The Best Car Loan Rates in Canada to Get You Behind the Wheel

There’s no denying that having a car can save you both time that would otherwise be spent on public transportation and airline costs for continental travel. If that sounds like something you’d like, getting a car loan is one way to achieve it. However, as prices and interest rates rise, finding a decent bargain can be difficult, and you can easily get overwhelmed by all the options out there.

Fortunately, we’ve compiled a list of the best car loan rates Canada has to offer. Let’s get started and see why these lenders stand out!

Top 5 Car Lenders in Canada

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Loans Canada

Best lender network

  • Largest lender network
  • APRs as low as 2.99%
  • Quick and simple online application
  • Rent-to-own for buyers with bad credit


Best for borrowers with poor or no credit history

  • Quick pre-approval
  • No minimum income requirement
  • The minimum loan amount is $500
  • Unsecured loans for used vehicles

Canada Auto Finance

Best for borrowers with lower incomes

  • Accepts borrowers with bad credit, no credit, and bankruptcies
  • Same-day approvals
  • Large inventory and network
  • No co-signer and low requirements
  • Trade-in to lower your monthly loan amount

CarsFast by LendingArch

Best for comparing options

  • Fast financing and pre-approvals
  • Trustworthy lenders and large inventory
  • Simple online application process with no fees
  • Trade-ins available for lowering the monthly loan rate


Best for low interest rates

  • No maximum loan amount
  • Free CARFAX reports for all vehicles
  • 10-day money-back guarantee
  • Quality vehicles from a direct lender

Dealers With Best Auto Loan Rates in Canada

Finding a suitable lender who will give you a decent deal on a loan is always a challenge. But now that we’ve introduced Canada’s finest car loan dealers, let’s take a closer look at each and explain why they made the cut.

Loans Canada

star 9.7

Best lender network

  • Interest rate: 2.99%-46.96%
  • Maximum loan amount: $35,000
  • Maximum loan term: 60 months (or longer)
  • Minimum credit score: 300
  • Vehicle types: van, sedan, SUV, truck, luxury

Loans Canada is an innovative online platform that allows you to search and compare different lenders, much like a broker. Upon entering all of your basic personal and financial information, you’ll find cheap car loans tailored to your specific budget.

The application process is straightforward and will take only a few minutes of your time. After completing the application form, you will be matched with a list of lenders who may be able to lend you the amount you require, if you agree to their terms.

The variety of car loan options provided by Loans Canada is one of its best features. You can apply for several vehicle types, as well as loan options such as:

  • Loans for new or used vehicles: You can choose whether to use the money you borrow to buy a new or used car from a dealership. Vehicles are classified as vans, sedans, SUVs, trucks, or luxury cars.
  • Low-interest loans: It’s always nice to hear where you can find car loans with a low interest rate. If you have an excellent credit score and meet some additional requirements, you have a good chance of securing just a 2.99% APR on your new loan.
  • Car loans for people with bad credit: Even if you have a bad credit score or a mark on your credit report, you can still get a car loan with up to 46.96% interest. Additionally, other choices, such as rent-to-own options, don’t require a credit check and are a decent solution for those with bad credit.

Although some specific requirements for approval will vary by lender, the following are some general conditions you must meet to qualify for any loan found on Loan Canada:

  • You must be a Canadian citizen and over the age of 18.
  • You must be consistently employed for at least three months.
  • You must meet the lender’s minimum credit score and salary requirements.

Loans Canada is a trustworthy platform offering some of the best auto finance deals in Canada, that’s been up and running since 2012. You can easily compare a bunch of providers, regardless of your current credit score, and borrow up to $35,000. Moreover, Loans Canada is a member of the Canadian Lenders Association, and is accredited by the Better Business Bureau with an A+ rating and no active disputes.


  • + Largest lender network
  • + APRs as low as 2.99%
  • + Quick and simple online application
  • + Rent-to-own for buyers with bad credit


  • Some lenders impose origination fees
  • Not a direct lender


star 9

Best for borrowers with poor or no credit history

  • Interest rate: 4.99%-46.96%
  • Maximum loan amount: $50,000
  • Maximum loan term: 84 months
  • Minimum credit score: No requirements
  • Vehicle types: Not specified

LoanConnect is an online platform founded in 2016 that offers car loans of up to $50,000, and you may be eligible even if you have bad or no credit. There is no need for collateral to obtain financing, and a single application allows you to compare different lenders from this network.

