Car loan rates in Canada range from 4.99% to 12%+ in 2026, depending on your credit score, vehicle age, and lender. Manufacturer promotions can drop as low as 0%. Here’s what to expect.
Current Car Loan Rates by Credit Score
| Credit Score | New Car Rate | Used Car Rate |
|---|---|---|
| 750+ (Excellent) | 4.99–6.49% | 5.99–7.99% |
| 700–749 (Good) | 5.99–7.99% | 7.49–9.99% |
| 650–699 (Fair) | 7.99–10.99% | 9.99–12.99% |
| Below 650 (Poor) | 10.99–18.99% | 12.99–24.99% |
Monthly Payment Examples
New Car ($40,000, 5-year term)
| Rate | Monthly Payment | Total Interest |
|---|---|---|
| 0% (promo) | $667 | $0 |
| 4.99% | $755 | $5,274 |
| 6.99% | $792 | $7,505 |
| 9.99% | $850 | $10,976 |
Used Car ($25,000, 5-year term)
| Rate | Monthly Payment | Total Interest |
|---|---|---|
| 5.99% | $483 | $3,998 |
| 7.99% | $507 | $5,409 |
| 10.99% | $544 | $7,634 |
| 14.99% | $594 | $10,661 |
Where to Get a Car Loan
| Source | Typical Rate | Pros | Cons |
|---|---|---|---|
| Manufacturer financing | 0–6.99% | Lowest promos on new | Limited to new models |
| Bank/credit union | 5.49–9.99% | Pre-approval, negotiating power | Requires good credit |
| Online (Canada Drives, Clutch) | 4.99–14.99% | Convenient, fast | May be higher |
| Dealer financing | 6.99–19.99% | One-stop shop | Often marked up |
| Subprime lender | 10–29.99% | Approves bad credit | Very expensive |
Tips to Get the Best Rate
- Get pre-approved from your bank/credit union before visiting a dealer
- Check your credit score — fix errors before applying
- Choose a shorter term — 4–5 years vs. 7–8 years saves thousands
- Consider certified pre-owned — nearly new, much cheaper
- Avoid biweekly payment “deals” at dealerships (often just rounding tricks)
- Put at least 10–20% down to reduce financed amount
Bottom Line
Car loan rates in Canada average 5–8% for good credit in 2026. The biggest savings come from getting pre-approved, choosing a shorter term (5 years max), and avoiding dealer markups. On a $40,000 vehicle, a 2% rate difference costs over $2,200 in extra interest.
See our lease vs. buy car guide or how much car can I afford for related decisions.
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