Advertiser Disclosure: Fortunly.com is an independent review site dedicated to providing accurate information about various financial and business-related offers. Fortunly.com remains financially sustainable by participating in a series of affiliate partnerships - it’s visitors’ clicks on links that cover the expenses of running this site.
How and where the offers appear on the site can vary according to the partnership terms. Affiliate partnerships may affect where a particular product is listed within a review, but they don’t affect the review’s content in any way.
Fortunly.com’s in-house writing team writes all the site’s content after in-depth research, and advertisers have no control over the personal opinions expressed by team members, whose job is to stay faithful to the truth and remain objective.
Our pages may include reviews of products or services for which we do not receive commission and are not tied to affiliate partnerships; information included in these reviews has been solely collected by Fortunly.com and has not been reviewed or provided by the issuer of this product or service. Product/service details may vary. Please see the issuer’s website for current information.
The Fortunly.com website does not include reviews of every single company offering loan products, nor does it cover all loan offers or types of financial products and services available.
Best Car Loans in Canada
Are you looking to finance your new car purchase? Taking out a loan is often the best option for many people. However, knowing where to begin tends to be challenging with so many different lenders and loan products available. And if you’re not careful, you could end up with an interest rate much higher than average.
To help you reach the best decision, we compiled a list of the leading car lenders.
Best Car Loans in Canada for December 2024
Loans Canada
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Loans Canada trades in cars, vans, SUVs, and trucks. It offers the most attractive rates on the market for customers with excellent credit scores for certain vehicles. Read more
- •Interest rates down to 0%
- •The lowest loan amount is $500
- •Linked to the largest dealerships network in Canada
Car Loans Canada
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Car Loans Canada has one of the lowest interest rates of 20.99% for clients with poor credit scores. Also, their pre-approval quickly follows the application. Read more
- •A few-minute application
- •No down payment required
- •Connected to hundreds of lenders
Canada Drives
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Canada Drives is among the best car dealers selling used cars. Their maximum loan amount is pretty high, and the rates tend to be affordable. Read more
- •Quick application process
- •Specializes in used cars trade
- •Efficient and knowledgeable customer service
Car Loans 411
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Car Loans 411 offers car loans with a low interest rate. It matches prospective buyers with dealerships close to them and boasts high approval rates. Read more
- •Low credit score
- •Minimum income of $1,600
- •Interest rates starting from 1.9%
Canada Auto Finance
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
This car dealer offers some of the best rates in Canada for customers with low credit scores and incomes. Read more
- •Low credit score
- •Nationwide availability
- •Minimum income of $1,500
Top 5 Car Loans in Canada - Our Picks for 2024:
Loans Canada – The lowest interest rates
Car Loans Canada – A substantial partner network
Canada Drives – Best for online purchases of used cars
Car Loans 411 – The lowest maximum interest rates
Canada Auto Finance – Best for customers with poor credit scores
How We Evaluate Canadian Auto Loan Lenders
The following section relates to some terms and practices you should familiarize yourself with before purchasing a vehicle.
The Principal
The principal is the amount of money borrowed for a car loan. Interest accrues on this amount and the longer the loan’s term, the higher the principal will be. In other words, car loans with shorter terms have lower principals than long ones since a portion of each payment goes towards the principal and the remainder finances the interest.
Interest Rate
How much your auto loan will cost also depends on the effective interest rate charged by the lender. The rate is determined by consulting factors such as:
- Your credit score
- Lender’s prime rate
- Optional down payment
Other factors affecting the interest rate may be the model and the year of the financed vehicle.
Term
A loan term refers to the amount of time the borrower has to repay the loan. This period can vary depending on the lender but is usually several months or years.
The length of the term also generally depends on the loan size and the borrower’s creditworthiness. Typically, loans with shorter terms will have a higher monthly payment but will cost less overall.
Loan Types
There are three main types of car loans you can resort to when buying a vehicle:
- Dealership financing is when you finance a vehicle purchase through the dealership. It can be convenient since you’re comparing financing options from various lenders, so ensure to shop around and get the best interest rate.
- Getting financing from an online lender is an easy process you can complete from home. Everything is done online, so comparing rates and making a best-value decision shouldn’t be difficult.
- Direct lending is when you get a car loan from a bank or credit union, and the loan funds are deposited into your bank account. Then, you can use that money to purchase the desired vehicle. Bank car loan interest rates apply in this case.
