What Is a Good Car Loan Interest Rate in Canada?
Car loan rates in Canada vary by credit score, lender, and term. Here's what's considered a good rate and how to get the best one you qualify for.
Car loan interest rates in Canada vary based on your credit score, the lender, the loan term, and whether the vehicle is new or used. Understanding what counts as a "good" rate can help you know whether you're getting a fair deal — or overpaying.
What Are Current Car Loan Rates in Canada?
As of 2025, typical car loan rates in Canada range from:
- Prime (excellent credit, 750+): 5.99%–8.99%
- Near-prime (good credit, 650–749): 8.99%–12.99%
- Subprime (fair credit, 550–649): 13.99%–19.99%
- Deep subprime (poor credit, below 550): 20%–29.99%
New vehicle rates are typically 1–3 percentage points lower than used vehicle rates, because manufacturers often offer subsidized rates through their captive finance companies.
What Counts as a "Good" Car Loan Rate?
A good rate depends on your credit situation:
- Excellent credit (750+): Under 7% is good; under 6% is excellent
- Good credit (650–749): Under 10% is good; under 9% is excellent
- Fair credit (550–649): Under 16% is good; under 14% is excellent
- Poor credit (below 550): Under 22% is reasonable; anything under 20% is excellent for this tier
If you're being offered a rate significantly above these ranges, you may be able to find better terms elsewhere.
Factors That Affect Your Rate
Credit Score
Your credit score is the single biggest factor. A 100-point difference in your score can change your rate by 5–10 percentage points — which adds up to thousands of dollars over a loan.
Loan Term
Longer terms mean higher rates and more total interest:
- 36–48 months: Lowest rates
- 60 months: Slightly higher
- 72–84 months: Higher rates, and many lenders won't go beyond 72 months for subprime borrowers
New vs Used
New vehicles typically qualify for lower rates because manufacturers offer subsidized financing and new vehicles have predictable value. Used vehicles carry higher rates because they're harder to value and carry more risk.
Down Payment
A larger down payment reduces the lender's risk and can improve your rate. A 20% down payment can lower your rate by 0.5–1 percentage point compared to a minimal down payment.
Vehicle Age
Most lenders won't finance vehicles older than 10 years, and rates increase for older vehicles. A 7-year-old vehicle might have a rate 2–3 points higher than a 2-year-old vehicle.
How to Get the Best Rate You Qualify For
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Check your credit first — Know your score before you apply. Use our Credit Score & Rate Tool to see what rate range to expect.
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Compare multiple lenders — Don't accept the first offer. Dealerships work with multiple lenders and can mark up your rate for profit.
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Make a down payment — Even 10% down can improve your rate and terms.
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Choose a shorter term — A 48–60 month loan costs less in interest than a 72–84 month loan, even at the same rate.
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Consider a co-signer — If your credit is borderline, a co-signer with strong credit can help you qualify for a better rate.
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Get pre-qualified — A soft pre-qualification shows you what rate range you qualify for without impacting your credit score. Start your pre-qualification with Affordrive to see your estimated rate.
How Rate Affects Your Total Cost
The difference between a 7% and 14% rate on a $30,000 loan over 60 months is dramatic:
| Rate | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 7% | $594 | $5,640 | $35,640 |
| 14% | $701 | $12,060 | $42,060 |
That's a $6,420 difference — more than 20% of the vehicle's price. This is why getting the best rate possible is so important, especially if you have bad credit.
Use our Car Payment Calculator to see how different rates affect your monthly payment, and our Loan Interest Calculator to see how much you can save by paying extra.
The Bottom Line
A "good" car loan rate is relative to your credit situation. The key is knowing what rate range you should expect for your credit tier, comparing offers, and choosing the shortest term you can afford. Get pre-qualified first so you know your number before you walk into a dealership.
Frequently asked questions
What is a good car loan interest rate in Canada? For excellent credit (750+), under 7% is good and under 6% is excellent. Near-prime borrowers (650 to 749) typically see about 9% to 12%.
Does a down payment lower my car loan rate? It can. A larger down payment reduces the lender's risk, which can help you qualify for a better rate.
Are used car loan rates higher than new car rates? Usually. Used and older vehicles typically carry somewhat higher rates than new cars.
Affordrive is a Canadian vehicle-shopping and financing-information platform designed to help consumers understand their options before connecting with a dealership.
Affordrive does not guarantee financing approval. Financing decisions, rates, terms and vehicle availability are determined by the applicable lender and dealership.
Information on this page is for educational purposes and should not be considered financial advice. Read how we write and update our guides and how Affordrive makes money.