Should You Buy a Car During Inflation in Canada? (2025)

Inflation. You hear about it on the news, you feel it at the grocery store, and yes — it even affects your car-buying decisions. So, should you buy a car during inflation?

 

The short answer: it depends on your situation. But don’t worry — we’ll walk you through what you need to know in a way that’s simple, honest, and useful.

 

 

First Things First: What Is Inflation?

Inflation means the prices of everyday goods and services are going up. When inflation is high, your money doesn’t go as far. So a car that might have cost $15,000 last year might be closer to $17,000 today.

 

This doesn’t just affect groceries or gas — it affects the price of used cars, interest rates on car loans, and even how dealerships do business.

 

Are Used Car Prices Higher Right Now?

Yes — but there’s more to it.

 

During inflation, the cost of new cars often goes up due to supply chain issues and higher production costs. That pushes more people to look at used cars instead. Higher demand = higher prices.

 

So while used cars are still cheaper than new ones, they’re not as cheap as they were a few years ago. The good news? A quality used car still gives you more bang for your buck — and you can avoid the steep depreciation that new cars face.

 

Should You Wait or Buy Now?

Let’s get real — no one can perfectly “time the market.” Waiting might save you a bit if prices go down, but they could also go up again. If you need a car now — because your current one broke down or your job requires one — then waiting might not be the best move.

 

Here are some simple questions to ask yourself:

 

• Is your current car unsafe or unreliable?
• Are you spending too much money on repairs?
• Do you need a vehicle for work or family needs?
• Can you afford monthly payments even if rates are higher?

 

If you answered “yes” to most of these, it might be better to buy a car during inflation than to delay and risk higher prices later.

 

What to Know About Car Loan Interest Rates

One big downside of inflation? Higher interest rates. The Bank of Canada raises rates to help control inflation, but that means borrowing money becomes more expensive.

 

That affects your car loan. Whether you have good credit, bad credit, or something in between, you might see a higher interest rate than you would have two years ago. That’s why shopping around is so important — and a good used car dealership can help match you with lenders that work with all credit types.

 

Tips for Buying Smart During Inflation

If you do decide to buy a car during inflation, here are some smart tips:

 

• Know your budget: Don’t stretch yourself too thin. Aim for a monthly payment you can manage, even if rates go up again.
• Go used instead of new: Used vehicles often offer more value, especially now.
• Get pre-approved: Know what interest rate you qualify for before you shop.
• Compare prices: Use online tools or ask dealerships to break down the costs.

 

Ask about trade-ins – Your current car might be worth more right now, and that could lower your loan.

 

Buying a car during inflation isn’t ideal — but life doesn’t always wait. If you need a reliable vehicle now, there are still good options out there. Used car dealerships across Ontario are working with lenders and offering more flexible plans, even for people with less-than-perfect credit.

 

Just remember to do your research, stick to your budget, and find a dealership that’s honest and upfront with you.

 

Sometimes the smartest move isn’t to wait — it’s to make the best choice with the situation you’re in.