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Compare car loans

Find out where to get car loans and how to choose the right lender.

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Car loans from Loans Canada

Loans Canada Car Loans logo
  • Rates from 0% - 29.99%
  • Loan terms from 3 - 96 months
  • Multiple loan offers
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Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
Loans Canada Car Loans
$500 - $35,000
0% - 29.99%
3 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Compare rates from multiple lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
goPeer Car Loan
$1,000 - $25,000
8.00% - 31.00%
36 - 60 months
600
Min. income of $40,000 /year
P2P platform with competitive rates.
Canada's first regulated consumer peer-to-peer lending platform that connects creditworthy Canadians looking for a loan with Canadians looking to invest.
AutoLoanProviders
$7,500 - $85,000
3.99% - 29.99%
12 - 96 months
300
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Get a new or used vehicle delivered to your door.
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
Coast Capital Car Loan
$10,000 - No Max.
Varies
18 - 84 months
650
Able to service debt payment of $300/month
Competitive rates and flexible terms.
Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
Splash Auto Finance
$10,000 - $50,000
9.90% - 29.90%
24 - 84 months
300
Min. income of $2,200 /month, 3+ months employed
Apply with any credit score.
Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
LoanConnect Car Loans
$500 - $50,000
9.90% - 46.96%
3 - 120 months
550
No min. income requirement
Pre-approval in as little as 60 seconds.
Get access to 25+ lenders through this brokerage. Get your funds in as little as 24 hours.
Canada Auto Finance
$500 - $45,000
4.90% - 29.95%
3 - 96 months
300
Min. income of $1,500 /month, 3+ months employed
Get financing from partnered local lenders.
Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
High application approval rate.
Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
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With so many car loans in the marketplace and different types of lenders, which one should you choose? Read this guide so you can confidently decide which auto loan is right for you.

How does auto financing work?

A car loan is a type of financing used specifically to purchase a new or used car. After buying the car, you’ll make regular payments of both principal and interest until the loan is fully paid off. Auto loans are usually secured loans — the car itself is used as collateral and can be repossessed if you don’t make payments.

How much you can borrow and what interest rate you get depends on the lender and your personal financial situation. To make sure you get a competitive deal, compare offers from multiple lenders before signing on to any car loan.

Three main components make up your car loan:

How much do car loans cost?

When it comes to how much you’ll pay for auto financing, you need to factor in both ongoing costs built into the loan and upfront costs. These are going to include the interest rate, fees, down payment and sales tax.

Upfront costs

  • Down payment. How much you’re expected to put down affects the immediate cost of your car loan. Expect to pay 10% to 20% of the cost of your vehicle upfront. Some lenders offer you the option to apply for a loan without a down payment at all.
  • Sales tax.Sales tax differs between different provinces and territories, so contact Service Canada to find out more about the tax you should expect to pay. Make sure to factor in sales tax when estimating the cost of your car, as this can add a hefty amount onto the cost, usually between 13-15%.
  • Fees. Some lenders charge an origination fee of 1% to 5% of the loan amount. An origination fee is a fee to process your loan and is deducted from the loan amount.

Ongoing costs

  • Interest rate. The average car loan rate is 4.44%, according to Statistics Canada. The lowest rates hover around 3%, though these are reserved for individuals with excellent credit and a low debt-to-income ratio. Borrowers with poor credit usually see rates in the double digits as high as 19.99% or more.

What is APR?

Your APR, or annual percentage rate, is a combination of your interest rate and financing fees, providing you with the total sum you’re borrowing. It shows you the true cost of your car loan.

In addition to APR, the length of your loan term also affects the overall cost. Your loan term is the amount of time you have to pay off your loan. A short loan term generally results in higher monthly payments, but a lower total loan cost. A longer loan term gives you lower monthly payments, though you’ll ultimately pay more in interest.

How is APR calculated?

Typically, your APR is determined by a number of factors, including the following:

  • The amount you need to borrow
  • Your down payment
  • The length of your term
  • Your credit score
  • Your income
  • The type of car you’re financing

Keep in mind, there are two types of interest calculations on a car loan:

  • Simple interest, which is only charged on the original amount you’re borrowing to finance your car purchase.
  • Compound interest, which is calculated with both your principal and the interest that’s adding up since the start of your loan.

Don’t forget to ask about any rebates you might be eligible for

If you’re financing with a dealer, ask about any cashback discounts to avoid leaving money on the table. Three main types include cash rebates, low-interest dealership financing and special leases. Government rebates for low-emission or hybrid vehicles are also available in many states.

