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Car loan interest rates in Canada

Compare current car loan rates in Canada to find competitive auto loans for your new or used car purchase.

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Buying a new or used vehicle often requires getting a loan. The car loan interest rate will have a direct impact on the overall cost of your auto loan – and ultimately how much a vehicle will cost you.

While getting the lowest car financing rate is ideal, not all borrowers will qualify for the competitively low rates advertised by traditional car loan lenders. To find a competitive car loan interest rate, it pays to shop around and to compare rates and terms from a variety of lenders. It also helps to benchmark against the average car loan interest rate in Canada — so you can quickly determine how much more or less the lender would like you to pay.

What is the average car loan interest rate in Canada?

According to Statistics Canada, the average car loan interest rate in Canada is currently 7.89%.

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In Canada, car loan rates are calculated using a lender’s prime rate — a rate that is adjusted by the Bank of Canada (BoC) in response to changes in the economy and monetary policy. When the prime rate increases, lenders will increase car loan rates to maintain their profitability. When the prime rate goes down, lenders will lower their auto financing rates, to remain competitive and attract borrowers.

The average buyer may pay around 6.7% and 9% interest on their car loan, depending on whether the car is new or used, their credit score, the purchase price of the car and whether the loan is based on a fixed or variable interest rate.

Compare current car loan interest rates in Canada

To get a car loan, you’ll need to be employed for at least 3 months and earning at least $1,500-$2,000 per month. Bad credit is okay with some lenders, but you’ll get some of the best car loan rates available in Canada if your financial profile is strong.

Loan providerInterest rateLoan termKey features
Loans Canada0% - 46.96% (new and used car loan rate)3 - 60 months
  • Loan search platform with a large lender and dealer network
  • Available across Canada
Approval Genie3.90% - 29.90% (used car loan rate)12 - 96 months
  • Specializes in used car financing
  • 4.7 Trustpilot rating based on 4,270+ reviews
  • Available in Ontario
CarsFast3.90% - 29.90% (new and used car loan rate)12 - 96 months
  • Loan search platform for new and used car financing
  • Available across Canada
ClutchFrom 8.49% (used car loan rate)12 - 96 months
  • Online dealer of used cars with competitive prices
  • Available in Ontario and Nova Scotia
dealerhop6.99% - 29.99% (new and used car loan rate)3 - 120 months
  • Loan search platform for new and used car financing
  • Available in all provinces except Alberta, Manitoba and Quebec
CarDoorFrom 7.99% (used car loan rate)12 - 96 months
  • Online dealer of used cars with competitive prices
  • Available in Ontario
Canada Auto Finance4.90% - 29.95% (new and used car loan rate)3 - 96 months
  • Loan search platform for all credit scores
  • Available across Canada

LoanConnect

8.99% - 46.96% (new and used car loan rate)72 - 84 months
  • Loan search platform for all credit scores
  • Available in all provinces

DucaFrom 6.9% (new car loan rate)Typically 1-5 years
  • Credit union serving Ontario
  • Book an appointment to check your rate
Learn more
Kawartha Credit Union7.99% (cars 5 years old or newer)Up to 5 years
  • Credit union serving Ontario
  • Apply online to get your rate
Learn more
VancityFrom 7.95% - 8.95% (electric vehicle rate)Up to 10 years
  • Credit union serving BC
  • Apply online to get your rate
Learn more
NLCU5.65% - 7.95% (new and used car loan rate)Typically 3-8 years (new), 3-5 years (used)
  • Credit union serving Newfoundland and Labrador
  • Apply online to get your rate
Learn more
WFCU6.99% (new car loan rate)Up to 4 - 8 years depending on the car's year
  • Credit union serving Ontario
  • Book an appointment to check your rate
Learn more
Libro Credit UnionFrom 7.79% (for vehicles up to 3 years old)1 - 7 years
  • Credit union serving Ontario
  • Book an appointment to check your rate
Learn more

Bank car loan rates in Canada

BankTypical interest rateLoan termMin. credit score
TD Canada Trust6.99% - 9.99% (new and used car loan rate)Up to 8 yearsTypically 650 or aboveLearn more
RBC7% - 11% (new and used car loan rate)1 – 8 yearsTypically 650 or aboveLearn more
ScotiabankTypically 8% (new and used car loan rate)Up to 8 yearsTypically 650 or aboveLearn more
BMO9% - 13% (new and used car loan rate)1 - 10 yearsTypically 650 or aboveLearn more
CIBC6% - 9.9% (6% – 7% for new cars, 8% – 9.9% for used cars)1 – 8 years600 – 635Learn more

In most cases, you’ll be able to apply for a car loan from a bank either at the dealership or at a bank branch. It’s a general rule for most banks that you’ll get lower car loan rates by applying at dealerships instead of at the bank.

