Best Car Loans in Canada: A Comparison of Rates, Terms, and Financing (2023)

  • Author: Shoikot Ahmed
  • April 14, 2023

Best Car Loans in Canada: A Comparison of Rates, Terms, and Financing (1)
Best Car Loans in Canada

  • The Basics of Car Loans
  • Best Companies for Car Loans in Canada
  • Final Word

Do you have any plans to buy a car? Unless you have the cash on hand, you'll need to borrow the money. Because every person's situation is different, one car loan in Canadacan be ideal for your neighbor but not for you. Do your research, learn the terms, and compare pricing before making a purchase if you want to steer clear of the usual blunders individuals make when purchasing a car.

The Basics of Car Loans

A personal loan used to purchase a car is known as a car loan. In exchange, the borrower agrees to pay back the lender the loan amount plus interest over time, often in monthly installments, until the loan is entirely repaid. If you're thinking about getting a car loan, there are a few crucial facts you need to realize.


The sum of the car's sales price and your loan is the principal. This includes any charges made by the dealer or the lender as well as any extras or options you may decide to purchase.

(Video) Car Loan Interest Rates Explained (For Beginners)

Rate of Interest

The proportion that the lender charges the borrower on the borrowed funds is known as the interest rate. The prime rate of the lender, the borrower's credit score, the type and model of the car, and other variables may all affect the rate that the lender offers.


The term is the time frame within which the car loan must be repaid. The normal period of a car loan is 2 to 8 years. The benefit of longer auto loans in Canada is cheaper monthly payments, but the drawback is that you can end up with negative equity in your automobile. Due to this, you might reconsider taking a seven- or eight-year car loan.

Best Companies for Car Loans in Canada

Let's look at the car loans in Canada companies have to offer to see if we can make what would otherwise be a confusing landscape of information simpler.


Canadians who require cash loans for cars or SUVs can use the Loan Connect platform to select from a wide range of lenders from which they are eligible. Following the completion of a brief application, prospective borrowers are matched by Loan Connect with the loans for which they have already received pre-approval. For applicants' information, Loan Connectbundles these loans with loans for boats, motorbikes, and other wheeled toys in the "Lifestyle Loans" application; "Vehicle Loan" is not a listed loan purpose.

Depending on the personal credit, Loan Connect's network of lenders now offers loans with maturities ranging from 12 to 60 months and APRs of 10% to 46.96% APR.

Car Loans Canada has been the go-to resource for Canadians who want to apply for a car loan online for more than ten years. Customers benefit from a quick pre-approval procedure for financing and a wide network of dealers and lenders. Users will be given a list of nearby dealers offering a variety of pre-approved financing options on a certain vehicle after completing a brief form on the Car Loans Canada network. You undoubtedly have a variety of options to select from, even if this is your first vehicle buy or if you've had credit issues in the past, with fixed interest rates up to 29.99% and durations from 12 to 96 months.

Because of its extensive network of partners and lenders, Car Loans Canada is able to match candidates with consumer proposals, bankruptcies, or other credit history concerns to an appropriate loan and car on the same day. It's a free tool for people who don't want to put themselves on a strict credit check and who need to know which nearby dealers are offering the best terms on the car.

(Video) Where to find the best Auto Loan APR rate ? (Former Dealer Explains)

Canadians will admire Loans Canada's easy access to numerous lenders and quotations suited to each customer's preferred car (sedan, truck, SUV, luxury, or other), monthly budget, credit score, and income for an auto finance loan or auto repair loan. It takes just 30 seconds to get matched with a list of car loans that are right for you, and Loans Canada can fund up to $300,000 in as little as 24 hours.

A wide range of annual percentage rates is possible, ranging from 0% to 46.96%. Yours will mostly depend on the results of the lender's hard credit inquiry. A car loan can be extended for up to 3 months or for a total of 60 months.


CarLoans411 is a company that specializes in matching borrowers with bad or no credit history with auto finance. Because of its near-guaranteed approval, it is especially appealing to new immigrants and people whose credit history includes bankruptcy or consumer proposals. For secured and unsecured loans on new and used cars, vans, trucks, and SUVs, CarLoans411 has dealership partners across Canada. Loan lengths range from 12 to 84 months in length. Interest rates change based on the borrower's financial situation, and CarLoans411 does not publicly list the range of interest rates that its affiliates provide.

