re among those looking for a hot deal on new wheels, we have some tips that could help rev up your savings.
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Summer in Canada means it’s time to hit the road — and shop around for new cars.

A Credit Karma analysis found that last year, vehicle loan originations in August were 11% higher than the monthly average for the year. This spike suggests end-of-summer may be a hot time to shop around for a new car. 

While our analysis found just 17% of Credit Karma members in Canada have an auto loan, those who do pay an average of $417 each month, our analysis found. And if you have a subprime credit score, you could pay more each month than those in other score bands, we found.

Canadian Credit Karma members with subprime credit paid an average $11 more per month than those with near-prime scores. Although this difference may seem small, it can add up to an extra $660 over the course of a 60-month loan.

If the idea of a hefty monthly payment seems intimidating, don’t sweat it. We offer some tips below to help you along your car-buying journey. 

Key findings from the analysis

Auto loan originations in Canada were 11% higher in August 2018 than the monthly average for the year.
The average Canadian monthly auto loan payment is $417.
Only 15% of Canadian millennials have auto loans.
In 2018, people with subprime credit scores paid an average of $11 per month more for their auto loans than those with near-prime credit scores.

The fast lane to getting your next vehicle

Based on our analysis, it’s clear that auto loans can be costly. But that doesn’t mean you can’t find the car you want at a price that fits your budget. We have some tips to help you along the way. 

Remember: You’re not alone on this journey

Only 17% of Canadian Credit Karma members have auto loans and of those, just 15% of Canadian millennial members have a car loan, according to our analysis. So, if you’re shopping around for your first car it might seem as if you’re on your own. But there are plenty of resources out there for first-time buyers. For instance, the Royal Bank of Canada has a checklist of things to consider when making your first car purchase, as does Carfax.

Get real about your budget — and your credit

Our analysis found that the average monthly auto payment for Canadian Credit Karma members who have an auto loan is $417 — or about $5,000 a year — no small chunk of change. What’s more, Canadian members with subprime credit scores paid an average of $11 more per month (or $132 more per year) for their auto loans compared to those with near-prime credit scores. So when it comes to auto loans, it pays to know your budget and your credit health.

  • Calculate your car payments based on your budget: Can you afford the average monthly auto payment of $417? Tools like the RBC’s loan payment calculator or the CIBC’s car loan calculator can help give you a rough idea about what your monthly car payments could be so you can adjust your budget accordingly.
  • Know the health of your credit: It’s important to have an idea of your credit health when you start shopping for a vehicle because having poor credit could increase your borrowing costs. If you can afford to wait a bit to work on improving your credit health before buying a car, it might be worth it.

The drive is as important as the destination: Don’t settle for the first offer

Once you’ve made up your mind to get a new vehicle, it can be tempting to rush to the dealer and buy the first car you see. But before you commit to adding a payment that could be hundreds of dollars a month, it’s a good idea to shop around for the best auto loan price and vehicle price.

  • At the lender: Your first step in the car-buying process should be to shop around for an affordable auto loan rate. You don’t want to pay more in interest over the life of the loan than you have to, so it’s a good idea to check rates at multiple banks, credit unions and dealers.

Then, if you find a rate that you like, you may be able to apply for preapproval so you don’t have to haggle over financing at the dealer. Make sure you have a disclosure statement from your lender so you’ll be able to clearly see the terms of your loan. Just keep in mind that getting preapproved doesn’t mean you’re automatically approved for the loan, and you might have to submit more information when you formally apply. Once you formally apply make sure you have a disclosure statement from your lender to confirm the terms of your loan.

  • At the dealer: If you find an auto loan with terms you like, it’s time to check out your car options. Maybe that car you’re seeing at the dealer looks great. But should you really pay the asking price? Whether you’re looking at a new or used vehicle, you should know the fair price for the car before your start negotiating.

When it comes to used cars, checking a vehicle history report through a site like Carfax is key so you know if any damage to the car has been reported. If you run into any issues with the dealer, the Financial Consumer Agency of Canada has information that can help. 


In order to determine auto loan trends in Canada for 2018, we examined, in aggregate, more than 2 million TransUnion credit reports belonging to members of Credit Karma Canada. All dollar amounts are in Canadian dollars (CAD) and all figures have been rounded to the nearest whole. 

About the author: Paris Ward is a content strategist at Credit Karma, providing readers with the latest news that will aid their financial progress. She has more than a decade of experience as a writer and editor and holds a bachelor’s… Read more.