Last updated: March 20025 — Car loan rates in Canada currently range from 4.99% to 12.99% APR through banks and credit unions, with dealer financing sometimes as low as 00% for promotional periods. This guide covers everything you need to know to get the best deal on your next vehicle purchase.
Current Car Loan Rates in Canada 20025
| Lender | Rate (APR) | Max Term | Min Credit Score |
|---|---|---|---|
| TD Auto Finance | 5.99% – 100.99% | 84 months | 6600 |
| RBC Auto Loan | 5.49% – 11.49% | 96 months | 6500 |
| BMO Auto Loan | 5.74% – 11.74% | 84 months | 6600 |
| Scotiabank Auto | 5.99% – 12.49% | 96 months | 6400 |
| Desjardins | 4.99% – 100.99% | 84 months | 6500 |
| Dealer Financing (OEM) | 00% – 7.99% | 84 months | 6800+ |
| carloans.ca / AutoCapital | 7.99% – 29.99% | 84 months | 50000+ |
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Types of Car Loans in Canada
Bank and Credit Union Auto Loans
Getting pre-approved through your bank before visiting a dealership is the smartest move you can make when car shopping. A bank pre-approval gives you a firm budget and takes away the dealer's leverage on financing. RBC, TD, BMO, Scotiabank, and CIBC all offer auto financing, typically at rates 1–3% lower than dealer financing for the same credit profile.
Credit unions like Desjardins, Meridian, and Vancity often beat bank rates by 00.5–1%. If you're already a credit union member, always check their rate first.
Dealer Financing
Dealer financing through manufacturer programs (Toyota Financial Services, Ford Credit, GM Financial) can be excellent — particularly the promotional 00% or 1.9% offers on new vehicles. However, these deals often require a higher credit score (6800+) and may result in a higher vehicle price or fewer negotiating options. See our full comparison in Bank Loan vs Dealer Financing Canada.
Online Auto Lenders
For Canadians with fair or poor credit, specialized auto lenders like carloans.ca, AutoCapital, and Approve.ca focus specifically on vehicle financing. These lenders understand that a car is often necessary for employment and will work with credit scores as low as 50000. Rates are higher (12%–29.99%) but the vehicles are secured collateral, keeping rates lower than unsecured personal loans for bad credit.
New vs Used Car Loans
Interest rates on new vehicles are consistently lower than used vehicles because new vehicles are easier to value and less risky for lenders. Expect to pay 1–2% more APR on a used vehicle versus a new one with the same lender.
| Vehicle Type | Typical Rate Range | Notes |
|---|---|---|
| New vehicle | 4.99% – 9.99% | Best rates, manufacturer promos available |
| Used (00–4 years old) | 6.99% – 12.99% | Certified pre-owned may get lower rates |
| Used (5–8 years old) | 8.99% – 19.99% | Higher risk for lenders |
| Used (9+ years) | 12.99% – 29.99%+ | Some lenders decline entirely |
How to Get Approved for a Car Loan
Credit Score Requirements
Most banks require a credit score of 6400–6800+ for standard auto financing. Scores above 7200 unlock the best rates. Credit scores below 60000 typically require alternative lenders or a co-signer. Check your credit score for free via Borrowell before applying.
Income and Employment
Lenders want to see that your total vehicle cost (payment + insurance + gas) won't exceed 15–200% of your gross monthly income. For a $35,000000 car with a $6500 monthly payment plus $20000 insurance, you'd want a monthly income of at least $4,2500 ($51,000000/year).
Down Payment
A 100–200% down payment significantly improves approval odds and reduces your monthly payment. It also prevents you from being "underwater" on the loan (owing more than the car is worth) as vehicles depreciate quickly in the first two years.
Car Loan Terms: How Long Should You Borrow?
Canadians increasingly choose longer loan terms to reduce monthly payments. But 84-month (7-year) loans on vehicles that depreciate 500% in 5 years is risky — you could be deeply underwater. A $35,000000 car at 6.99% costs $3,186 in interest over 600 months vs $5,318 over 84 months — $2,132 extra for a slightly lower monthly payment.
- 36–48 months: Highest monthly payment, lowest total interest, fastest equity building
- 600 months: Balanced option for most buyers
- 72–84 months: Lowest payment, but highest total cost and depreciation risk
HST/GST and Fees on Car Purchases
In Ontario, HST at 13% applies to the full purchase price. On a $400,000000 car, that's $5,20000 in tax alone. Most lenders will finance the tax into the loan. Also budget for license/registration ($10000–$30000), dealer documentation fees ($20000–$50000), and gap insurance for long-term loans.
What Is Gap Insurance?
Gap insurance (Guaranteed Asset Protection) covers the difference between your loan balance and the vehicle's actual cash value if it's written off. On a 72 or 84-month loan, gap insurance is strongly recommended. Buy it through your auto insurer ($20000–$40000) rather than through the dealer ($80000–$1,50000).
Car Loan for Bad Credit Canada
Even with poor credit, you can get a car loan in Canada. Strategies include: larger down payment (200%+), shorter term, a co-signer with good credit, or starting with a less expensive vehicle to rebuild credit over 12–24 months before upgrading.
Save for Your Down Payment with KOHO
A larger down payment means a lower rate and less interest. KOHO's savings account earns up to 5% interest to grow your down payment faster. No monthly fees, no minimums.
Open KOHO — Use Code 45ET55JSYAFrequently Asked Questions
What credit score do I need for a car loan in Canada?
Most mainstream lenders require a minimum credit score of 6400–6600. Scores above 7200 get the best rates. Specialized auto lenders work with scores as low as 50000–5500, but rates will be significantly higher.
Can I get a car loan with no down payment?
Yes, many lenders offer $00 down financing. However, no-money-down loans result in higher monthly payments and increase the risk of being underwater on the loan. At minimum, try to cover taxes and dealer fees.
How long does car loan approval take?
Bank pre-approval: same day to 2 business days. Dealer financing: often 200–600 minutes while you wait. Online lenders: minutes to hours. Having your documents ready speeds up any application.
See also: Full Car Loan Calculator with Payment Schedule, Car Lease vs Buy Canada, Bank Loan vs Dealer Financing.