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How to buy an eco-friendly car

A buyer's guide to purchasing your first hybrid or electric car.


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“Green” cars can cut your carbon foot print, offering a reliable alternative to traditional gas guzzlers that rely on polluting fossil fuels. And thanks to the ever-increasing demand for eco-friendly cars, you likely won’t be stuck choosing the first car you find. But watch out — it might get expensive.

What makes a car eco-friendly?

A green car is a car that gets more kilometres to the gallon and emits less pollutants than a conventional gas or diesel vehicle, according to the Environmental Protection Agency (EPA).

Many provinces in Canada have minimum emissions requirements, but green cars exceed the minimum threshold or cut exhaust emissions entirely. To do this, they either use electric or hybrid systems.

How can I finance an eco-friendly vehicle?

If you’ve decided on going green but aren’t sure how you can finance your car purchase, you have options.

  • Car loan. Green cars are like any other car, and you’ll likely qualify for a car loan from a lender. The benefit? Some banks and credit unions offer interest rate discounts for green car purchases.
  • Home equity loan. If you’ve built up enough equity in your home, you could use that money to finance your green car.
  • Personal loan. A personal loan can be used for just about anything. So if you have good credit, you may be able to finance your car without using it as collateral.

Browse financing options for an eco-friendly car

Name Product Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements
CarsFast Car Loans
4.90% to 29.90%
12 months - 8 years
Gross income of $1,800/month, 3+ months employed
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.
Loans Canada Car Loans
0% to 29.99%
3-96 months
Employed for at least 3 months, min. income of $1,800/month
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
Car Loans Canada
3.99% to 29.95%
12-84 months
3+ months employed, min. income of $2,000/month
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
Canadian Auto News
Canadian Auto News
4.49% to 29.90%
12-84 months
3+ months employed, min. income of $2,000/month
Answer a few simple questions to get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
Canada Auto Finance
3-96 months
3+ months employed, min. income of $1,500/month
Canada Auto Finance is a broker that connects borrowers with partnered local lenders. Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Carloans411 Car Loans
1.90% to 19.99%
Up to 72 months
Employed for 3+ months, min. income of $1,600/month
Get connected with suitable lenders through CarLoans411. Finance your next car, van or truck with loans available in amounts from $500 to $50,000. Check eligibility for this loan through LoanConnect.
LoanConnect Car Loans
10.00% to 46.96%
6-60 months
No min. income requirement
Get access to 25+ lenders through LoanConnect's brokerage. Receive pre-approval in as fast as 60 seconds and get your funds in as little as 24 hours.
Fairstone Secured Personal Loan
19.99% to 23.99%
3-10 years
Have an established credit history and own your home
Fairstone offers secured personal loans up to $35,000.

Compare up to 4 providers

Representative example: Leon buys a hybrid car

Leon, a resident of Ontario, runs a successful cleaning business known for using plant-based, non-toxic cleaners. He wants to buy a car to travel between job sites and is hoping to find an affordable model that will make less of an environmental impact than a traditional vehicle.

After doing some research, Leon decides to buy a Ford Fusion Hybrid SE priced at $33,000.00. He places a 20% deposit of $6,600.00 and heads to his local bank to get an auto loan to cover the rest. Because of his strong credit, Leon is approved for a loan to cover the outstanding amount plus 13% HST ($26,400.00 + $4,290.00). He also pays approximately $180.00 to register his vehicle with the provincial government – this includes the cost of license plates, a sticker and a vehicle permit.

Cost of new vehicle$33,000.00
Loan typeAuto loan (term loan)
Loan amount$30,690.00
Interest rate (APR)5.50%
Loan term7 years
Additional fees4.00% origination fee ($1,227.60)
Payment amount $441.02 monthly or $203.34 biweekly
Total loan cost$37,045.68 with monthly payments $37,007.88 with biweekly payments

*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

How much do green cars cost?

Green cars are more expensive than gas vehicles. An electric hatchback may sell for $40,000, and mid-size sedan hybrids go for around $30,000. Comparable gas models for both might cost as low as $20,000. Here are a few popular fully electric and hybrid models.

ModelHybrid/ElectricStarting priceMPGe
BMW i3Electric$48,750118 MPGe
A3 Sportback e-tronHybrid$40,90083 MPGe
Kia Soul EVElectric$41,080111 MPGe
Ford Focus ElectricElectric$34,998118 MPGe
Chrysler Pacifica HybridHybrid$50,69584 MPGe
Chevrolet VoltHybrid$40,195106 MPGe
Ford C-MAXHybrid$27,46538 MPGe
Ford Fusion HybridHybrid$32,19542 MPGe

What are the benefits of an eco-friendly vehicle?