Applying takes less than five minutes, and you might even be approved for financing in just 24 hours (sometimes only 12 hours). If you’re in Canada, car loan rates from this platform start as low as 4.99% here, with a loan repayment schedule ranging from 72 to 84 months.

LoanConnect’s lenders offer loans to people with bad, fair, or no credit. That means practically anyone looking for an unsecured loan under $50,000 has a chance of getting one. To apply, you must be of legal age in your province of residence and a Canadian citizen or permanent resident.

LoanConnect allows you to search for secured and unsecured loans from its network of lenders. You can choose from several auto loan types using this platform:

  • Used car loans
  • New car loans
  • Auto refinancing loans
  • Lease buyouts

You can apply as long as your debt payments do not exceed 60% of your income. In fact, having an outstanding loan establishes a credit history, which may improve your chances of approval even though you will most likely not be granted the lowest car loan interest rate.

It’s important to note that using LoanConnect to find lenders does not affect your credit score. In some cases, you may be given the option of having them run a soft credit check on your file to determine the most reasonable course of action. Your credit score will remain unaffected by this soft check, and lenders cannot access it.

If you choose to start a loan application, the lender will almost certainly demand a full credit check. However, if you are worried that this might harm your score, you will be informed of it and given the choice to quit.

LoanConnect is a BBB-accredited company with an A+ rating and good reviews; all things considered, it’s an option worth considering, especially for those with bad or no credit.


  • + Quick pre-approval
  • + No minimum income requirement
  • + The minimum loan amount is $500
  • + Unsecured loans for used vehicles


  • Interest rates from 9.9%
  • Personal information required

Canada Auto Finance

star 8.7

Best for borrowers with lower incomes

  • Interest rates: 4.90%-29.95%
  • Maximum loan amount: $45,000
  • Maximum loan term: 72 months (or longer)
  • Minimum credit score: 300
  • Vehicle types: car, truck, SUV, minivan

Canada Auto Finance is a car loan broker service that connects you with local dealers. It has a deal in store, whether you want a new or pre-owned truck, car, SUV, or minivan.

While there are many ways to improve your credit score, few of them work in the short-term, and bank car loan interest rates and approval can be out of reach for many people in urgent need of transportation, which is where services like Canada Auto Finance come in.

Here, you will be presented with auto financing options tailored to your specific financial situation. The online application is simple to complete and takes little time. You can expect APRs to range from 4.90% to 29.95%.

Canada Auto Finance provides a variety of loan options, including new and used car loans, as well as bad credit car loans. The following are some of the most basic requirements for a car loan of up to $45,000:

  • Canadian resident over the age of 18
  • Gross monthly income of $1,500 for those with credit scores under 625
  • All bankruptcies should be discharged.
  • No repossessions in the previous year unless they were a part of a bankruptcy.

What’s more, Canada Auto Finance provides competitive new and used car financing rates in Canada, no matter the province or territory, which is a huge plus.

Overall, if you have bad credit or a low income, Canada Auto Finance is a good option for a car loan. With flexible repayment terms and quick turnarounds, it provides the dual convenience of obtaining a car loan and shopping for a car online. However, the only dealerships available to you will be those in the Canada Auto Finance network.


  • + Accepts borrowers with bad credit, no credit, and bankruptcies
  • + Same-day approvals
  • + Large inventory and network
  • + No co-signer and low requirements
  • + Trade-in to lower your monthly loan amount


  • High interest rates for people with bad credit
  • Additional charges are possible

CarsFast by LendingArch

star 9.5

Best for comparing options

  • Interest rate: Up to 46.96%
  • Maximum loan amount: $75,000
  • Maximum loan term: 120 months
  • Minimum credit score: 300
  • Vehicle types: car, van, truck, SUV
  • Available in: Alberta, British Columbia, and Ontario

CarsFast is a subsidy of LendingArch, a well-known online lending marketplace, that allows you to compare multiple auto loans in Canada, all in one convenient location. CarsFast has assisted over 350,000 Canadians in getting approved for loans and works with over 350 dealerships across the country.