Where to get car loans

  • Banks. Your bank most likely offers auto financing or a personal loan you can use to buy a car. Banks offer competitive interest rates, but you will need a good to excellent credit score to qualify.
  • Credit unions. Credit unions car loans also offer some of the most competitive interest rates, but you also need good to excellent credit and may need a membership to access their products.
  • Online lenders. Online car loan providers have more lenient requirements and can offer loans to borrowers with any credit situation, good or bad. They are faster to fund loans than banks and credit unions since their application process is less strict. However, online lenders tend to offer higher interest rates.
  • Online brokers. Online brokers like CarsFast or Loans Canada could be an ideal option if you have bad credit. By filling out one simple application, you can get car loan offers from multiple lenders who want to finance you.
  • Dealerships. You can always try to get financing directly from the dealership, though you might need to become a master negotiator to dodge typical dealership tactics. Dealerships may come with their share of hidden fees you need to pay attention to, but they’re pretty convenient. You can shop for your dream car and secure financing in the same spot.

Types of auto loans

There are many types of auto loans, which include the following:

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How to find the best car loans

Before you compare lenders for car loans, calculate how much you can afford to pay for a down payment, monthly repayments, any fees and your loan’s overall cost. Look up the taxes and fees associated with purchasing a car in your province or territory, and add them to the cost of each car you consider.

Banks, credit unions and online lenders often ask borrowers to choose a car before applying. Matching services and dealerships, on the other hand, usually ask you to come with an open mind. Regardless of where you apply, narrow down the makes and models of different cars in order to get an idea of the type of car you can afford.

To get the best car loan, ask yourself these 10 questions:

Click on each question to expand more information about what to look for.

4 red flags when looking for financing

Lenders or dealerships advertising any of these “perks” should ring the alarm bells – or at least prompt deeper research.

  • There’s no credit check. Dealerships often don’t run a credit check for buy-here-pay-here loans, but other types of loan usually require a credit check. Direct lenders advertising no credit check could be a scam.
  • It lets you take your car home before approval. This could be the sign of a “spot delivery scam,” where a dealer calls a few days later to announce that financing fell through and you now need to renegotiate your loan at a much higher price.
  • It lies about your credit score. Some dealerships con borrowers into paying higher interest by telling them their credit score is worse than it actually is. Yet another reason to check your credit report, and know what that number means, before comparing lenders.
  • It offers 0% car financing. You may not pay an APR on your car loan, but you typically aren’t able to negotiate your price or take advantage of rebates. Loan terms also tend to be shorter, sometimes to the point of being unaffordable. Be very careful with this option, as it’s usually offered quite frequently.

Common car loan scams

What else do I need to know before I apply for car loans?

Here’s the information you should have about your finances, the lender and the car loans you’re considering before you apply.

I’m ready to apply. What do I need to do?

The car loan application process can vary wildly depending on the type of financing you choose. Getting financing from a dealership doesn’t involve most of the steps outlined below, for example – instead, you start at the dealership.

What documents do I need?

Most lenders ask to see at least three documents when you apply for a car loan:

  • Your driver’s licence. Your lender might ask to see your licence or require your licence number. Either way, have it on hand.
  • Your insurance card. Some lenders require you to have specific car insurance before applying for a loan.
  • Employment verification. You might be asked to submit tax returns, bank statements or recent pay stubs to prove you make enough to afford your car loan.

5 reasons your car loan application was rejected

  • Bad credit. The pre-approval process for many lenders is a soft credit check only.
    How to avoid it: Know your credit score and your lender’s credit requirements before applying.
  • Paperwork mistakes. Missing or incorrect information on your application can land you in the rejection pile.
    How to avoid it: Carefully review your application before submitting it. Bonus points if you get someone else to look it over too.
  • A recent financial catastrophe. Foreclosure, tax liens and bankruptcies make you look like a risk to lenders.
    How to avoid it: Wait a year or so before all of that is behind you. Waiting not an option? Try a lender that doesn’t have such strict requirements, though it might cost you in higher repayments.
  • You asked for too much. You can be rejected if your lender doesn’t believe you’re able to repay a loan.
    How to avoid it: Only apply for a car loan you can prove you can afford – not one you think you can.
  • Inconsistent income. Unpredictable cash flow is not assuring to a lender that wants to be sure you can pay back a loan.
    How to avoid it: Freelancers might try to get a steady part-time gig on the books to show you have at least a reliable base income.

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I got my car loan. What happens next?

So, you’ve finalized the deal that got you behind the driver’s seat. Now it’s time to start paying off your car loan. With many lenders, you can set up automatic payments so you don’t forget to pay. Some even offer a discount on your interest rate for signing up for automatic repayments.

Keep track of your personal account and loan balance to make sure everything goes smoothly – sometimes even automated systems make mistakes. Contact customer service if you notice anything off.

Before signing your loan contract, find out if you can make early repayments without incurring additional fees by contacting your lender directly.

Frequently asked questions

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