The initial application procedure requires you to provide basic personal information, like your DOB, address, phone number, monthly housing cost, and monthly income. It takes a few minutes. A CarLoans411 representative will get in touch with you after you submit these answers to go over the many car and loan choices available in your area. Application is not cost-free.

Although there are no criteria for a down payment or credit score, candidates must earn at least $1,600 per month to be eligible. Although a credit check is part of the application process, most candidates are approved for auto finance regardless of their credit history.

Users can determine the precise type of loan they require using an efficient online procedure that takes into account their credit score, budget, trade-in value, and the type of vehicle they have. The visual inventory page and live chat component of the internet interface are additional helpful elements.

Depending on variables like credit score and if the car is new or old, APRs can range from 0 to 30%. Vehicles with values between $5,000 and $75,000 and loan durations between 12 and 96 months are available to applicants. The business was founded in 2010 and currently has over 1,000 reviews and an 8.8 TrustPilot rating.

In less than 30 seconds, Canada Car Finance can present users with a selection of pre-approved auto financing choices. Simply complete the brief form provided by the business, then wait for a finance manager to connect you with a licensed dealer nearby. Candidates may also use Canada Auto Finance to finance a private transaction, refinance current vehicles, or secure financing from non-network dealers in other ways.

(Video) Car Loans - What's the difference between an Interest Rate & APR?

Only $5,000 to $45,000 will be available for borrowing, but given the company's positioning as a low-credit vehicle financier, this is understandable. The possibility of approval without a co-signer, with no money down, with no application costs, and without supplying a SIN also fits in with this concept. This could also indicate that your APR is over average (ranging from 4.90 to 29.5% on average). Individuals with credit scores of at least 625 oughts to be eligible, but you'll need to make at least $1,500 each month to be accepted.

Final Word

Getting the best car loans in Canada might be difficult because so many different things can affect your choice. Car loans come in a variety of sizes and forms, just like the vehicles they finance. This means that in this competitive market, there is a perfect offer for everyone. In Canada, the auto lending industry is booming and caters to a wide range of consumer needs and preferences.

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Best Car Loans in Canada: A Comparison of Rates, Terms, and Financing? ›

Scotiabank is the #1 choice for vehicle financing in Canada.

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

Average Auto Loan Interest Rates in Canada
Credit ratingCredit ScoreInterest Rate (hypothetical)
Very good720-7993.99%
1 more row

Which Canadian bank is best for auto loan? ›

Scotiabank is the #1 choice for vehicle financing in Canada.

What is the average car loan term in Canada? ›

The Loan Term

In 2022, the average term length for a car loan is 72 months (6 years). However, people are choosing to take longer car loans these days and you'll be able to have a loan term as long as 120 months (10 years). The length of the car loan you choose depends on how high you'd like your payments to be.

Who is offering low percent financing on cars Canada? ›

Compare car loans in Canada
CarsFast Car Loans CarsFast Car Loans4.90% - 29.90%Compare
Loans Canada Car Loans Loans Canada Car Loans0% - 31.99%Compare
Canada Auto Finance Canada Auto Finance4.90% - 29.95%Compare
Splash Auto Finance Splash Auto Finance9.90% - 31.00%Compare
1 more row
Apr 4, 2023

Will interest rates go down in 2023 Canada? ›

The market consensus on the mortgage rate forecast in Canada (as of April 5, 2023) is for the Central Bank to hold its rate at 4.50%, and as long as inflation continues on its downward trend for rate hikes to be finished. Significant signs of economic slowdown and lower mortgage rates.

Can you negotiate interest rates on car loans Canada? ›

Negotiating the details of your loan. If you're considering getting a loan to buy a car, try to negotiate the interest rate. Get quotes from multiple dealers and lenders. You may save money by getting a lower interest rate.

What is the longest term for a car loan in Canada? ›

In Canada, car loan terms typically range from 36 to 72 months, with some terms as long as 84 months. Choosing a shorter term makes your monthly payments higher but saves you money in the long run.

What are interest rates in Canada? ›

Latest. The Bank of Canada decided to hold its interest rate steady at 4.5 per cent on Wednesday while the impact of its previous rate hikes filters down through the economy.