The application is an online form that will take just a few minutes to complete. Once you’ve decided whether you need a car, van, truck, or SUV and have been pre-approved by lenders, you can compare rates from hundreds of providers.

CarsFast’s partners include Canada’s major banks, including Toronto-Dominion Bank (TD), Canadian Imperial Bank of Commerce (CIBC), Bank of Nova Scotia (Scotiabank), as well as Royal Bank of Canada (RBC) and Bank of Montreal (BMO). CarsFast allows you to borrow up to $75,000 for a vehicle over terms of up to 120 months (depending on the lender), with interest rates going up to 46.96%.

There are certain minimum requirements that you must meet to qualify for loans with this Canadian auto financing business, and they are as follows:

  • A monthly income of at least $2,000
  • You must be a Canadian citizen or resident and over the age of 18.
  • You must have a valid driver’s license.
  • You should have a consistent source of income and employment.

CarsFast is available across Canada, and you can apply for a new or used vehicle loan, bad credit car loans, and trade-ins. To apply, you must have basic documentation on hand, such as your proof of employment, personal identification, and a valid driver’s license.

Despite the fact that CarsFast has not yet been accredited by the Better Business Bureau, it has an A+ rating, no active complaints, and has been in business for 19 years. All in all, in our humble opinion, CarsFast’s Canadian car loans are definitely worth trying out.


  • + Fast financing and pre-approvals
  • + Trustworthy lenders and large inventory
  • + Simple online application process with no fees
  • + Trade-ins available for lowering the monthly loan rate


  • High interest rates for bad credit borrowers
  • Some lenders may charge additional fees


star 8.8

Best for low interest rates

  • Interest rate: From 3.9%
  • Maximum loan amount: N/A
  • Maximum loan term: 96 months
  • Minimum credit score: 580
  • Vehicle types: SUV, sedan, hatchback, wagon, truck, van, coupe, convertible

Clutch, an online car retailer founded in 2016, delivers cars to your door and offers competitive interest rates on used cars in Canada, as well as a 10-day money-back guarantee or 750 km trial after vehicle delivery. What’s more, there’s also a 90-day (or 6,000 km driven) protection plan for unexpected breakdowns in the early days.

Unlike other car-buying websites, Clutch owns over 700 used vehicles and does not refer you to a third-party dealer.

The application process is simple and takes place entirely online. Although Clutch sells used cars, all Clutch vehicles undergo a 210-point inspection and come with a free CARFAX report. The cars come from brands such as Mercedes, BMW, Volkswagen, Tesla, Hyundai, Audi, and others.

If you choose to finance your car, the loan can be paid off at any time without penalty during the 96-month term, because it is open-ended. However, if your credit score is less than 580, your chances of getting a loan are a lot slimmer. Furthermore, Clutch will buy your current car even if you do not intend to buy a new one, and trade-ins are accepted.

You should also keep an eye out for any special promotions that may be available on the site from time to time, as Clutch is known for offering some of the lowest car loan interest rates on the market.

The minimum loan amount is $7,500, and you must be a Canadian resident of legal age, who has been consistently employed for at least three months. The prices are non-negotiable, and service fees may apply depending on your province (as disclosed on their website):

  • Ontario, Alberta, and Saskatchewan: Customers from these provinces will not be charged a service fee.
  • British Columbia: Customers in BC will be charged a $599 service fee.
  • New Brunswick, Nova Scotia, and Prince Edward Island: The service fee for customers in the Maritime provinces will be $899.
  • Quebec: No services are offered there currently.

Clutch has partnerships with industry leaders such as TD and has been featured in mainstream media outlets such as CTV News, Global News, and CBC. In Canada, this car financing platform is reputable, with Better Business Bureau accreditation and an A+ rating.


  • + No maximum loan amount
  • + Free CARFAX reports for all vehicles
  • + 10-day money-back guarantee
  • + Quality vehicles from a direct lender


  • Only used cars available
  • Unavailable in Quebec, Manitoba, and the territories

Car Loan Interest Rates in Canada: Buyer’s Guide

Let’s face it; the process of purchasing a car can be both exciting and stressful. Finding the right financing option for your desired purchase, and filing all the necessary paperwork can be exhausting, even though choosing the type of car and features you want can be enjoyable.

