Best Car Loans In Canada 2022

Best Car Loans In Canada 2022

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated December 9, 2021

Whether you live in the city, suburbs, or the country, there are plenty of reasons to want a dependable vehicle. However, if you’re looking for something that’s safe, fuel-efficient, and that will last you more than a few years, chances are it’ll have a price tag that matches, which is where a car loan can be extremely useful. 

In fact, a solid amount of financing can help you purchase a very nice hatchback, sedan, SUV, or truck. What’s more, there are a ton of lenders and dealerships across Canada that can give you an affordable car loan this year. You just need to know where to look. 

What Costs Can You Expect When Taking Out A Car Loan? 

Essentially, a car loan helps you finance a vehicle over several years using divided installments. This can make the car more affordable overall because you won’t have to shell out tens of thousands of dollars at once.

Nonetheless, there are many different costs that you’ll encounter after you’ve been approved, not including the expenses that come with the average vehicle. These costs can include but aren’t restricted to your:

Down Payment

A down payment is usually optional, depending on where you apply. However, most experts recommend that you put down at least 10% – 20% of the vehicle’s final asking price. While a down payment isn’t affordable for everyone, it can be particularly beneficial when financing a newer or more expensive model. 

Not only can a larger down payment reduce the size and length of your debt, but it can also help you qualify for a lower interest rate. Plus, it will let your auto dealer know you’re a serious buyer, so they may offer you a few extra perks. 

Interest Rate

Interest is what lenders and dealerships charge in exchange for you borrowing from them. The rate you end up paying can fluctuate depending on where you apply, what kind of vehicle you’re financing, and how strong your finances are. There are also two types of interest rate you may encounter:

  • A fixed interest rate will be locked in once you’ve been approved for your car loan and won’t change during your repayment term. While some fixed rates can be higher than variable ones, many drivers prefer them because they make it easier to predict how much they’ll owe.
  • A variable interest rate can fluctuate during your payment period due to several factors, but will mainly depend on Canada’s prime rate. Although this can make the cost of your car loan payments less predictable, they may become cheaper than some fixed rates when the prime rate drops.

Term & Payments

The length of your loan term and the size of your payments can also significantly affect the amount you pay by the end of your car loan. After all, your vehicle’s advertised price won’t actually be its final cost, once you factor in fees and interest. 

For instance, while a longer term and small payments can be more affordable at first, you would pay more interest and fees overall. Larger payments are harder on your budget, but typically help you pay off the car faster. Either way, you should be careful not to take on a repayment plan that you cannot handle. 


There will also be several fees included with your car loan, which can also vary depending on where you apply and the conditions of your repayment plan. For example, traditional lenders, like banks, often charge for administrative services, such as loan origination.

If you apply for in-house financing through a dealership, you may also encounter fees for documentation, licensing, and pre-delivery costs. In some cases, these are one-time fees to be paid when your term ends, in others, they are applied on a per-payment basis. Ask your car loan provider for a price quote before you sign any contracts. 

Best Car Loan Providers

AmountInterest Term(Months)
Loans Canada Logo - Bad Credit Loans Canada$500 - $50,000Up to 46.96%12 - 84Learn More
Canada Drives$500 - $35,000$29.99% – 46.96%9 - 60Learn more
SkyCap Financial$500 – $10,00012.99% – 39.99%9 - 36Learn more
Carloans411$5,000 - $40,000Varies12 - 72Learn more
Car Loans Canada$7500 - $59,9953.95% +12 -96Learn more
Canada Auto Finance$5,000 - $45,0004.90 % - 29.95%36 - 72Learn more
Eden ParkVaries11.9% +12 - 84Learn more
Splash Auto Finance by RifcoUp to $50,000Varies12 - 84Learn more
SafeLendUp to $50,0008.99% +12 - 72Learn more

Where Is the Best Place To Get A Car Loan?

Luckily, there are many places in Canada where you can apply for a car loan. Each of these lending sources has different benefits, drawbacks, and approval requirements, so be sure to compare them properly prior to applying:

Online Subprime Auto Lenders

These days, there is an increasing number of car loan transactions conducted online. In fact, almost every subprime auto lender now has a webpage where you can create an account, apply, and make payments. Alternative lenders like this can also be a good option because they often have easy requirements, so borrowers with bad credit and low incomes won’t have as much trouble qualifying for a subprime auto loan in Canada.  

