Best Car Loan Rates in Canada 2025

With interest rates still elevated in 2025, finding the lowest car loan rate can save you thousands. We have compared rates from Canada's major banks, credit unions, and online auto lenders to help you shop smarter.

Best Car Loan Rates — Quick Comparison (2025)

Lender	New Car Rate	Used Car Rate	Best For
Credit Unions (avg) Best Rate	5.5–7.9%	6.9–10%	Members with good credit
RBC Royal Bank	7.19–8.99%	8.19–10.99%	RBC existing customers
TD Auto Finance	6.99–9.49%	8.49–11.99%	TD banking customers
BMO	7.25–9.25%	8.25–11.25%	BMO banking customers
Scotiabank	7.0–9.5%	8.5–12%	Scotia rewards customers
CIBC	7.19–9.49%	8.49–11.99%	CIBC banking customers
CarsFast / iA Auto Finance	6.9–11%	8.9–15%	Quick online pre-approval
Manufacturer (e.g., Honda, Toyota)	0–6.99% (promo)	N/A	New car buyers, promo periods

Rates as of early 2025. Actual rates depend on credit score, loan term, vehicle, and lender assessment.

Why Credit Unions Often Have the Best Rates

Credit unions are member-owned cooperatives, meaning profits are returned to members rather than shareholders. This typically translates to lower loan rates than the Big 5 banks. Top Canadian credit unions for auto loans include Meridian (Ontario), Desjardins (Quebec), Coast Capital Savings (BC), Affinity (Saskatchewan), and Servus (Alberta).

When Dealer Financing Wins

Manufacturer-subsidized financing can beat any bank or credit union rate. Automakers sometimes offer 0–1.99% on new models as a sales tool. Watch for these promotions, but note that low-rate offers often come with a higher vehicle price (no cash discount). You may have to choose between the low rate or a cash rebate — calculate both options.

Cash rebate vs. low rate? If a manufacturer offers $3,000 cash back OR 0% financing, calculate total interest on the regular rate with the cash discount applied. In many cases, the cash rebate wins — especially for longer loan terms.

How Your Credit Score Affects Your Rate

Credit Score Range	Rating	Typical Auto Loan Rate
760+	Excellent	5.5–7.5%
720–759	Very Good	6.5–8.5%
680–719	Good	7.5–10%
620–679	Fair	10–16%
Below 620	Poor	16–29.99%

How to Get the Best Car Loan Rate in Canada

Check your credit score first — Use Borrowell or Credit Karma Canada (free, no credit impact).
Get pre-approved by your bank or credit union before visiting a dealership.
Shop multiple lenders — Apply within a 14-day window and credit bureaus treat it as a single hard inquiry.
Increase your down payment — A larger down payment reduces lender risk and can improve your rate.
Opt for a shorter term — 48–60 months generally earns better rates than 72–84 months.
Consider a co-signer if your credit is below 680.

Online Auto Loan Lenders in Canada

Several online platforms allow you to get pre-approved quickly without visiting a branch: CarsFast, LoanConnect, iA Auto Finance, and Approve Canada. Online lenders are convenient but may have slightly higher rates than your bank or credit union. They are most useful when banks decline you or when you want a fast comparison.

Questions to Ask Before Signing Any Car Loan

What is the exact annual interest rate (APR)?
Are there any origination fees or documentation fees?
Is there a prepayment penalty if I pay off early?
Is the rate fixed or variable?

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Last updated: March 2025. Rates are indicative and change frequently. Always confirm current rates directly with lenders.