Last updated: October 2026
You can consolidate auto loans in Canada by refinancing them into one new loan, usually a car refinance or a personal loan, and paying off the old ones. On $27,000 of car debt split across two loans, that can cut payments from about $768 a month to about $554, though a longer term means you keep paying for longer.
Canadian Debt Relief is an independent Canadian guide to debt relief options — consumer proposals, debt management plans, debt consolidation and bankruptcy — for people who want to understand their choices before they talk to anyone.
What does it mean to consolidate auto loans in Canada?
Consolidating auto loans means replacing two or more car loans with one new loan, so you make a single monthly payment at a single interest rate. Most Canadians do this by refinancing the vehicles with a bank, credit union or auto lender, or by taking a personal loan that pays off the old balances.
Before you start, know that lenders look at your credit score, income and how much your vehicles are worth compared with what you owe. The Financial Consumer Agency of Canada explains in its guide to financing a car that the interest rate, the loan term and the fees all change what a loan really costs, so each should be compared before you sign.
There are three common routes. A car refinance replaces the loan on one vehicle with a new loan on better terms. A personal loan or line of credit can pay off both car loans at once, usually unsecured. Our guide to consolidating car and personal loans covers the mixed case.
What are the benefits of consolidating auto loans?
The main benefit is a lower, simpler monthly payment: one due date instead of two or three, and often a few hundred dollars a month back in your budget. If your credit has improved since you took out the original loans, you may also qualify for a lower rate.
What are the risks of consolidating auto loans?
The biggest risk is paying more in total even though your monthly payment drops, because a longer term adds months of interest. A second risk is negative equity: if you owe more than the car is worth, many lenders will not refinance it, or will roll the shortfall into the new loan.
Who should consolidate their auto loans?
Consolidation tends to work when your credit has improved and you can get a clearly lower rate than the loans you have now. It also helps if you are managing fine but want one payment to track.
- Your credit score has risen meaningfully since you took the original loans, so you qualify for a lower rate.
- Your vehicles are worth at least as much as you owe on them.
- You can keep the same repayment length, or shorten it, and still afford the new payment.
Who should not consolidate their auto loans?
Consolidation is the wrong tool if the real problem is that your total debt is bigger than your income can carry. Taking a new loan will not fix that, and in some cases it makes things worse.
- You owe far more than the vehicles are worth and the lender would roll that gap into the new loan.
- You are already behind on payments and your credit is too weak to qualify for a better rate.
- You would be extending the term only to feel relief this month, while paying noticeably more interest overall.
How much can you save by consolidating $27,000 of car loans?
On $27,000 of car debt, consolidating can cut the monthly payment by roughly $214, but the total interest barely changes unless the rate falls by more. The numbers below are illustrative estimates for a household with two car loans, using standard loan formulas.
How do you consolidate auto loans step by step?
You consolidate auto loans in five steps, and most people can get a decision within a few business days once their documents are ready. Do each step in order so you compare real offers before committing.
- List what you owe. Gather the balance, interest rate, remaining term and monthly payment for each loan, and ask each lender for a payout figure and any early-payout fee.
- Check your credit and vehicle value. Pull your credit report and estimate what each vehicle is worth, so you know whether you owe more than the car is worth.
- Shop several lenders. Ask banks, credit unions and online lenders for quotes. The FCAC recommends shopping around for auto financing and comparing the annual percentage rate, term and fees side by side.
- Pick the offer with the lowest total cost. Compare total interest paid, not only the monthly payment, and confirm there are no hidden fees. Our guide to debt consolidation loans shows what typical rates look like.
- Pay off the old loans and keep paying. Make sure the new lender sends payouts directly to your old lenders, confirm the old loans show a zero balance, and set up automatic payments on the new loan.
Struggling with car loans, credit cards and other debts at once? See which debt relief options fit your situation.
Frequently asked questions
Can you consolidate two car loans into one in Canada?
Yes, you can combine two car loans into one in Canada by getting a personal loan or refinancing with a lender willing to pay off both. For example, a $27,000 total across two loans could become one loan at a single rate, as long as the lender approves your credit and the vehicles are worth enough to support the debt.
Does consolidating auto loans hurt your credit score?
Consolidating auto loans usually causes a small, temporary dip of a few points because the lender does a credit inquiry and the old accounts close. Over time, an on-time payment record on one new loan can help your score recover and improve.
Can you consolidate auto loans with bad credit?
It is possible, but with bad credit the new rate may be as high as, or higher than, your current loans, which defeats the purpose. If a quote does not beat your current rate or total cost, it usually makes sense to keep your loans and focus on rebuilding credit first.
What if you owe more than the car is worth?
If you owe, for example, $20,000 on a car worth $14,000, many lenders will not refinance it, or will add the $6,000 gap to the new loan. The FCAC explains your protections as a car buyer, and it is worth reading before you roll negative equity into new borrowing.
What if you cannot keep up with your car payments?
If you are already missing payments on a $27,000 car debt plus other debts, a new loan may not solve it, and you should contact your lenders early. A Licensed Insolvency Trustee is the only professional who can file a consumer proposal or bankruptcy and can explain whether either fits; our consumer proposal example shows real numbers.
After 20 years of structuring multi-million dollar corporate debt facilities and corporate turnarounds in investment banking, Marcus now leads Canadian Debt Relief to apply those exact same balance-sheet optimization frameworks to Canadian household debt.
