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How to buy an eco-friendly car

Find out how you can buy a hybrid or electric car in Canada, and compare lenders to get affordable financing.

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Environmentally friendly cars can cut your carbon footprint, 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, it’s easier than ever to buy a hybrid or electric car in Canada. Find out more about how you can find the car you want at a price that suits your budget.

How can I finance an eco-friendly car?

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

  • Car loan. You can take out a car loan for an eco-friendly car and some lenders may even give you a lower interest rate when you buy a hybrid or electric car in Canada.
  • Home equity loan. If you’ve built up enough equity in your home, you could use that money to finance your eco-friendly car. Just be aware that your house will be used as collateral to secure your loan.
  • Unsecured personal loan. If you have good credit, you may be able to finance your eco-friendly car with an unsecured personal loan. This means you won’t need to use your new vehicle as collateral to secure your loan.
  • Secured personal loan. If your credit is not as good, you may be able to use assets like your investments to secure your loan. This will usually help you get lower interest rates as well.

Browse financing options for an eco-friendly car

Name Product Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements
Loans Canada Car Loans
$500
0% to 29.99%
3-96 months
300
Min. income of $1,800 /month, 3+ months employed
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
CarsFast Car Loans
$500
4.90% to 29.90%
12-96 months
300
Min. 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.
Coast Capital Car Loan
$10,000
Varies
18-84 months
650
Able to service debt payment of $300/month
Finance or lease both new and used vehicles with competitive rates and flexible terms from one of Canada's largest credit unions. No credit union membership required for this product.
Canadian Auto News
$7,500
3.99% to 29.95%
12-84 months
300
Min. income of $2,000 /month, 3+ months employed
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.
Car Loans Canada
$7,500
3.99% to 29.95%
12-84 months
300
Min. income of $2,000 /month, 3+ months employed
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.
LoanConnect Car Loans
$500
9.90% to 46.96%
3-120 months
550
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.
Canada Auto Finance
$500
4.90%-29.95%
3-96 months
300
Min. income of $1,500 /month, 3+ months employed
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
$500
1.90% to 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
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.
Fairstone Secured Personal Loan
$5,000
19.99% to 23.99%
36-120 months
560
Established credit history and own your home
Fairstone offers secured personal loans up to $50,000.
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What makes a car eco-friendly?

A eco-friendly 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.

Should I buy an electric car in Canada?

That depends on your lifestyle and budget. If you don’t mind charging up every night or a higher price tag, you could benefit from an electric car in the following ways:

  • Government incentives. Depending on where you live, you may get a rebate from the government when you buy an electric car in Canada. For example, Quebec offers rebates of up to $8,000 and BC offers rebates of up to $3,000.
  • No fuel costs. Since electric vehicles run without fuel, you can save tons of money on skyrocketing fuel costs in Canada.
  • No requirement for routine maintenance. You won’t have to pay for oil changes or other maintenance associated with having a gas engine.

Should I buy a hybrid car?

Hybrids may be a better option if you don’t want to take the full plunge into buying an electric car. They require routine maintenance and usually come with a higher initial price tag than gas-powered cars, but they offer the following benefits:

  • Government incentives. You’ll usually get a lower rebate for a hybrid car than you will for an electric car, but it’s still worth exploring in most cases.
  • You can use fuel to power your car. Your engine can switch between fuel and electric, which means you aren’t completely reliant on charging stations to get around.

How much do eco-friendly cars cost?

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

ModelHybrid/ElectricStarting price
BMW i3Electric$44,950
Kia Soul EVElectric$42,995
Ford Focus ElectricElectric$31,998
Tesla S ModelElectric$114,990
Nissan LeafElectric$44,298
A3 Sportback e-tronHybrid$40,900
Chrysler Pacifica HybridHybrid$48,571
Chevrolet VoltHybrid$45,198
Ford C-MAXHybrid$27,465
Ford Fusion HybridHybrid$29,375
Toyota PriusHybrid$28,850

Are eco-friendly cars more expensive?

Typically, you’ll pay between $10,000 and $20,000 more when you buy a hybrid car or buy an electric car in Canada. That said, many governments offer rebates to help you cover the costs of purchasing an eco-friendly car.

You’ll save a significant amount of money on gas when you have a hybrid or electric car. With an electric car, you’ll also save on routine engine maintenance since you won’t need to change your oil or other consumables.

Representative example: Leon buys a hybrid car

Leon runs a successful cleaning business in Ontario and wants to buy a hybrid car to travel between sites. After doing some research, he finds a Ford Fusion Hybrid SE priced at $37,290 ($33,000 + 13% HST).

