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Car loan interest rates in Canada
Compare current car loan rates in Canada from a range of lenders.
If you need financing to buy a new or used car, the interest rate you’re offered will affect how much your loan will cost you – and ultimately how much your car will cost you. You need to be in a strong place financially to qualify for the most competitive car loan rates that lenders advertise – and that’s not the only factor to consider when shopping around for the best deal on car loan interest rates in Canada.
What is the average car loan interest rate in Canada?
According to Statistics Canada, the average car loan interest rate in Canada is 5.23%. The average buyer can expect to pay anywhere between 4% to 7% 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
|Loan provider||Interest rates||Key features||Eligibility requirements|
|From 3.9%||Clutch is an online dealer with 2,000+ cars in its inventory.||3+ months employed, Max.1 bankruptcy||Go to site|
|4.75% - 29.99%||Canada Drives is an online dealer that helps you buy a used car completely online.||Min. income of $1,800 /month||Go to site|
|4.90% - 29.90%||CarsFast allows you to pre-qualify for loans from multiple lenders and compare your rates.||Min. income of $2,000 /month, 3+ months employed||Go to site|
|0% - 31.99%|
(0% APR for new cars only.)
|Loans Canada is an online broker with the largest lender network in Canada.||Min. income of $1,800 /month, 3+ months employed||Go to site|
|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 site|
|4.90% - 29.95%||Canada Auto Finance connects 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 site|
|9.90% - 46.96%||LoanConnect's search engine shows lenders with highest likeliness of positive results.||No min. income requirement||Go to site|
|Around 5.99% (used car loan rate)||CarDoor is an online dealer serving the Greater Toronto Area.||Not specified online||Read review|
|8.00% - 31.00%||goPeer is Canada’s first peer-to-peer consumer lending platform. Get financing from Canadian investors.||Min. income of $40,000 /year|
|3.99% - 29.99%||Auto Loan Providers lets you choose a vehicle type first, then helps you determine how much you can afford in loan payments. Ontario only.||Min. income of $1,800 /month, 1+ months employed|
|4.29%||The interest rate is fixed with a maximum 5-year term, and it is for cars 5 years old or less.||Not specified online||Learn more|
(Newfoundland and Labrador Credit Union)
|3.70% - 6.05%||NLCU offers vehicle loans for new cars, used cars, trailers, motorcycles and ATVs.||Not specified online||Learn more|
|From 4.99% (used car loans)||Autorama is one of the largest used car dealerships in Toronto.||Not specified online|
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 84 months, 13% provincial sales tax and a down payment of $3,600.
|Credit rating||Credit Score||Interest Rate (hypothetical)||Monthly payment||Total interest paid|
Where can I find the best car loan rates in Canada?
You can often find competitive car loan interest rates in Canada from the following providers:
- Dealerships. Dealers have an incentive to offer the best car loan rates in Canada because they want you to buy a car from them. Dealers provide in-house financing and/or are partnered with multiple lenders, including the big banks. You can also negotiate with different dealers to bring your rate down.
- Banks and credit unions. While financial institutions do not have an incentive to sell you a car, they may still offer competitive interest rates. When weighing your options, check if the auto loan is secured or unsecured. Secured loans generally have lower rates than unsecured loans. Most auto loans are secured, but some auto loans from banks or credit unions may not be.
- Online brokers. If you have fair or bad credit below 660 and need help finding a lender who can approve you, you may wish to apply to an online broker that specializes in finding a car loan for borrowers like you. Online brokers are partnered with hundreds of dealers and can match you with multiple car loan rate offers. Be prepared for higher interest rates though, because lenders view borrowers with bad credit as higher risk.
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 payments on the principal of the car with no interest for a 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 for certain models.
- You may not get as much money for your trade-in vehicle.
- The loan structure will likely be set in stone.
8 tips to get the best car loan interest rates in Canada
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 car loan 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.
How much will my car loan cost every month?
The cost of your car loan will depend on your loan amount, interest rate and loan term. Use the car loan monthly payment calculator to find out how these factors 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)|
Fill out the form and click on “Calculate” to see your estimated monthly payment.
orCompare car loans now
Based on your loan terms
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To get the best car loan interest 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.
Frequently asked questions
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