Detailed Reviews of Canadian Car Lenders
Loans Canada
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Overview
This vehicle dealer offers car loans with interest rates starting at 0%. It also offers a wide variety of four-wheelers, including vans, SUVs, and trucks.
Credit score
With Loans Canada, you qualify even with the lowest credit score of 300. However, a higher score promises a lower loan cost.
Loan term
The loan term you can sign up for with this provider is longer than many other dealers offer. Loan terms start at 24 and extend to 120 months.
Loan amount
The highest loan amount you can get with this provider is $35,000. This is considerably lower than other vendors’ maximum amounts. The minimum amount, on the other hand, is $500.
Interest rates
You can access some of the lowest interest rates with this car dealer, starting at 0%, if you meet certain requirements. These are:
- An excellent credit score (760 – 900)
- Willingness to buy a used vehicle
In the case of obtaining a 0% interest rate, pay attention to whether the rate applies for the entire duration of the term. The highest rate you could end up with is 31.99%.
Extras
To apply for a loan in the first place, you need to:
- Be employed for at least three months
- Have a monthly income of no less than $1,800
Loans Canada sends requests to various lenders upon your application, improving your chances of getting the right deal. Note, though, that some partners might charge an origination fee. Finally, the dealer works with secured loans only, meaning that you can lose a car if you fail to send timely payments.
Car Loans Canada
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Overview
Headquartered in Ottawa, Car Loans Canada has been in business for over ten years. During that time, the company developed a vast partner network to yield loan conditions that suit most buyers’ needs.
Credit score
Thanks to its extensive number of partners, Car Loans Canada can match clients with bad credit scores, even bankruptcies, with auto dealers willing to sell them a car while keeping the approval rate high.
Loan term
With this dealer, you can schedule a repayment loan term for up to eight years.
Loan amount
You can borrow up to $80,000 for a car purchase with Car Loans Canada.
Interest rate
Clients with bad credit scores benefit from relatively low car loan payments when buying a vehicle through this vendor. The lowest interest rate is 4.95%, while the highest is 29.99%, which is considerably lower compared to some dealers.
Extras
Buyers recognized Car Loans Canada as one of the top dealers nationwide since they approve more than 11,000 monthly requests. Moreover, their application procedure is simple, and response times are short, so you can get a car within a few days after applying.
Finally, they don’t demand a down payment, and the company’s customer service is efficient and knowledgeable.
Canada Drives
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Overview
Canada Drives is a car loan provider specializing in the used cars trade. The company streamlines the procedure by offering its clients to complete the application process and buy their four-wheelers online.
Credit score
The minimum credit score requirement to buy a used car from Canada Drives is 400. So, you don’t need a fair score to be eligible to apply, but you still have to be a little above the bottom line.
If you don’t meet this requirement, you might wish to check out our tips on increasing your credit score.
Loan term
When buying a used car from Canada Drives, you can pay the vehicle off anywhere between 12 and 92 months following the application approval.
Loan amount
The highest loan amount this car dealer will approve is $99,999.
Interest rate
Since Canada Drives specializes in used cars, it offers some of the lowest interest rates in Canada, ranging from 4.75% to 29.99%.
Extras
Some other mandatory criteria you have to meet to apply for a used car via Canada Drives are:
- Have an active bank account
- Posses a valid driver’s license
- Have a monthly income of at least $1,800
Contact the company’s customer service via phone or email if you have any questions or concerns. Finally, you can consult their loan calculator to make a more informed decision.
Car Loans 411
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Overview
Car Loans 411 offers some of the cheapest car finance rates in the market.
Credit score
You don’t need a good credit score to apply for a loan with this dealer since they accept applications from potential customers whose credit score is as low as 300.
Loan term
With this company, you can take a loan for 12 to 84 months.
Loan amount
The minimum auto loans this dealer approves are $500, while the maximum amounts are $50,000.
Interest rates
The company’s interest rates are among the lowest in the market, which helps clients avoid over-stretching their budget. The lowest interest rate for customers with excellent credit scores is 1.9%, while the highest is 19.99%.
Extras
To get a loan, you need at least a $1,600 salary. Also, you must be continuously employed for no less than three months. If you meet these and a few other requirements – such as possessing a valid driver’s license and being a citizen or permanent resident – the likelihood of getting approved is very high.
