Best Car Loan Interest Rates In Canada 2026 Ontario
Quick Summary
In 2026, the best car loan interest rates in Ontario, Canada range from 7.0%–7.5% for new cars and 8.2%–9.5% for used cars, depending on your credit score and lender. Major banks like Scotiabank, RBC, and CIBC offer the most competitive rates with flexible terms up to 84 months.
Overview of Car Loan Interest Rates in Ontario (2026)
Interest rates for car loans in Ontario have shifted upwards in 2026, reflecting the Bank of Canada's tighter monetary policy aimed at curbing inflation and stabilizing the economy. As a result, average rates are higher than in previous years, affecting both new and used vehicle purchases. Here's a breakdown of typical APRs:
- New Car Loans: 6.9% – 7.5% (average), with some banks and brands offering rates starting from 7.0%
- Used Car Loans: 8.2% – 9.5% on average depending on lender and borrower profile
- Bad Credit Loans: 12.9% – 29.99% (may be higher for subprime borrowers)
Top Banks and Lender Rate Comparison
Ontario's largest banks and auto lenders adjust their terms annually. Below are 2026 updates for major institutions:
| Lender | New Car Rate | Used Car Rate | Key Features |
|---|---|---|---|
| RBC Royal Bank | From 7.2% | From 8.5% | Online app, bundle discounts, up to 84 months |
| TD Auto Finance | From 7.5% | 8.8–9.5% | Fast approvals, 36–96 mo terms, dealer promos |
| Scotiabank | From 7.0% | From 8.2% | Green vehicle discount, easy digital process |
| National Bank | From 7.49% | From 8.99% | Fixed/variable, flexible payment options |
| Meridian CU | From 7.49% | 8.99–11.73% | At dealerships, same-day funding |
Exact rates depend on credit score, loan term, income, and vehicle type; always check latest direct from lender.
Factors Influencing Your Car Loan Rate
Multiple factors determine the car loan rate you'll be offered:
- Credit Score: Higher scores (over 700) get the best rates: 5.99% – 8.99%
- Loan Term: Shorter terms usually have lower rates and less total interest
- Down Payment: Larger upfront payments often reduce your interest rate
- Vehicle Type: Newer, in-demand, or eco-friendly models can qualify for discounts
- Lender Type: Banks, credit unions, online lenders, and dealership financing—each has competitive offers; always compare
Step-by-Step: How to Get the Best Car Loan Rate in Ontario (2026)
- Obtain your latest credit score from Equifax or TransUnion Canada.
- Review any errors and dispute them before applying.
- Use online calculators to estimate your monthly payments and the total cost of borrowing at different rates.
- Factor in down payment, loan term (in months), and any associated fees.
- Shortlist major banks (RBC, TD, Scotiabank, CIBC, BMO), credit unions (Meridian, Alterna, DUCA), non-bank auto lenders, and dealership offers.
- Proof of identity and residence in Ontario
- Employment verification and income documents
- Bank statements, recent pay slips, and (for some lenders) tax documents
- Apply for pre-approval from multiple lenders to compare "soft offers" without hurting your credit score.
- Pay attention to both interest rates and the total cost, including lender fees.
- Dealerships may offer 0% or low-rate financing on select models—often on new or "hot-selling" vehicles. These deals can undercut bank rates but come with eligibility limits and fine print.
- Don't accept the first offer; negotiate for better rates or terms, especially if you have a strong credit profile.
- Consider shorter terms for lower rates, or higher down payments to reduce principal and interest.
- Once you secure the best rate, finalize the paperwork in person or online.
- Review the contract thoroughly before signing and confirm the loan is applied correctly by the dealership or seller.
Top Tips for Ontario Car Loan Borrowers in 2026
- Monitor Bank of Canada updates: Macro rate increases directly influence what banks and credit unions offer to borrowers.
- Shop multiple lenders—even a small difference in APR adds up over a 5–7 year loan term.
- Consider green or hybrid car purchase discounts if eligible.
- Avoid overextending loan terms (longer than 72–84 months), which raises total interest and risk of negative equity.
- Always check for hidden fees, add-ons, and insurance sold at the time of closing.
Average Interest Rate Trends for 2026
According to the latest industry and government data:
- The average car loan rate in March 2026 in Canada was 6.86% for new vehicles; used cars typically see higher rates, often over 8%.
- National Bank and Meridian are offering fixed or variable rate options between 7.49% and 11.73% depending on loan type and borrower profile.
- Bad credit applicants may see rates between 12.9% and 29.99%, with deep subprime cases occasionally higher.
Frequently Asked Questions
Car Loan Interest Rate Table by Major Ontario Lenders (2026)
| Lender | New Car APR | Used Car APR | Term Length |
|---|---|---|---|
| RBC | 7.2%+ | 8.5%+ | Up to 84 mo |
| TD | 7.5%+ | 8.8–9.5% | 36–96 mo |
| Scotiabank | 7.0%+ | 8.2%+ | Up to 84 mo |
| CIBC | ~6.9%+ avg. | 8.49%+ | 36–84 mo |
| National Bank | 7.49%+ | 8.99%+ | Customizable |
| Meridian CU | 7.49%–9.99% | 8.99–11.73% | 36–84 mo |
All rates subject to change and depend on your credit, loan, and vehicle characteristics. Always confirm with your lender before committing.
How to Use a Car Loan Calculator (Step-by-Step)
- Enter total vehicle price (including taxes and additional dealer fees).
- Input estimated down payment amount.
- Set your preferred loan term in months (36, 48, 60, 72, or 84 are common).
- Enter the interest rate (APR) given by your lender or as estimated in your research.
- The calculator will display your estimated monthly payment and total cost over the loan's lifetime.
- Adjust inputs (term, down payment, rate) to see how they affect your payment and total interest paid.
- Use results to negotiate with lenders or decide what's affordable before you sign.
Popular calculators: CIBC, TD Auto Finance, and independent web tool platforms are available for Ontario buyers.
Conclusion
Navigating the car loan market in Ontario in 2026 requires careful attention to interest rates, lender offers, and your financial standing. With Canada's major banks averaging new-car rates in the 7.0–7.5% range, but some providers and promotions beating these figures, it pays to compare widely and focus on credit improvement. Using the above step-by-step process and rate tables, Ontario residents can secure the best-possible terms for their car financing needs—minimizing costs even in a rising-rate world.