Canada's Auto Financing Market is Shifting — Here’s What’s Happening

The vehicle financing landscape in Canada is undergoing a major transformation, driven by innovation from fintechs and digital solutions. Industry experts predict rapid growth by 2026, creating incredible opportunities for both buyers and lenders.

Fintechs Are Leading the Digital Revolution

Back in 2020, less than 20% of vehicle financing in Canada was fully digital. Today, that number has already surpassed 45%. Companies like Clutch (specializing in fully online used car sales and financing) and Canada Drives (offering fast pre-approvals in minutes) are reshaping the market.

Thanks to AI-powered credit assessments, approval times that once took days can now be completed in under an hour.

What Canadians Are Financing the Most

Canadians are prioritizing efficiency, reliability, and adaptability to harsh weather:

Economical Cars: Honda Civic (a longtime Canadian favourite) and Toyota Corolla

Compact SUVs: Toyota RAV4 (Canada’s best-selling SUV)

Electric Vehicles: Tesla Model 3 and Hyundai Ioniq 5, boosted by federal and provincial EV incentives

Big Banks and Innovative Leasing Solutions

Traditional lenders like RBC (Royal Bank of Canada), TD Canada Trust, Scotiabank, and CIBC are heavily investing in digital platforms to stay competitive.

For example, RBC Auto Finance now offers a fully online financing experience with competitive rates starting around 7.99% APR for qualified buyers.

Leasing is also booming — growing around 10% a year — especially in provinces like Ontario and Quebec, fueled by entrepreneurs and small business owners who value flexible tax options.

Fast, Digital Auto Insurance

Canadian insurtechs like Sonnet Insurance and Onlia now let drivers purchase full auto coverage online in less than five minutes, with customizable policies that integrate directly with their financing or leasing agreements.

This automation helps minimize uncovered claims and streamlines the customer experience.

Subscription Models: Clutch, Canada Drives, and Kovi Arriving Soon

Car subscription models are gaining momentum in Canada too. Companies like:

Clutch allow Canadians to buy or swap vehicles 100% online

Canada Drives bundles financing, insurance, and maintenance into one simple package

Soon, Kovi Próprio, a proven success in Latin America, is expected to expand into Canada, offering:

No traditional credit check required

Guaranteed purchase options after 24 or 48 months

Low upfront deposits deducted from the final price

This innovation could completely change how Canadians access cars — making it easier, faster, and more flexible than ever before.