Knowing your financing options and the basics of auto loans can simplify the entire process and help you steer clear of costly mistakes as you navigate these (often confusing) waters.

Factors Influencing Your Auto Loan Rate

When you apply for a car loan, lenders will evaluate you based on a number of factors to determine the available auto loan interest rates in Canada in your case. These include your credit score, income, loan term, and the asset in question (i.e., the vehicle).

To help you fully understand how your car loan rate is determined, we’ll go over each key factor in more detail.

Credit Score

When deciding whether to approve you for a car loan, lenders give precedence to those with better scores. Due to their history of on-time debt repayment, people with high credit scores typically have lower interest rates than those with lower scores. Your credit score, which ranges from 300 to 900, is a measurement of your creditworthiness.

A credit score of 760 or higher is considered good, and will almost certainly enable you to find the cheapest car loan rates in Canada. If you have a low credit score, you may still be able to find some lenders who will approve you, but you will most likely have to pay a higher interest rate.

Income and Employment Stability

Lenders will calculate the percentage of your income that will be spent on debt repayment. This is your debt service ratio.

Increasing your income or paying down debt are the two best ways to lower your debt service ratio. A lower ratio is preferable, because less of your income is dedicated to debt repayment, making you less likely to default on your auto loan.

Term Length

One of the factors that has the biggest impact on your current car loan rates in Canada is the term length. Most auto loans in Canada have terms ranging from four to seven years. Shorter term lengths are generally recommended because your car drops in value faster than you can pay off the loan, but the shorter the term, the higher the monthly payments.

Because the lender is taking on more risk by giving you a longer loan, the interest rate will be higher, because you are more likely to default on a longer loan, which puts the lender at greater risk.

Vehicle Type

Lenders want to know that they can quickly sell your car to recoup their losses if you default on your payments. The best car loan rates are available for newer vehicles that are in high demand, and will retain their value longer.

Luxury and used car loan rates are typically higher because they pose a greater risk to lenders. They are hard to sell, expensive to repair, and quickly depreciate. For these reasons, many lenders have a $75,000 limit on auto loans.

Down Payment

Lenders require a down payment in case they need to seize and sell your vehicle. A larger down payment indicates to your lender that you are less risky; as a result, you should receive a lower interest rate. The down payment, which is usually 10-20% (or more), gives them a buffer in case they need to sell the car to pay off your debts.

Auto Loan Features

Navigating rates for car loans can be confusing, and failing to understand something could result in higher monthly payments. Let’s look at these specific auto loan features and try to interpret them.

Interest Rate and APR

The percentage of the loan principal that the lender is charging you as compensation for extending you credit is known as the interest rate. Generally speaking, depending on the lender and terms, interest is calculated either monthly or daily.

The annual percentage rate of a loan is the total amount of interest plus any additional loan fees added up and expressed as a percentage of the loan principal. Because additional origination or administrative costs are uncommon on auto loans, the APR and interest rate are often the same.

Since interest accumulates as the loan matures, the sooner you pay it off, the more money you’ll save in total. Almost every loan has repayment terms that include an APR and financing rates for cars, so look for lower-than-average interest rates.

Variable Interest Rates vs. Fixed Interest Rates

In Canada, the vast majority of auto loans have a variable interest rate, which means that your interest rate will fluctuate along with the prime lending rate. In other words, your car loan’s interest rate will fluctuate in line with the Bank of Canada’s overnight lending rate.

Pre-Payment Fees

Most lenders don’t charge you any fees if you make extra monthly payments or pay off your loan early. Pre-payment privileges are an excellent way to pay off your loan more quickly and cut your interest costs. If you pay off your loan early, though, some lenders may impose a pre-payment penalty.

Loan Range

Most lenders have a maximum and minimum amount they are prepared to lend you. For example, a particular lender might only finance vehicles priced between $5,000 and $50,000.

Where Can You Get a Car Loan?