You can also expect to get lower car loan rates from banks for new cars as opposed to used cars.

If you want to apply for financing from a particular bank at the dealership, just check with the dealership beforehand to make sure they’ve partnered with that bank.

Just keep in mind that as of October 2023, BMO is no longer offering auto loans through dealerships. Instead, if you want to apply for a BMO car loan, you have to go to a BMO bank branch and apply for an unsecured personal vehicle loan.

Which bank has the best car loan rates in Canada?

According to our research of the Big 5 Banks in Canada, CIBC offers the best car loan rate with APRs around 6% - 9.9%, followed by TD Bank (6.99% - 9.99%) and RBC (7% - 11%). That said, only people with an excellent credit score and solid financial profile can qualify for the lowest rates from banks.

How car loan interest rates in Canada have changed recently

According to Statistics Canada data, the average car loan interest rate has increased from 4.94% in December 2019 to 8.21% in December 2023 — an increase of 3.27 percentage points in just four years. Although rates dropped briefly during the pandemic, they rose sharply afterwards.

The good news is that average car loan interest rates appear to be dropping so far in 2024.

The rise of car loan interest rates

In 2022, car loan interest rates in Canada increased in tandem with the rate increases applied to each lender’s prime rate. As a result, the average car loan rate increased rapidly in 2022, increasing by 2.80 percentage points by the end of the year.

In comparison, the average car loan interest rate increase was only half a percentage point between 2017 and 2021 — with a 0.91 percentage point drop in the average car loan interest rate in 2020 alone. In 2023, the average car loan rate increased by a more modest 0.18 percentage points.

Car loan interest rates in 2023 and 2024

Given the rapid increase in interest rates in 2022, most car buyers were cautious about the ongoing rising cost for purchasing a new or used vehicle using a car loan in Canada. On January 25, 2023, Canada’s central bank again raised rates, but this time it came with a message: Rate hikes would be paused, in the near future, to assess the impact of the rapid rate hikes over the last 12 months.

The BoC held steady in the rate announcements on March 8 and April 12, 2023, but it raised the rate by a quarter of a percentage point on June 7 and again on July 12. That rate was then held throughout the fall of 2023.

On January 24, 2024, the BoC held the rate steady yet again, and stated that inflation rates are expected to slowly decrease and reach central bank targets in 2025.

Finally, on June 5, 2024 the BoC lowered its target for the overnight rate. For new and used vehicle shoppers, this means car loan interest in Canada may stay steady or go down for the remainder of 2024.

How many Canadians plan to get a car loan in 2023

Recent data from the Finder: Consumer Sentiment Survey Q3, shows that 8% of respondents plan to take out a car loan in the next three months.

To help keep costs low, Canadians will need to compare the car loans from various lenders, in order to find an auto loan with a good interest rate and competitive terms.

What is a good interest rate on a car loan in Canada?

While fluctuations in the prime rate will influence the interest rate on an auto loan, lenders also use a variety of other factors to set their car loan interest rates, including the borrower’s credit score, loan term, loan amount, and the current, competitive landscape.

As a result, a good interest rate on a car loan in Canada, is a rate that is equal or near the current national average car loan rate of 7.89%.

New car loan rates

If you have good credit, then new car loan rates are typically 0% - 7.5% depending on the make and model.

Used car loan rates

Used car loan rates in Canada are typically higher, and currently fall between 8% - 10%.

Bad credit car loan rates

Car loans for bad credit are higher because lenders take on more risk. Bad credit auto loan rates are typically between 14% – 29.99%.

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 usually 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. However, you may want to get car loan pre-approval first before you visit a dealership so you have more negotiating power.

Car loan interest rates from popular car brands in Canada

Car manufacturers in Canada offer their own financing programs. Keep in mind that some car brand offers are based on region, and that you may not qualify for a manufacturer’s advertised car loan interest rates because of factors like your credit score and income.