Potential downsides are that some lenders Car Loans 411 connects you with may charge additional fees and customer support only being available over the phone.
Canada Auto Finance
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Overview
Canada Auto Finance offers some of the lowest rates for clients with poor credit scores and their response times are reasonably short. Another huge benefit for future car owners is that this vendor operates in every Canadian province and territory.
Credit score
You can have a credit score down to 300 to be eligible to apply for auto financing. Remember, though, that you need an excellent credit score to benefit from the best deals offered here.
Loan term
The loan term can run anywhere from 3 to 96 months with Canada Auto Finance.
Loan amount
The least amount of money you can loan from Canada Auto Finance is $500, while the greatest is $45,000.
Interest rates
The company's interest rates start at the average of 4.9% and go up to 29.95%.
Extras
If your credit score is below 625, you must have at least a 3-month employment and no less than $1,500 in monthly income. Having down payment money ready may also be good if your credit score is low. Your past bankruptcies need to be discharged when applying.
Pros and Cons of Financing a Car With a Loan
Getting a loan, leasing, and borrowing money from friends to finance a car purchase all have their advantages and disadvantages. Car loans are usually the best way, but they come with some drawbacks, so let’s look at the pros and cons of car loans:
Benefits
- Once you have paid off the loan, the car is all yours.
- If you have an excellent or good credit score, you can get the best interest rates. It can also save you money on the overall cost of your car.
- A car loan can help improve your credit score. This may be helpful if you need to finance something else in the future, such as a house, for example.
- Car loans are generally more straightforward and quicker than other financing options, such as leasing or borrowing money from friends or family.
Downsides
- If you fall behind on payments or default on loan, your credit score will suffer, and you might even lose the vehicle.
- The monthly payments on a car loan are usually higher than lease payments.
- You are responsible for all maintenance and repair costs associated with the vehicle.
Choosing a Car Loan
To make this experience smoother, we’ve compiled a checklist of criteria to pay attention to.
Some key parameters you should take into account are:
- Your credit score
- The term length of your loan
- The maximum loan amount you’re eligible for
For example, you may opt for the longer term for the lower payments. In that case, you’ll pay more interest over the loan life.
Now, let’s get to car loan basics to see what factors impact your car purchase.
Credit Score
Your credit score is one of the main factors lenders use to determine whether or not to give you a car loan.
Getting a loan will be very difficult if you have a bad credit score. And even if you get approved, interest rates are likely to be high.
But if you have an excellent credit score, you’ll probably be able to get a loan with ease. Moreover, you should get the lowest car loan interest rate.
So, checking your credit score when considering a car loan is paramount as it could make all the difference in the world.
Credit scores are ranked as follows:
| Score | Range |
| Poor | 300 – 559 |
| Fair | 560 – 659 |
| Good | 660 – 724 |
| Very Good | 725 – 759 |
| Excellent | 760 – 900 |
If you need help with checking your credit score, it’s best to speak to your financial advisor or banker to get the most relevant information.
Loan Term
The car loan term refers to the period you have to repay the loan. Loan terms typically stretch between 12 and 96 months. Also, consider the interest rate when choosing a car loan.
When selecting a shorter term, you’ll need to make a larger down payment and pay higher monthly installations. On the other hand, a longer loan term promises lower monthly payments but higher interest rates overall. That is because the lender is taking on more risk by lending you money for longer.
Choosing a loan term as short as possible is advised without stretching yourself too thin.
Loan Amount
In Canada, the lowest amount you can borrow for a car loan is $500, and some providers don’t have a maximum limit.
Depending on the lender, credit history, and income, you may get approved for a different loan amount. When considering how much financing you’ll need, factor in taxes, fees, and insurance on top of the car price.
Interest Rates
The interest rate is usually based on the loan term’s length and your credit score. The interest rate is among the most significant factors to consider when taking a car loan.
Also, your income affects the interest rate by a large margin. The higher your income, the more likely you will get a lower interest rate. Finally, the type of car you’re looking to finance will also play a role in determining your interest rate.
Before you start negotiating with car merchants, you might want to learn the average car loan rates, as interest rates in Canada can sometimes go up to 46.96%.
Summary
Understanding how car loans work can be confusing. Still, if you comply with the tips and information from our car loan checklist, you’ll be able to navigate the process seamlessly and get the best deal. Generally, it all comes down to choosing a loan you can afford and making regular payments.