He puts a deposit of $6,600 down on the car and requests a loan to cover the rest. He is approved for a loan of $30,690 with a 5.50% interest rate over 7 years. This is what his loan will look like:

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.

What’s the most fuel-efficient car?

According to Natural Resources Canada, the most fuel-efficient new (non-plug-in) vehicle on the market in 2020 is a Hyundai Ioniq. The Ford Escape Hybrid is listed as the most fuel efficient SUV.

What’s the most environmentally friendly car?

A study conducted by the American Council for an Energy Efficient Economy (ACEEE) lists the Hyundai Ioniq and MINI Cooper SE as tied for the most environmentally friendly car. These are followed closely by the Toyota Prius Prime, BMW i3s and Nissan Leaf.

5 factors to consider when shopping for an eco-friendly vehicle

There are a number of factors to consider when you want to buy an electric car in Canada.

  1. Fuel efficiency. Ask how many miles per gallon (MPG) or equivalent (MPGe) you’ll get when you buy a hybrid or electric car in Canada. The higher the MPG, the more efficient your vehicle will be and the less you’ll spend on gas.
  2. Transmission. Manual transmission might be harder for Canadians to drive, but it’s more eco-friendly than automatic.
  3. Suspensions. Cars with sport suspensions give you better control of the vehicle, meaning you won’t have to stop as much.
  4. Colour. Lighter-coloured cars keep things cool in places where it’s hot most of the time. Dark coloured cars can keep in the heat in locations with a cooler climate.
  5. Reviews. Look at online forums to find out what customer experiences have been with the vehicle. If you spot too many red flags, consider another car.

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. Eco-friendly cars don’t emit as much carbon dioxide, which means cleaner cities and less pollution in your neighborhood.
  • Save money on gas. Electric and hybrid vehicles require you to spend a fraction of what you would pay for gas with a normal car.
  • Tax credit. When you buy a hybrid car or an electric car, you could be eligible for a tax credit through your provincial or federal government .
  • Lower insurance rates. You may qualify for lower rates or insurance rebates if you insure an eco-friendly car.

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

What to watch out for with an eco-friendly car

  • More expensive. Eco-friendly cars can be much more expensive than gas vehicles, even when you consider the money you’ll save on fuel, oil and maintenance.
  • Limited driving range. You may get less mileage for a fully charged battery than you will with a tank of gas, which means you may need to recharge mid-drive. Getting a hybrid can help with this downside.
  • Fewer chances to power up. Not all gas stations have recharge stations for electric vehicles, meaning you could get left high and dry if your battery runs out.

3 alternatives to buying an electric or hybrid car

  1. High MPG gas vehicles. While gas-powered vehicles won’t be as efficient as electric vehicles, some non-hybrid vehicles come with relatively low fuel consumption (like the 2020 Mitsubishi Mirage or Toyota Corolla).
  2. Smaller cars. Smaller, two-door vehicles can sometimes get higher mileage than gas-guzzlers like SUVs.
  3. Biodiesel cars. Cars that run on animal fat or vegetable oil are a novel choice, and they typically cost less than a Tesla or Prius.

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 by following these tips:

  1. Accelerate slowly and smoothly. Engines use the most fuel when starting up or accelerating. Try to limit rapid or erratic acceleration.
  2. Anticipate traffic conditions. The most efficient way to drive is to maintain a fairly constant speed. Try to anticipate the conditions ahead to minimize the amount you need to slow down or speed up.
  3. Remove unnecessary equipment. Extra weight on your car will increase the amount of drag, cutting into your fuel savings. Remove accessories such as roof racks, tools chests and bike racks when not in use to lighten your load.
  4. Maintain your vehicle. Basic maintenance such as checking tire air levels and engine oil is an easy way to make sure your vehicle isn’t burning dirty oil or expending more energy than necessary.

More ways to cut back on your carbon footprint

If you can’t afford an electric car, you may want to consider other options to reduce your emissions:

  • Take public transport. Take the bus or train to work and save on parking. Schedule public transit into your routine once or twice a week to cut down on how much you drive.
  • Ride a bike. If you live in a bike-friendly town, you might be able to get around even faster on a bike than you would with a car, especially during rush hour.
  • Avoid unnecessary flights. Air travel is one of the least environmentally friendly ways to get around. Try to limit how much you fly and aim to take on-ground transportation to reduce your carbon footprint wherever possible.

    Bottom line

    You may want to consider getting an eco-friendly car if you’re concerned about your vehicle’s carbon emissions and their effect on the environment. Hybrid and electric cars tend to cost more than fuel-powered cars, but they also come with government rebates and gas savings to offset the cost. Learn more about eco-friendly cars and compare your financing options when you’re ready to buy.

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