BrandLowest-rate finance deal (APR)Vehicle & loan term
Ford0%2023 F-150 Lightning, on select models (up to 72 months)
GMC0%2024 Sierra 1500, on Pro and Elevation models (up to 60 months)
Chevrolet0%2024 Silverado 1500, on select trims (up to 60 months)
Ford0.99%2024 Bronco, on most models (up to 60 months)
Ford0.99%2024 Escape (up to 60 months)
Volkswagen0.99%2024 ID.4 (36 months)
Cadillac0.99%2024 LYRIQ (up to 36 months)
Cadillac0.99%2024 CT5 (up to 36 months)
Subaru1.49%2024 Solterra (24 months)
Volkswagen1.49%2024 Tiguan (24 months)
Mazda1.9%2024 CX-90 GS-L (up to 36 months)
Volkswagen1.99%2024 Taos (24 months)
Audi2.48%2024 Audi Q5 (60 months)
Nissan2.49%2024 Pathfinder (24 months)
Chevrolet2.99%2024 Malibu (up to 48 months)
Jeep2.99%2023 Grand Cherokee 4xe PHEV Overland (72 months)
Mitsubishi2.99%2024 Mirage (term length not disclosed)
Volkswagen2.99%2024 Jetta (24 months)
Subaru3.49%2024 Impreza (24 months)
Land Rover3.49%2024 Defender 110 S (P300) (84 months)
Ram3.86%2024 Ram 1500 Tradesman (60 months)

Offers last verified on June 4, 2024 and expire either on June 30, 2024 or July 2, 2024 (where an expiration date is disclosed). Ford offers are valid through June 1-6 and June 26-July 2, 2024. Offers are on approved credit, vary by region and may have other conditions.

Online brokers

If you have a credit score below 660 and need help finding car loans for low credit scores, 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 fair or bad credit as higher risk. Compare online car loan options above.

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 bank or credit union options, check if their auto loan is secured or unsecured. Most auto loans from traditional lenders, like banks, are secured loans as these generally offer borrowers lower car loan interest rates.

A good place to start is online. The first option is to search for the bank page directly. For example, search “TD car loan rates” to find specific car loan rates offered by TD. Do this for every bank and credit union to get a list of the most competitive car loan rates.

Another option is to search for a bank’s car loan calculator. For instance, a CIBC customer should check out the CIBC car loan calculator to get an idea of current CIBC auto loan rates and terms. All big five banks offer a car loan calculator that also lets you examine their most competitive auto loan rates.

What are the bank car loan interest rates?

Banks do not disclose their car loan interest rates on their websites. However, to get an idea of bank car loan interest rates, download the TD Wheels app, which lets you browse new cars and financing offers. As of June 4, 2024, TD is offering the following car loan interest rates:

  • 2024 Toyota Corolla: 8.49% for 24 – 72 months, 8.99% for 84, 9.49% for 96 months
  • 2024 Honda Civic Sedan: 8.49% for 24 – 72 months, 8.99% for 84, 9.49% for 96 months
  • 2024 Chevrolet Malibu: 2.99% for 12-48 months, 4.49% for 60-72 months, 5.49% for 84 months
  • 2024 Cadillac CT5: 0.99% for 24-36 months, 1.99% for 48 months, 4.99% for 60-72 months, 5.49% for 84 months
  • 2024 BMW 3 Series 330e Plug-In Hybrid: 8.49% for 24 – 72 months, 8.99% for 84, 9.49% for 96 months
  • 2024 Hyundai Sonata: 8.49% for 24 – 72 months, 8.99% for 84, 9.49% for 96 months

Where Canadians plan to buy their new vehicle

In the recent Finder: Consumer Sentiment Survey Q2 2023 report, where 1,011 Canadians were asked where they planned to buy their next vehicle, the majority of Canadians confirmed that a used or new car dealership was still the preferred place to purchase their next vehicle. However, a larger number of Canadians are becoming more comfortable with the online car-buying process.

How are car loan interest rates calculated?

Most borrowers focus on the prime rate, but lenders use a range of factors to set their car loan interest rates, with risk assessment and market conditions being among the most important factors.

In general, each lender will use five criteria to set their car loan interest rates:

Risk assessment: Banks and car loan lenders assess the risk of lending to an individual based on their credit score, income, employment history, and other financial factors. Borrowers with higher credit scores and more stable financial situations are generally seen as lower risk and may be offered lower car loan interest rates.

Loan term: Car loan lenders may offer different interest rates based on the length of the loan term. Most lender will offer their most competitive car loan interest rate with a term that helps them reduce risk and maximize earnings.

