Automotive Aftermarket Financing

What to know about new proposed tariffs on Canadian goods

New proposed tariffs on Canadian imports could disrupt the automotive market, driving up sticker prices and straining consumer credit limits.

Proposed tariffs on Canadian goods, particularly in the automotive sector, could create a chain reaction that directly impacts your financing volumes and loan approvals. For retailers and dealerships, higher import costs almost always lead to higher sticker prices for the consumer. When the price of a vehicle or high-end equipment rises sharply, the amount of financing required per customer increases. This may seem like a boost to loan volume, but it often lowers overall conversion rates as customers struggle to qualify for larger loan amounts. Increased prices can push debt-to-income ratios beyond what your lending partners are comfortable with, leading to more credit denials at the point of sale. Furthermore, if consumers are spending more on monthly car payments due to tariff-inflated pricing, their discretionary income for other financed categories—like home improvements or jewelry—tightens significantly. You should prepare for a shift in consumer behavior where customers opt for longer loan terms to keep monthly payments manageable, or downgrade to used inventory which may have different lending tiers. Keeping a close eye on your lenders’ tier structures will be vital as price floors move upward.

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