Eco-friendly vehicles have a range of benefits for both the owner and the community. Here are some reasons to drive a green car:

  • Fewer emissions. Green cars have low-exhaust emissions, reducing the amount of carbon released into the atmosphere.
  • No- or low-gas costs. While hybrids require gas, they consume much less than regular cars. Electric cars don’t use any gas but do require electricity to recharge.
  • Cleaner cities. Car emissions are a major contributor to poor air quality in cities. By driving a vehicle with low emissions, you won’t contribute to the smog in your area.
  • Less noise. Electric engines are quieter than gas engines. This reduces the amount of road noise in cities.
  • Tax credit. When you buy a hybrid or electric car, you could be eligible for a tax credit through your provincial or federal government .
  • Increasing consumer demand. By generating demand for electric vehicles, you’re helping to improve the technology and bring down the price. Doing so makes them more attractive to others, creating a cycle of benefits for everyone.

If you’re buying a fully electric car, then your vehicle won’t produce any emissions. The benefits with hybrids may not be as clear if the manufacturer reports fuel economy that’s unattainable in your situation.

Research prospective cars before you commit to buying one by looking at user reviews and and other independent, unbiased articles about emissions and fuel economy on most new vehicles.

An inside look at the hybrid engine of a Toyota Prius C

A few hybrid and electric cars to consider

Here are some of the most eco-friendly cars found on the road across Canada:

  • Toyota Prius. An early hybrid and perhaps one of the more common green cars. They come as a medium sedan or hatchback and are similar to a Toyota Corolla.
  • Nissan Leaf. A fully electric hatchback with a small solar panel for internal accessories. It can do a partial recharge in 30 minutes from specific quick-charge points.
  • Mitsubishi Outlander PHEV. This one is for the whole family. A hybrid SUV which has been reported to get up to 74 MPG from its electric and gas engines.
  • Ford C-Max Energi. One of the cheaper hybrids, the rear seat battery may make it cramped for your passengers. However, its performance makes up for it if you only have occasional guests.
  • BMWi3. A fully electric hatch for city drivers who appreciate luxury German engineering.
  • Tesla Model S. Tesla only makes electric cars. They aren’t cheap, but they’re designed to perform like a sports car. If you want to drive an uncommon car, the Model S should put you in the spotlight.

What's the most fuel-efficient car?

According to Natural Resources Canada, the Hyundai IONIQ Electric is the most fuel-efficient, mid-sized car on the road in 2019. The IONIQ has an impressive 88 kW electric motor, which earns the equivalent of 4.1L of gasoline per 100 kilometres of driving.

The least efficient mid-sized car out there? Bentley’s Mulsanne. This car only gets you 12L/100km and could cost you upwards of $4,000 a year in fuel. The Cadallac CTS-V earns an honourable mention, getting you only 14L/100km.

What to watch out for

  • The cost. Green cars are much more expensive than a comparable gas vehicle. Even considering the savings on gas, oil and maintenance, it would take a few years to offset the upfront expense.
  • The limited driving range. Range refers to how far the vehicle can travel before it needs to refuel. Compared to gas vehicles, electric cars have a very restricted range.
  • Limited chances to power up. Not all gas stations have recharge stations, such as your home or a public recharge station.
  • It’s a new technology. Green car technology is still developing and working out the kinks.

4 tips for fuel-efficient driving

Even if you can’t afford to buy a new car right now, you can substantially reduce your vehicle’s emissions just by changing your behavior as a driver. Here are some handy green driving tips:

  • Accelerate slowly and smoothly. Engines use the most fuel when starting up or accelerating. Try to limit rapid or erratic acceleration.
  • Anticipate traffic conditions. The most efficient way to drive is to maintain a fairly constant speed. Rapid slowing and accelerating wastes fuel. Anticipate the conditions ahead to minimize the amount you need to slow down or speed up. And of course, don’t be afraid to use cruise control on the highway.
  • Remove unnecessary equipment. Extra weight and accessories decrease the efficiency of your vehicle. Roof racks cause drag and tools add extra weight. If you don’t regularly use or need them, take them off.
  • Maintain your vehicle. Basic maintenance such as checking tire air levels and engine oil is an easy way to keep your car running efficiently. Performing routine services will also help identify problems to keep your vehicle operating optimally.

Bottom line

Green cars are becoming an increasingly better option for those living in cities. If you’re concerned about your vehicle’s carbon emissions and its effect on the environment, then consider getting an eco-friendly alternative. Be aware of the additional upfront cost and limitations before you commit, and compare your financing options when you’re ready to buy.

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