About Car Loan Interest Rates in Canada
Car loan interest rates are the percentage of the principal you pay for borrowing money to purchase a vehicle. These rates depend on several factors:
- Your credit score
- Type of lender (bank, credit union, dealership, online platform)
- Loan term and amount
- Current Bank of Canada rates and economic trends
- Vehicle type (new vs. used)
Lenders assess risk based on your creditworthiness, reflected mainly by your credit score. The higher your score, the lower your expected interest rate.
Car Loan Interest Rate Based on Credit Score Canada Scotiabank
Scotiabank, one of the largest lenders in Canada, offers car loans with rates primarily determined by your credit score and the loan product chosen.
Sample Rate Tiers at Scotiabank (2025):
| Credit Score Range |
Typical Scotiabank Car Loan Rate (APR) |
| 760+ |
4.99% – 6.74% |
| 700–759 |
5.99% – 7.49% |
| 660–699 |
7.49% – 9.49% |
| 600–659 |
9.99% – 14.99% |
| Below 600 |
14.99% – 19.99% or higher |
Actual rates depend on the vehicle, province, down payment, and promotional offers. Always check Scotiabank's latest rates page for updates.
Current Car Loan Rates Canada
As of October 2025, here are average car loan interest rates offered in Canada by major banks and lenders:
| Bank/Lender |
New Car Loan APR |
Used Car Loan APR |
Notes |
| Scotiabank |
5.99% – 8.39% |
7.49% – 12.99% |
Highly credit-score dependent |
| TD Canada Trust |
6.25% – 8.99% |
8.49% – 13.99% |
Dealer integration available |
| RBC |
5.94% – 8.59% |
6.94% – 10.99% |
Flexible repayment schedule |
| BMO |
5.99% – 9.99% |
7.99% – 14.99% |
Pre-approval online |
| Desjardins |
5.95% – 8.49% |
6.95% – 12.49% |
Quebec specialty |
| CIBC |
6.49% – 9.99% |
7.99% – 14.99% |
Used car focus |
| Specialized Lenders |
7.99% – 29.99% |
12.49% – 29.99% |
For subprime/bad credit |
Rates regularly change based on central bank policy, lender strategies, and vehicle promotions. Always confirm with your chosen lender directly.
Best Car Loan Interest Rate Based on Credit Score Canada
Getting the best rate hinges on your credit score. Here's how typical scores translate into rates and loan options:
Prime Credit (740+)
- Best rates: 5.69% – 7.99% on new cars, with options for 0% dealer financing on select models during promos.
- Banks like Scotiabank, RBC, and TD often offer competitive rates to prime customers.
Near-Prime (660–739)
- Rates: 7.99% – 11.99%
- More options available at banks and reputable dealerships. Dealer financing may have extra incentives.
Fair Credit (600–659)
- Rates: 11.99% – 16.99%
- May require a higher down payment, shorter term, or co-signer. Specialist lenders may offer approvals but with stricter terms.
Poor Credit (Below 600)
- Rates: 16.99% – 29.99%
- Approval possible but costly. Subprime lenders and dealer-based financing are main sources; rates and fees are high.
Steps to Secure the Best Rate
- Check your credit score (Equifax/TransUnion) before applying.
- Reduce outstanding debts for a better score.
- Apply for pre-approval at multiple lenders, including banks and credit unions.
- Compare offers, focusing on APR, fees, and total cost.
- Consider certified used vehicles or manufacturer certified lenders for possible lower rates.
- Increase your down payment to lower risk and qualify for better terms.
- Negotiate with dealers; dealer-based financing may feature promos but always compare with direct bank loans.
Which Bank Has Best Car Loan Rates Canada?
There's no single "best" bank since rates and terms vary for each applicant. However, as of late 2025, the following banks frequently offer the most competitive auto loan rates for Canadians with good or excellent credit scores:
| Bank |
Pros |
Cons |
| Scotiabank |
Wide dealer network, flexible terms |
Subprime rates higher |
| RBC |
Quick approval, rate discounts |
Stricter qualifications |
| TD Canada Trust |
Dealer integration, online tools |
Used car rates higher |
| BMO |
Pre-approval online, flexible repayment |
Fewer promo rates |
| Desjardins |
Low rates in Quebec, credit union perks |
Less availability outside Quebec |
| CIBC |
Focus on used vehicles, rate matching |
Not always lowest for new cars |
Tip: Credit unions (Desjardins, local co-ops) sometimes offer better rates, especially to members, than big banks.
What Is a Good Interest Rate on a Car Loan in Canada?
A "good" rate depends on the market and your credit score:
- Excellent credit (760+): 4.99% – 6.99% APR is considered excellent.
- Good credit (700–759): 6.99% – 8.99% is competitive.
- Fair credit (660–699): Under 11.99% is fair; shop around for better.
- Below 660: Anything below 19.99% may be acceptable depending on lender; however, improving credit can dramatically decrease loan costs.
For reference, the national average new car loan APR in Canada fluctuated between 6.99% and 8.49% in October 2025, reflecting both central bank rate hikes and lender risk policies.
Frequently Asked Questions
Can I get a car loan with bad credit?
Yes, but expect higher rates and stricter terms. Subprime lenders (e.g., Canada Drives, Go Auto, dealership financing) are main sources. Improving your score can save thousands over your loan period.
Is dealer financing better than bank financing?
Dealers may offer low promo rates (sometimes 0% on new models), but these can be offset by higher prices or strict requirements. Always compare with direct bank and credit union offers.
How much should my down payment be?
Aiming for 15–20% may secure better rates, especially with fair or poor credit.
Should I choose a shorter or longer loan term?
Shorter terms (36–48 months) mean less interest overall but higher monthly payments. Longer terms (60–84 months) lower payments but may result in higher total interest costs.
Conclusion
Canadian car loan interest rates depend most on your credit score, lender choice, and market conditions. Scotiabank, RBC, TD, Desjardins, and CIBC frequently offer some of the most competitive rates; however, shopping around and strengthening your credit score are key to landing the best deal. Always carefully compare all fees, terms, and read the contract details before signing.