You have several options when you’re on the hunt for low interest car loans in Canada, but we’ll go over some of the most common ways to secure financing for your new vehicle.

Online Auto Lenders

Online auto loan lenders will look over your credit report and make a decision quickly. When you receive pre-approval from an online lender, just like with a bank, you can practically walk into the dealership as a cash buyer.

There are numerous platforms available where you can compare various options and lenders. The disadvantage is that there is usually no local branch to walk into with questions, so most of the communication is done over the phone or online.

Credit Unions and Banks

Almost any bank or credit union can put you in touch with a loan expert about getting an auto loan. If you are an existing customer, they may even offer you exclusive financing options.

However, the most competitive car loan rates in Canada aren’t always found at local banks and credit unions – prices are usually higher there. Moreover, credit unions require you to join them to use their services.

Car Dealerships

Convenience is the main advantage of getting financing through a car dealership, because all you have to do is find the car you want to buy, and the dealership will take care of the rest. Additionally, the dealership might be able to push through challenging cases that might otherwise be rejected because it has a relationship with the lender.

The dealership’s finance department will send your credit report and score to their lending partners so they can compare loan terms.

How Can You Get a Lower Interest Rate on a Car Loan?

In light of what has been said so far, use the following tips to get the lowest auto loan interest rates possible:

Work on Improving Your Credit Score Before Applying

Improving your credit score is not something that can be accomplished overnight. You must demonstrate that you are responsible with your debts, which includes making credit card payments on time for several months and accumulating a diverse but well-managed mix of debt.

Compare Different Lenders and Consider Pre-Approval

If you want to be well-prepared for the various interest rates and deals available, you should consider getting pre-approved for a loan. After all, a pre-approval will not affect your credit score.

Instead, pre-approvals may actually prove very beneficial in determining your loan eligibility. Additionally, being able to compare interest rates with loans for which you have already been pre-approved gives you more negotiating power with a dealership.

Find a Co-Signer and Increase Your Down Payment

Canada’s car loan interest rates are nothing to be scared of. If you want to improve your loan application or have bad credit, getting a co-signer is a great way to improve your chances of getting a loan. Also, consider delaying your car purchase until you have a sizable fund saved for your down payment.

By including a co-signer, you reduce the risk to the lender and increase your leverage to get a better interest rate. Lenders will review your application and take into account both your income and the income of your co-signer, opening up better interest rate and approval opportunities.


Let’s not forget that all car dealerships are businesses, and their goal is always to make more money. However, even if you have a strong credit history, they are unlikely to offer you the lowest possible interest rate right away, so you will have to negotiate either way.

Don’t be afraid to bargain, especially if you have good credit, a co-signer, and a sizeable down payment. Also, don’t forget to research average interest rates before deciding on a weekly, biweekly, or monthly payment schedule.

Best Auto Loan Rates in Canada: Conclusion

As you can see, finding the right auto loan is a difficult task, because you must conduct thorough research and consider numerous factors before signing on the dotted line.

We hope the above service providers and guides we’ve recommended will make your life easier. Make sure you have all of your necessary information on hand – we are confident the best lender for you will be found on this list.

Your dream vehicle is only a few clicks away! The next step is to find the best winter tires for these chilly days once you have your car figured out.


What is a good interest rate for a car in 2022?

According to the latest available data from Statistics Canada, the average interest rate for car loans in Canada is 7.21% as of October 2022 for new vehicles, so anything less than that is considered a good deal.

Is 3% interest good for a car loan?

Determining whether an interest rate on a car loan is reasonable or not is difficult when you don’t have all of the information, such as the applicant’s financial situation, loan term, car type, anIncludingever, if your credit score is above average, you should have no trouble finding a 3% interest rate, which is considered a pretty good rate for most borrowers.

Can you negotiate interest rates on car loans in Canada?

You can try to negotiate the interest rate on your car loan. Also, you may be able to negotiate the exclusion of additional fees, such as dealer administration fees. You should do your research and get quotes from multiple lenders and dealers to determine who will ultimately provide you with the best car loan rates in Canada.

However, renegotiating your current interest rate is impossible, so refinancing may be a good way to get a new loan approved at a much more reasonable rate.

Milica Milenkovic
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