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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 7.61%.

Did you know?
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 can expect to pay anywhere between 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

Loan providerInterest rateLoan termEligibility requirements
Loans Canada0.99% - 46.96% (new and used car loan rate)3 - 60 monthsMin. income of $1,800 /month, 3+ months employedGo to site
CarsFast3.90% - 29.90% (new and used car loan rate)12 - 96 monthsMin. income of $2,000 /month, 3+ months employedGo to site
ClutchFrom 8.49% (used car loan rate)12 - 96 months3+ months employed, Max.1 bankruptcy, Ontario & Nova Scotia onlyGo to site
Drive Away3.90% - 29.99% (new and used car loan rate)12 - 96 monthsMin. income of $2,500 /month, employedGo to site
Canada Auto Finance

4.90% - 29.95% (new and used car loan rate)3 - 96 monthsMin. income of $1,500 /month, 3+ months employedGo to site

6.99% - 46.96% (new and used car loan rate)72 - 84 monthsNo min. income requirementGo to site
DucaFrom 6.9% (new car loan rate)1 - 5 yearsNot disclosedLearn more
Kawartha Credit Union7.99% (cars 5 years old or newer)Up to 5 yearsNot disclosedLearn more

(Newfoundland and Labrador Credit Union)

5.50% - 7.80% (new and used car loan rate)3 - 8 years for new, 3 - 5 years for usedNot disclosedLearn more
WFCU credit union6.99% (new car loan rate)Up to 4 - 8 years depending on the car's yearNot disclosedLearn more

How car loan interest rates in Canada have changed in the last 3 years

According to Statistics Canada data, the average car loan interest rate has increased from 4.27% in June 2020 to 7.61% in June 2023 — an increase of 3.34 percentage points in three years.

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 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.

Car loan interest rates in 2023

Given the rapid increase in interest rates in 2022, most car buyers are cautious about the ongoing rising cost for purchasing a new or use vehicle using a car loan in Canada. In 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, but it raised the rate by a quarter of a percentage point on June 7 and again on July 12. For new and used vehicle shoppers, this meant an increase in car loan interest rates in Canada.

How many Canadians plan to get a car loan in 2023

Recent data from the Finder: Consumer Sentiment Survey Q2, shows that 15% 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 7.61%.

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:


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.

BrandStarting low rate finance deal (APR)Vehicle & loan term
Chevrolet0.99%2023 Silverado 1500, offer excludes ZR2 and High Country Trims (up to 60 months)
GMC0.99%2023 Sierra 1500, offer excludes AT4X, Denali and Denali Ultimate Trims (up to 60 months)
Ford1.99%2023 Escape (up to 60 months)
Ford2.99%2024 Edge (up to 72 months)
Ford2.99%2023 Mustang (up to 72 months)
Mitsubishi2.99%2024 and 2023 Eclipse Cross (loan terms not disclosed)
Mitsubishi2.99%2023 Mirage (loan terms not disclosed)
Audi3.48%2023 A4 (60 months)
Subaru3.49%2023 Forester (24 months)
Cadillac3.49%2023 CT4 (up to 36 months)
Cadillac3.49%2023 CT5 (up to 36 months)
Audi3.98%2023 A5 Coupé (60 months)
Audi3.98%2023 Q7 (60 months)
Volvo3.99%2023 XC90 (60 months)
Volvo3.99%2023 XC40 (60 months)

Offers last verified on Sept. 1, 2023 and expire at the end of the month. 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 at September 1, 2023, TD is showing the following car loan interest rates:

  • Toyota Corolla: 8.49% for 24 – 72 months, 8.99% for 84 months and 9.49% for 96 months
  • Honda Civic Sedan: 8.49% for 24 – 72 months, 8.99% for 84 months and 9.49% for 96 months
  • Chevrolet Bolt EV: 5.99% for 12 – 84 months
  • Ford F-150: 8.49% for 12 – 72 months, 8.99% for 84 months, 9.49% for 96 months

Where Canadians plan to buy their new vehicle

In the recent Finder: Consumer Sentiment Tracker 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.

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 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.

Case study: 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.


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.

0% financing on cars

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 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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