Loans Canada Launches Free Credit Score Portal And Is Recognized As One Of Canada’s Top Growing Companies
Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
If you plan on financing a car with a loan, one of the most important things to consider is your interest rate, because it can add hundreds, even thousands of dollars extra to the final cost of your payment plan. That means you could pay far more for your car than you originally hoped.
Don’t worry, there are ways to obtain a lower interest rate if you’re willing to put in the work. Read this to learn how you can get a good interest rate on a car loan in Canada.
Generally speaking, most Canadian drivers pay 4% – 7% interest on their car loans. As of May 2022, car loan interest rates are 5.80%. However, your interest rate could vary greatly according to factors such as your income, credit score, down payment and loan term.
January 2022 | February 2022 | March 2022 | April 2022 | May 2022 |
5.09% | 5.11% | 5.23% | 5.52% | 5.80% |
Some lenders charge fixed and variable interest rates on car loans:
Amount | Interest | Term (Months) | ||
![]() | $500 - $50,000 | Up to 46.96% | 12 - 84 | Learn more |
![]() | $500 - $35,000 | 29.99% - 46.96% | 9 - 60 | Learn more |
![]() | $500 - $10,000 | 12.99% - 39.99% | 9 - 36 | Learn more |
![]() | $5,000 - $40,000 | Varies | 12 - 72 | Learn more |
![]() | $7500 - $59,995 | 3.95% + | 12 - 96 | Learn more |
![]() | $5,000 - $45,000 | 4.90 % - 29.95% | 36 - 72 | Learn more |
![]() | Varies | 11.9% + | 12 - 84 | Learn more |
![]() | Up to $50,000 | Varies | 12 - 84 | Learn more |
![]() | Up to $50,000 | 8.99% + | 12 - 72 | Learn more |
Locking down a great financing deal be tough at times but there are several things you can do to qualify for a good interest rate on a car loan, including:
Every lender offers different interest rates for their car loans, so remember to shop around and ask all the questions you need. While it can be tempting to accept the first deal you find, there are a ton of lending sources all across Canada.
Most car lenders and dealerships should be able to give you a commitment-free loan quote or pre-approval offer, so you can get a basic idea of how much your car loan will cost and what interest rates you may qualify for. This shouldn’t affect your credit score or lead to any fees and it might give you some negotiating power when you compare lending sources.
Before you apply for a car loan, don’t forget to create a realistic budget, then check your bank account, credit report and debt levels to confirm that they’re all healthy. If you have a decent monthly income, good credit and little-to-no outstanding debt, it shouldn’t be too difficult to qualify for a good interest rate on a car loan.
When shopping for car loans, think about more than just your payments. For example, longer loan terms often feature lower interest rates but they can cause you to pay more interest over the life of the loan. On the other hand, short terms come with higher rates and payments, which can be pricier upfront but cheaper overall.
While it’s more common with auto dealers, some car financing lenders will be open to negotiating your interest rate. Then again, most hope that you’ll accept the first rate they give you, so take their “best offer” with a grain of salt. If you can’t qualify for a better rate with your finances and credit, try offering a down payment or trading in your existing car.
If you don’t have a down payment, collateral or another type of security, you might score a good interest rate by applying with a cosigner. Some lenders even require you to find a cosigner when you have bad credit. Essentially, the cosigner will become responsible for your loan payments if you can no longer afford them, which acts as a guarantee.
Here are some places you can get competitive interest rates on car loans in Canada:
Lenders will normally use these elements to calculate your car loan interest rate:
Short-Term Car Loan | Long-Term Car Loan | |
Car Loan Amount | $40,000 | $40,000 |
Interest Rate | 6% | 5% |
Term Length | 3 years (36 months) | 7 years (84 months) |
Monthly Payment | $773.31 | $565.36 |
Total Paid | $46,398.72 | $47,489.93 |
Total Interest Paid | $6 398.72 | $7 489.93 |
It’s not smart to apply for a car loan without doing a bit of basic math first. For example, here’s what you can expect to pay when financing a new car in British Columbia:
Credit Rating | Credit Score | Interest Rate | Monthly Payment | Total Interest | Total Paid |
Excellent | 760 – 900 | 3.99% | $719.47 | $5 801.76 | $55,801.76 |
Very Good | 725 – 759 | 6.99% | $784.03 | $10 450.41 | $60,450.41 |
Good | 660 – 724 | 9.99% | $851.96 | $15 340.87 | $65,340.87 |
Fair | 560 – 659 | 12.99% | $923.17 | $20 467.96 | $70,467.96 |
Bad | 300 – 559 | 15.99% | $972.67 | $24 032.28 | $74,032.28 |
If so, you’re making a financially responsible choice. Even though it’s easier to accept the first interest rate you come across, qualifying for a lower rate can potentially save you thousands of dollars over the course of the loan term. For help finding good car loan interest rates in your area, don’t hesitate to contact Loans Canada today.
Rating of 5/5 based on 1 vote.
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
Frank Mortgage is Canada’s one-stop shop for mortgages. Get up to $1,500 cash back on your mortgage.
Great unsecured credit card for customers currently in, or recently discharged from, a consumer proposal or bankruptcy
Earn an average 5%¹ cashback at thousands of partners and at least 0.5%² cashback guaranteed with Neo.
KOHO’s Credit Building Program helps you build a better credit history with easy to manage payments for just $10/month.
All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.
When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.
Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.