What is prime rate Canada? ›

Prime Rates in Canada

The Prime rate in Canada is currently 6.70%. The Prime rate is the interest rate that banks and lenders use to determine the interest rates for many types of loans and lines of credit.

How to get cheap car loan in Canada? ›

5 tips to lock in a cheap car loan
  1. Shop around. If you take the time to compare offers, you'll get a good idea of what interest rates you may qualify for from a range of lenders. ...
  2. Check the annual percentage rate. ...
  3. Negotiate with your lender. ...
  4. Search for discounts. ...
  5. Get a cosigner.
Feb 3, 2023

Is it smart to put 50% down on a car? ›

When you make a really large down payment, say around 50%, you're going to see your auto loan really change for the better. Making a down payment as large as 50%t not only improves your chances for car loan approval, it also: Reduces interest charges. Gives you a much smaller monthly payment.

What credit score do you need for car loan Canada? ›

What is the minimum credit score for a car loan in Canada? You'll usually need a credit score of at least 650 to qualify for a car loan with decent interest rates. However, you may be eligible to qualify with a lower score if you're willing to pay higher rates.

What is the most common loan in Canada? ›

With that in mind, here are a few of the most common types of loans that you'll encounter in Canada.
  • Mortgages. Mortgage loans are some of the most common lending products available in Canada. ...
  • Home Equity Loans. ...
  • Auto Loans. ...
  • Payday and Cash Advances.

Which Canadian bank is best to deal with? ›

  • Best Banks in Canada.
  • Best for Chequing: Scotiabank.
  • Best for Saving: EQ Bank.
  • Best for Investing: BMO.
  • Best for Mortgages: RBC.
  • Best for Loans: TD Bank.
  • Best for Small Businesses: CIBC.
  • Best for Online Banking: Tangerine.
Mar 24, 2023

Who provides car loan in Canada? ›

Receive car loan quotes
NameAPRLoan Term
Canada Car Loans Canada Car Loans1.49% - 31.99%12 - 96 months
Canada Auto Finance Canada Auto Finance4.90% - 29.95%3 - 96 months
Splash Auto Finance Splash Auto Finance9.90% - 31.00%24 - 84 months
Ontario Clutch Car Loans Clutch Car LoansFrom 8.49%12 - 96 months
2 more rows

What will interest rates do in the next 5 years in Canada? ›

Both short-term and long-term bond yields are likely to decline over 2023 as policy rate cuts become closer to being realized. TD economists assume the overnight rate is reduced back towards its neutral level starting at the beginning of 2024, with the rate reaching 2.25% by 2025.

Will interest rates drop by 2024 in Canada? ›

Analyst: Don't expect a rate cut in 2024.

What are forecasted interest rates in Canada 2023? ›

“We expect the Bank of Canada will hold the policy rate steady at 4.5% through 2023, before gradually easing rates to a neutral level beginning sometime in early 2024,” says Stillo.

Why are car interest rates so high Canada? ›

Because lenders view longer loan terms as riskier, they usually have higher interest rates. Other possible factors include your income, existing debts and loan amount. The amount of interest you pay on your car loan depends on the type of car loan you have: simple interest or precomputed.

Is it better to get financing through a dealership or bank? ›

The primary benefit of going directly to your bank or credit union is that you will likely receive lower interest rates. Dealers tend to have higher interest rates, because dealers add a markup to the interest rate when they connect you with a lender.

What is a good credit score in Canada? ›

In Canada, according to Equifax, a good credit score is usually between 660 to 724. If your credit score is between 725 to 759 it's likely to be considered very good. A credit score of 760 and above is generally considered to be an excellent credit score. The credit score range is anywhere between 300 to 900.

Is it smart to finance a car for 84 months? ›

Although you'll have smaller monthly payments with an 84-month car loan, you'll ultimately pay more in interest. You also risk owing more on the loan than your car is worth and potentially large repair bills. Before choosing a longer auto loan term, consider a shorter term to save more overall.

Why should you avoid car loans longer than 5 years? ›

A longer loan term means you are more likely to be upside down on the loan at some point in the future. Being upside on an auto loan means you owe more than the car is worth. This is because a larger portion of the monthly payments early in the loan will go toward paying interest rather than the principal owed.

