Used Car Loan Rates in Canada
Used car loan rates are typically 1–3 points higher than new car rates. Here's what to expect and how to get the best used car rate in Canada.
Used car loan rates in Canada are typically 1–3 percentage points higher than new car rates. This is because used vehicles are harder to value, carry more risk of breakdown, and don't benefit from manufacturer-subsidized financing.
Current Used Car Loan Rate Ranges
| Credit Score | Used Car Rate | New Car Rate (for comparison) |
|---|---|---|
| 750+ | 7.99%–10.99% | 5.99%–8.99% |
| 650–749 | 10.99%–14.99% | 8.99%–12.99% |
| 550–649 | 16%–22% | 14%–20% |
| Below 550 | 22%–30% | 20%–29% |
How Vehicle Age Affects Your Rate
Lenders categorize used vehicles by age, and rates increase with age:
- 1–3 years old: Lowest used rates — often close to new car rates
- 4–6 years old: Moderate rate increase of 1–2 points
- 7–10 years old: Higher rates; many lenders cap terms at 48 months
- 10+ years old: Very high rates or no financing available
Most lenders won't finance vehicles older than 10 years, and some cap at 7–8 years.
Why Used Car Rates Are Higher
- No manufacturer subsidies — New car companies offer below-market rates to sell cars; used cars don't get this
- Higher default risk — Used vehicles break down, leaving borrowers with payments on a car they can't drive
- Harder to value — Used vehicle values fluctuate, making the loan riskier for the lender
- Shorter terms required — Older vehicles need shorter terms, which means higher monthly payments
How to Get the Best Used Car Rate
- Buy a newer used vehicle — A 2–3 year old vehicle qualifies for better rates than a 7-year-old one
- Choose a reliable brand — Toyota, Honda, and Mazda get better rates because they hold value and are less likely to break down
- Make a down payment — 10–20% down reduces the lender's risk
- Keep the term under 60 months — Shorter terms get better rates
- Get pre-qualified first — Know your rate before you shop so you can negotiate
Used vs New: The Total Cost Comparison
Even with a higher rate, a used car can be cheaper overall:
| Used ($20,000 @ 12%) | New ($35,000 @ 6%) | |
|---|---|---|
| Monthly (60mo) | $445 | $677 |
| Total interest | $6,700 | $5,620 |
| Total cost | $26,700 | $40,620 |
The used car costs $14,000 less overall, even with a higher rate.
The Bottom Line
Used car rates are higher than new car rates, but the lower purchase price usually makes a used vehicle the better financial choice. Get pre-qualified to see your actual used car rate, and use our Car Payment Calculator to compare payments.
Looking for a specific vehicle? See our best used SUVs under $30,000 or best used cars under $20,000.
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.