Competitive landscape: Lenders will use the prime rate to establish a baseline but may choose to adjust their car loan interest rates based on the competitive landscape. As a result, a lender may lower their rates to remain competitive or increase rates if they are no longer interested in attracting business for a certain loan type or in a specific region of the country.

Market conditions: Interest rates can also be influenced by broader market conditions, such as inflation, economic growth, and government policies. Banks and lenders may adjust their interest rates in response to these factors to manage their own risks and ensure profitability.

Loan amount: The loan amount may also impact the interest rate, with larger loans or secured loans offered at potentially lower interest rates.

Knowing how or why car loan interest rates change helps borrowers to negotiate with lenders to try to secure lower interest rates. Even in a volatile economic environment, borrowers with a strong credit score and secure financial situation should negotiate.

Factors that impact car loan interest rates

There are seven main factors that lenders will use to assess your application and to determine what car loan interest rate to offer.

FactorDescription
Credit scoreHigher credit scores = lower car loan interest rates
Loan termShorter loan terms = less interest paid
Type of carNew vehicle / Preferred make or model = lower car loan interest rates
IncomeStable income = lower car loan interest rates
DebtLower debt ratios = lower car loan interest rates
Down paymentLarger down payments = lower car loan interest rates
Type of loanA fixed-rate loan is typically offered at a higher interest rate
  • 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.
  • Loan term. Car loan terms can range from two to eight years or more. The loan term impacts the interest rate that you’re offered and the total cost of the loan. In general, shorter loan terms will correspond with lower car loan interest rates. That’s because lenders see longer loan terms as more risky. Even if a lender does offer you a lower interest rate on a longer loan term, you won’t necessarily save money since you’ll pay more interest over time.
  • Type of vehicle. Your vehicle’s make and model can also play a role in 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.
  • Income and debt ratios. 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. Online lenders typically require a minimum monthly income between $1,500 and $2,200 to qualify for a car loan. Of course, you’ll have a greater chance of being approved and may be offered lower interest rates if your income is higher.
  • Type of loan. 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.

Example: Impact of credit score on car loan interest rates

The following example illustrates how your credit score will influence what car loan interest rate a lender will offer you, and how this will impact the total cost of buying a car. To illustrate, we assume the purchase is for a new vehicle with a purchase price of $26,000 and a loan term of five years. These calculations also factor in 13% provincial sales tax and a 20% down payment (of $5,200).

Credit ratingCredit scoreInterest rateMonthly paymentTotal interest paid
Excellent760 to 9005.39%$461$3,458
Very good725 to 7595.99%$467$3,861
Good660 to 7246.20%$470$4,003
Fair560 to 6599.90%$513$6,574
Poor300 to 55914.99%$575$10,327

Note: The information above is for illustrative purposes only and does not take into account all of the factors lenders consider when evaluating a loan application. Actual lenders may charge different interest rates.

Car loan calculator: How car loan interest rates impact your total cost

The cost of your auto loan will depend on your loan amount, car loan interest rate and loan term. You can use this car loan payment calculator to find out how these factors affect your monthly payments and total interest charged.

Car loan monthly calculator

Calculate how much you could expect to pay each month
Your loan
Loan amount
$
Loan terms (in years)
Interest rate
%

Fill out the form and click on “Calculate” to see your estimated monthly payment.

or

Compare car loans now
You can expect to pay back $ per month
Based on your loan terms
Principal $
Interest $
Total Cost $

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.

Survey methodology

The results of the Finder: Consumer Sentiment Survey Q3 (CSTQ3) were collected through an online Pollfish survey conducted between August 10 to 21, 2023. In the survey, 1,013 Canadians from across the country were asked about their current debt obligations, among other questions regarding money goals and financial confidence. The estimated margin of error for the survey is +/- 3%, 90% of the time.

The results of the Finder: Consumer Sentiment Survey Q2 were collected through an online Pollfish survey conducted between April 27 and April 29, 2023. In the survey, 1,011 Canadians from across the country were asked about their opinions and plans regarding the purchase of a vehicle and the use of vehicle financing. The estimated margin of error for the survey is +/- 3%, 19 out of 20 times.

Bottom line

To get the best car loan interest rates in Canada, you’ll need to have an excellent credit score, enough income 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. Compare car loans now.

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 loan refinancing.

Frequently asked questions about car loan rates

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