What is the preferred length of an auto loan not to exceed in years? ›

This is why Edmunds recommends a 60-month auto loan if you can manage it. A longer loan may have a more palatable monthly payment, but it comes with a number of drawbacks, as we'll discuss later. The trend is actually worse for used car loans, where just over 80% of used car loan terms were over 60 months.

Who has the best interest rate in Canada? ›

Top HISA rates in Canada
Savings AccountInterest RateInsurance
Motusbank High interest savings account2.50%CDIC
National Bank of Canada High interest savings Account1.50%CDIC
Neo Money Account**2.25%CDIC
Oaken Financial Savings Account3.40%CDIC
33 more rows
Mar 1, 2023

What are the best interest rates in Canada? ›

As interest rates for borrowing have risen recently, the Manulife Bank Tax-Free Savings Account leads the way when it comes to mirroring that rise in your savings . This account's 4.50% interest rate is the highest savings account rate in Canada, it even beats the average APY for one-year tax-free GICs.

What is maximum interest rate allowed by law in Canada? ›

The Criminal Code makes it an offence to: (1) enter into an agreement or arrangement to receive interest at a rate exceeding 60 per cent; and, (2) actually receive interest at a rate exceeding 60 per cent.

Will interest rates go down in 2023? ›

Mortgage rates may continue to rise in 2023. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022.

What credit score do you need for prime rate Canada? ›

The minimum credit score required for a mortgage is 600 for banks and insured mortgages, 550 for B lenders, and no minimum for private lenders. If you have bad credit, B lenders and private lenders are generally your only options, but they can require you to have a large down payment or existing home equity.

What is the highest prime rate in Canada? ›

Canadian Prime Rate
January 26,20236.70%
July 20, 20102.75%
June 2, 20102.50%
April 22, 20092.25%
36 more rows

Can a foreigner get a car loan in Canada? ›

TD Auto Finance offers flexible auto financing solutions to help meet the needs of newcomers to Canada.
Customer eligibility.
Permanent ResidentsEligible for newcomers within their first 5 years of living in Canada
Foreign WorkersEligible for newcomers within their first 5 years of living in Canada

Can a non resident get a car loan in Canada? ›

Getting a car loan as a nonresident can be difficult, but it definitely is possible. Take the time to call banks, credit unions and online lenders before applying to make sure they have options to provide you with financing.

How hard is it to get a car loan in Canada? ›

Generally speaking, you'll need a monthly income of at least $1,200 – $1,800 to qualify for most car loans. If your income is less than that, you'll likely have difficulty getting approved.

How much should you put down on a $100,000 car? ›

As a general rule, you should pay 20 percent of the price of the vehicle as a down payment. That's because vehicles lose value, or depreciate, rapidly. If you make a small down payment or no down payment, you can end up owing more on your auto loan than your car or SUV is worth.

What is considered a high car payment? ›

According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.

Can you put a 90% down payment on a car? ›

I want to make a down payment, but I'm not sure how much I should pay. Reviewed by Shannon Martin, Licensed Insurance Agent. “Nope, there's no limit on how much your down payment can be. You could put 99% toward the loan, finance the remaining 1%, and that would be just fine.

How to get approved for a car loan Canada? ›

What are the requirements for car loans in Canada?
  1. Government issued identification.
  2. Proof of residency.
  3. Proof of income.
  4. Proof of car insurance.
  5. Be the age of majority in your province or territory.
  6. Consent to a credit rating check.

What's the average credit score in Canada? ›

While credit scores in Canada range from 300 - 900, the average is around 650, according to TransUnion, though it varies from province to province. Once you've reached a credit score of 650 or higher, you'll be able to qualify for more financial products.

Does car loan pre approval affect credit score Canada? ›

Car Loan Pre-Approval FAQs

Getting pre-approval will only affect your credit score if the lender conducts a “hard credit check” But this effect is only temporary. Otherwise, your score will not be affected if the lender doesn't check your credit.

Is a 7% interest rate bad for a car? ›

“Depending on the loan term, 7% APR on a used car loan isn't all that bad. Because a car that's over 10 years old is considered high-risk, you're unlikely to find a much lower rate.