Banks & Credit Unions

If you’d prefer a more traditional approach, many banks and credit unions can also offer you vehicle financing. Some borrowers prefer financial institutions because they are generally more secure and offer better rates than alternative lenders. However, drivers with weaker finances and credit may find it difficult to get approved

Car Dealerships

There are also thousands of dealerships that can provide you with in-house financing, so you can pay them directly and avoid having to apply for a loan. Like alternative lenders, car dealerships will usually have less restrictive approval requirements if it means making a sale but can charge slightly higher rates. 

How Do I Apply For A Car Loan?

As mentioned, every lender and dealership has its own loan requirements. However, there are a few personal and financial details that you’ll have to provide to qualify for the best car loan in 2022, such as your:

  • Name, address, and other personal information (proof of identity)
  • Bank account details and other financial information (proof of income)
  • Employment status and job title
  • Vehicle make, model, and cost (if applying with a bank or other lender)
  • Down payment amount

Although your credit score may be less significant for some lenders and dealerships, you may also have to fill out a credit application, so they can check your credit report. The healthier your credit is, the easier it will be to get approved for a car loan with a decent interest rate and repayment plan.

Auto Financing 101

How Can I Prepare to Apply For A Car Loan?

Remember, getting approved for the best car loan is all about your financial health. The more chance you have of making payments on time, the better the result. As such, it’s important to prepare yourself by taking the following measures:

  • Improve your credit if its bad (a credit score of 660-800 is ideal). While there are subprime auto loans in Canada, improving your credit will lead to better interests rates and terms.
  • Have a full-time job for at least 6 months
  • Earn as much income that allows you to afford your payments
  • Pay off your outstanding debts
  • Save up for an appropriate down payment 
  • Confirm which make and model of vehicle you want
  • Make sure your driver’s license is up to date

Finding A Cosigner 

If your finances or credit aren’t good enough, you can also strengthen your application by finding a stronger borrower to cosign it. While this is usually optional, a cosigner gives your lender a way to protect their investment, since they will be agreeing to take over your payments if you cannot afford them. 

Just be careful, because your cosigner’s finances and credit could be negatively affected if they become responsible for your car loan, but also can’t make payments. 

How Can I Find The Best Deal On A Car Loan?

Cars come in all shapes, sizes, and costs. That said, if you want the best deal on your car loan, here are a few extra tips to help you find it:

  • Compare lenders/dealerships – Though you may want your car right away, you shouldn’t necessarily choose the first lender or dealership you come across. Spend time researching different loan sources in your area so you can find a vehicle, interest rate, and repayment plan that works for your finances. 
  • Search for a no-credit-check lender or dealership – If bad credit is holding you back, you might be able to find a car loan source that has no credit checks. Although rates can be somewhat higher, this will also help you avoid too many hard inquiries appearing on your credit report and lowering your credit score. 
  • Don’t borrow more than you can afford – For obvious reasons, asking for too large of a car loan isn’t a good idea. Instead, consider making a larger down payment so you don’t end up in debt for longer than you have to be. You may even qualify for a lower rate because the lender won’t be taking as much risk.
  • Offer collateral – You may be able to apply for a secured car loan using one of your assets as loan security. Like a cosigner, this gives your lender assurance that you’ll pay on time. However, you must once again be careful, because your lender will have the right to seize your asset if you miss too many payments
  • Look into newer vehicles – Despite being more expensive initially, vehicles that are less than two years old often come with better rates because the lender or dealership isn’t risking as much as they would with a second-hand vehicle. Plus, your vehicle will likely be more reliable and cost-effective.
New vs. Used Cars

Car Loan FAQs

Can I get a car loan for a used car?

Yes. Car loans can be applied to almost any vehicle. However, if you’re trying to finance a used car that’s relatively cheap or from a private seller, it may be better to save up and buy it outright. That way, you won’t have to deal with as many extra costs.  

Are down payments mandatory for car loans?

Typically, making a down payment is optional when financing a car. That said, putting at least 10% – 20% down can significantly reduce the final cost of your vehicle, as well as the length of your debt. Additionally, a large down payment can help you qualify for more appealing loan conditions and interest rates. 

Will a car loan affect my credit?

This really depends on where you apply, because many lenders and dealerships report their clients to at least one of Canada’s main credit bureaus (Equifax and/or TransUnion). While some lenders won’t check your credit when you apply, they may report your payment activity once the loan is in effect.  In that case, making payments on time and in full will gradually improve your credit, and you’ll be more eligible for good loan conditions in the future. However, every payment that’s late, short, or missed will damage your credit and make you a riskier borrower.

Looking For The Best Car Loan In 2022?

Loans Canada can help make your search easier. Whether you’re looking to finance a new or used car, we can connect you with the right lenders and dealerships in your area. 

Rating of 5/5 based on 1 vote.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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