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Car loan rates in Canada
Your credit score, income, vehicle and loan term will help to determine the interest rate that you're offered.
What is the average car loan interest rate in Canada?
According to Statistics Canada, the average car loan interest rate in Canada is 4.44%. The average buyer can expect to pay anywhere between 4% to 6% interest on their car loan, depending on whether the car is new or used and whether the interest rate is fixed or variable.
Compare current car loan interest rates in Canada
|Car loan company||Interest rate||Key features||Eligibility requirements|
|0% - 29.99%||Loans Canada Car Loans is not a direct lender, but instead sends your information to different lenders who try to woo you into a loan agreement. You get great rates because lenders have to compete for your business.||Min. income of $1,800 /month, 3+ months employed||Go to siteRead review|
|4.90% - 29.90%||While CarsFast allows you to pre-qualify for loans from multiple lenders and compare your rates, one of its best features is that it gives you easy access to financing, even if you have bad credit.||Min. income of $1,800 /month, 3+ months employed||Go to siteRead review|
|3.99% - 29.99%||Auto Loan Providers is available in Ontario only. This lender lets you choose a vehicle type first, then helps you determine how much you can afford to pay in loan payments before car shopping.||Min. income of $1,800 /month, 1+ months employed||Go to siteRead review|
|9.90% - 29.90%||Splash is a division of Rifco, one of Canada’s largest non-charted banks specializing in non-prime auto financing.||Min. income of $2,200 /month, 3+ months employed
||Go to siteRead review|
|8.00% - 31.00%||goPeer is Canada’s first peer-to-peer consumer lending platform. Get car financing anonymously from everyday Canadian investors.||Min. income of $40,000 /year||Go to siteRead review|
|3.99% to 29.95%||Search thousands of vehicles through Car Loans Canada’s online platform, including $0 down options, from dealers across the country and get matched with affordable financing options, even if you have bad credit, consumer proposals or bankruptcies.||Min. income of $2,000 /month, 3+ months employed||Read review|
|9.90% - 46.96%||LoanConnect's search engine shows lenders with highest likeliness of positive results.||No min. income requirement||Go to siteRead review|
|4.90% - 29.95%||Canada Auto Finance is a free car loan matching service, connecting auto loan applicants with local dealers to help you secure auto financing, even for those with bad credit.||Min. income of $1,500 /month, 3+ months employed||Go to siteRead review|
|1.90% - 19.99%||Carloans411 is an easy-to-use online platform that lets you get financing from a local dealership near you. All you need to do is fill in some basic personal information, and it matches you with a loan provider.||Min. income of $1,600 /month, 3+ months employed||Go to siteRead review|
|6.99% average||Desjardins is one of the largest credit unions in Canada. You can use this loan to finance a new or used car, motorcycle, recreation vehicle, boat or RV. Choose between a fixed or variable rate. Loan amount starts at $5,000.||Not specified online||Learn more about credit union car loans|
|Newfoundland and Labrador Credit Union (NLCU)||3.30% - 5.75% (varies based on the year of the car)||Use an NLCU vehicle loan to buy a car, truck, boat or recreational vehicle. NLCU offers special rates for new vehicle loans.||Not specified online||Learn more about credit union car loans|
Note: the information below is just an example and does not take into account all of the factors lenders consider when evaluating a loan application. Actual lenders may charge different interest rates.
Example: Interest on a $36,000 car with a loan term of 7 years
The following example shows the amount of interest you could end up paying for a brand new $36,000 car assuming a loan term of 7 years and a down payment of $3,600.
|Credit rating||Credit Score||Interest Rate|
|Total interest paid|
|Poor||300-559||15% (there are some lenders that may approve a score under 560)||$715.52||$23,023.99|
Where can I find competitive car loan rates in Canada?
Comparing car loan interest rates offered by different banks, credit unions and online lenders is critical to finding the deal that’s best for you.
- Banks or credit unions. Since you have an established relationship with your bank already, it might be easier to get approved for a car loan, even if you don’t have the best credit. Banks and credit unions also tend to offer the most competitive rates.
- Online lenders. Some online lenders may be willing to loan money to people with average or poor credit, even if they can’t get approval from their bank — though they may not get the lowest rate available. Online lenders also tend to be the quickest to approve loans and disburse funds.
- Dealerships. Local car dealers are often willing to work with borrowers of all credit ratings. But because many dealerships offer financing through an external lender, dealers may inflate interest rates in order to make a profit.
8 tips to get the best car loan interest rates
Finding the best car loan rates in Canada involve doing research and comparing lenders. The following tips can help you find a low interest rate on your next car loan – and save you thousands of dollars in the long run.
A few different factors help lenders determine the car loan interest rates you’ll be offered. The more well-rounded your application, the better your chances of scoring a low rate. Although there are many factors that may play a role in your interest rate, these are the four main points lenders consider when reviewing your application:
- Credit score. Those with higher scores generally have access to lower rates, so improving your credit history is an important part of getting a low interest rate on your car loan.
- Income. Lenders consider your income because it reflects your ability to pay back the loan. They also want to see a low debt-to-income ratio to make sure you can afford your loan.
- Loan term. The loan term impacts the interest rate that you’re offered – as well as how much interest you’ll pay over the life of the loan. A lender could offer you a lower interest rate on a longer loan term, but this doesn’t mean you’ll save money: you’ll pay more interest on a longer loan term.
- Vehicle. Your vehicle’s make and model can also play a role car loan rates, especially if you’re buying a used car. Since it’s possible that your car will be used as collateral to secure the loan, lenders often charge higher interest for cars that are of poorer quality and are more likely to break down.
- Type of interest rate. Banks and credit unions can offer fixed and variable interest rates on a car loan. Generally, variable-rate car loans have lower starting rates than fixed-rate car loans.
Can I get 0% financing on a car loan?
You may see dealerships advertising 0% financing on their cars. With 0% financing, you buy the car at the agreed-on price, and then make monthly payments on the principal of the car with no interest for a set number of months. However, keep these points in mind:
- 0% interest may only be offered for part of the loan term.
- To be approved, you’ll need spectacular credit (usually above 700).
- Negotiating the car price will be difficult.
- 0% interest car financing is only available to certain models.
- You may not get as much money for your trade-in vehicle.
- The loan structure will likely be set in stone.
How much will my car loan cost?
The cost of your car loan will depend on your interest rate and loan term. Use the car loan monthly payment calculator to find out how your interest rate and the length of your loan term affect your monthly payments and total interest charged.
Car loan monthly calculatorCalculate how much you could expect to pay each month
|Loan terms (in years)|
Compare car loans
To get the best car loan rates in Canada, you’ll need to have an excellent credit score, a sufficient income that allows you to easily manage your loan repayments and a vehicle that is viewed favourably by lenders. Getting a low interest rate allows you to save money over the course of your car loan – and ultimately lowers the total price that you pay for your car.
If you already have a car loan with a high interest rate and think you could qualify for a lower one, you may want to consider auto refinancing.
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