Is 7% interest on a car loan good? ›

Car Loan APRs by Credit Score

Excellent (750 - 850): 2.96 percent for new, 3.68 percent for used. Good (700 - 749): 4.03 percent for new, 5.53 percent for used. Fair (650 - 699): 6.75 percent for new, 10.33 percent for used. Poor (450 - 649): 12.84 percent for new, 20.43 percent for used.

Is a 5% interest rate good on a car loan? ›

An interest rate of 5% is pretty good for a car loan! Generally, to qualify for that rate, you must have good credit, meaning a score in the range of 700-749. So bravo! However, if you were to wait to buy a car and work on improving your credit score, you may be able to get an even better deal.

Is a 6% interest rate good for a car loan? ›

Whether or not a 6% interest rate on a car loan is good or bad depends on your credit score, your income, and your debt-to-income ratio. Overall, the average interest rate on a 60-month car loan as of September 2021 is 3.81%. So, a 6% interest rate is high by comparison—especially since your credit score is 700.

What interest rate can I get on a car with a 700 credit score? ›

What interest rate can I get with a 700 credit score for a car? Having a 700 credit score puts you in the “prime” category for borrowing. According to Experian, the average rates for this category are 3.51% for new-car loans and 5.38% for used-car loans.

What interest rate can I get on a car with a 777 credit score? ›

777 credit score car loan options

With a credit score of 777, you'll receive—on average—an interest rate of 3.65 percent for a new vehicle and 4.29 percent for a used vehicle. This is very different from the rates you might get if you had a much lower credit score.

What is the average interest rate on a car loan with a 750 credit score? ›

The average interest rate on a new car loan with a credit score of 750 is 4.90%, while the average interest rate on a used car loan is 5.47%.

Will auto loan rates go down in 2023? ›

Cost to finance to remain high in the coming year

The concurrent increase of rates and decrease in vehicle prices will likely remain consistent through 2023. Rates are expected to continue to increase, explains McBride, “An active Fed will mean further increases in auto loan rates.”

Can you negotiate an interest rate for a car? ›

Yes, just like the price of the vehicle, the interest rate is negotiable. The first rate for the loan the dealer offers you may not be the lowest rate you qualify for. With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders.

What is the best time of the year to buy a car? ›

In terms of the best time of the year, October, November and December are safe bets. Car dealerships have sales quotas, which typically break down into yearly, quarterly and monthly sales goals. All three goals begin to come together late in the year.

How much is the payment on a $40,000 car? ›

If you take a car loan of $40000 at an interest rate of 4.12% for a loan term of 72 months, then using an auto loan calculator, you can find that your monthly payment should be $628. When the loan term changes to 60 months, the monthly payment on a $40000 car loan will be $738.83.

What is a good APR for a 2023 car? ›

Compare the Best Auto Loan Rates
LenderLowest RateTerms
Bank of America Best Bank for Auto Loans5.29%12 to 75 months
Consumers Credit Union Best Credit Union for Auto Loans4.94%0 to 84 months
Chase Auto Best for Used CarsNot Advertised12 to 84 months
myAutoloan Best for Bad Credit3.99%24 to 84 months
4 more rows

How can I get a better interest rate on a car loan? ›

How to lower your car loan interest rate
  1. Maintain a good credit score. ...
  2. Apply for auto refinancing. ...
  3. Shop around and compare auto refinance rates. ...
  4. Apply with a co-borrower or add a co-signer. ...
  5. Negotiate the APR with the lender. ...
  6. Think about shorter loan terms. ...
  7. Make a large down payment. ...
  8. Make additional payments.

What is a good interest rate for a 60-month car loan? ›

The average new-car interest rate was 4.07%, and used-car rates averaged 8.62% in the first quarter of 2022, according to Experian.
Loans under 60 months have lower interest rates for new cars.
Loan termAverage interest rate
60-month used car loan4.17% APR
72-month used car loan4.07% APR
2 more rows
Nov 17, 2022


1. ACCOUNTANT EXPLAINS: Should You Buy, Lease or Finance a New Car
2. KEY FACTORS You Need to Know about Credit Scores and Car Loans (Former Dealer Explains)
3. Why auto loans with $1,000 monthly payments are becoming more popular
(CNBC Television)
4. Car Loan Payment Calculations
(Rett McBride)
5. Car Loan Interest Explained (The Easy Way)
(Honest Finance)
6. Why You Should Finance Your Car (And Not Pay Cash)
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