Best Car Loan Rates in Canada 2023

Do you plan to buy a new vehicle? You can save lots of money with the best car loan rates in Canada through interest’s fees.

The process is daunting for everyone doing it for the first time. And probably you wish it to be a straightforward procedure to navigate. While it may appear confusing, you don’t need to rush it until you exhaust a few aspects.

The first step is to look for an affordable car loan when paying in cash is not your option.

You can do that by checking the car loan rates from various banks, car dealerships or compare several car financing institutions online After acquiring a car loan, this can help you finance a car for a long time through installments without any financial pressure.

Check some of the most reputable places you can get friendly loan rates below.

Best Car Loan Providers for 2023

Here is the list of lenders that provide some of the most affordable car loan rates in Canada.

If your credit score is poor, the rates will be higher than those with a good rating. Some may not bother to check your credit score until the loan is given. In these circumstances, timely payments improve your credit and qualify you for reasonable loan consideration in the future.

  • Car Loans Canada
  • Loan Connect
  • Canada Drives
  • Moves Financial

Car Loans Canada

  • The interest rate starts from 0.00% up to 29.95%
  • Loan terms start from 36 months to 8 years.

Car Loans Canada is longest-serving auto service pioneer in Canada for more than a decade. Many Canadians rely on their services for a quick online application that takes less than 5 minutes to fill, and the approval process is swift.

They have an extensive network that connects Canadians looking for vehicle loans with consumer proposal bankruptcies plus other credit score concerns to suitable loans.

The advantage with Car Loan Canada is a free resource, meaning you’ll encounter no concern about your credit history.

Loan Connect

  • Interest rate range from 4.6% to 46.96%
  • Loan term starts from 12 months to 60 months.
  • Maximum loan amount they offer is $50,000

Loan Connect provides same-day pre-approval within five minutes through an interest rate of between 4.6% to 46.96. Although their network is not expansive as Car Loans Canada, you can get good deals with loan terms of 12 months to 60 months.

The encouraging thing with loan connect is offering you best rates, whether for a car loan or something else irrespective of your credit history. They do not list car loan as a category but combine with other types of cars comprising boats, motorcycles and more.

They are accredited by the Better Business Bureau (BBB) with a rating of A+.

  • Canada Drives
  • Interest rate starting from 0.00% to 30%
  • The maximum amount of loan range from $5,000 $75,000
  • Loan term begins from 12 months to 92 months

Canada Drives was established in 2010; Canadians find it easy to get approved for auto finance irrespective of their credit score.

With over 350 car dealer partners, you are guaranteed to have car loan request approved despite your financial woes. The online application takes not more than 2 minutes to complete.

They give you a car loan interest rate of 0.00% to 30% and offer to finance cars worth $5,000 up to $75,000 with a loan term of 12 to 96 months. According to Trust Pilot, the lender has positive reviews and in 2019 was named as Canada best managed Company.

Moves Financial

  • Interest rate range from 15.65% AIR
  • Loan term starts from 0 to 6 months
  • The maximum loan amount you can get from $500 to $2,500

Moves Financial is different from other lenders as it fits independent “gig” workers and contractors. They give funds to qualified candidates depending on your income history and not credit scores.

You borrow loan of $500 to $2,500 repayable within 6 months. Early payments exempt you from penalties.

Only the residents of Alberta, BC and Ontario qualify for 15.65 AIR interest rates. To be eligible for credit, you must have an active bank account and receive income from gig platform within 3 months.

The only allowed gig platforms are Upwork, Amazon Flex, TaskRabbit, Foodora, SkipTheDishes, Uber, FaceDrive, Hyr, Instacart, and HiRide.

Ferratum Loans

  • Interest rate starts at 18.9%
  • Loan term start from 1 year to 5 years
  • Maximum loan amount they give you is $15, 000

Ferratum is the only Company with the simplest and speedy loan delivery of all the mentioned lenders. Within 24 hours they process your loan without asking for any documents.

However, their loan is not suitable to buy a new car, since they allow a maximum amount of $15, 000. But that amount can buy a second-hand vehicle.

Those who are below the stellar credit score can apply for a loan if they have a minimum monthly income of $2, 000. Must be a Canadian citizen, have an active bank account, and not have a bankruptcy history for 7 years.

Ferratum set conditions to make it difficult for individuals with bad credit history. The interest rate starts at 18.9%, and you qualify for funds not exceeding more than 5 years.

Car Loans and how it Works

In simple terms car loan is a personal loan given to a borrower by a lender to buy a car. The borrower will, in return repay the amount within the agreed time plus the interest.

The amount of interest rate you are to pay depends on various aspects. They include the type of car you choose, the lender’s prime rate, and your credit history.

Remember the car acts as security for the loan, and if you default to pay within the agreed timeframe, the lender has a right to take the car from you.

The lender can be a credit union, car dealership, online lenders or a bank.

Here are important concepts you need to understand before you go for a car loan that may guide you during and after securing the loan.


The original amount you agree to pay back to the lender or the one you use to buy a car.

Interest rate

This is the percentage that the lender charges you for the borrowed loan. The interest rate that the lender requires you to pay depends on several aspects such as your credit history, creditor prime rate plus the model of your car.

Some of the loan money you pay offsets the interest rate and the rest goes to cover the principal amount you owe. Also, you should note that the interest rate can either be a variable or fixed rate. In some cases, the amount you pay per month remains the same (e.g. fixed rate)

Loan Term

This is the duration of time that you take to repay the car loan to the lender. The length of your car loan typically may take from 1 year to 8 years.

The best car loans in Canada are longer ones where you pay a low amount per month. The only downside is that it can affect you when you experience financial difficulties along the way and the car you’re paying loan for is not operational.

Therefore, it’s advisable to take a car loan not exceeding five years if you have good cash flow.

What is the Best Option? Taking a Lease, Finance or Buy a Car?

While you can choose either leasing, financing or buying a car outright, you need to consider several factors.

Car Lease

If you opt to lease a car, you are renting it for some time and not entirely yours. Normally, lease takes between 2 to 4 years, and at the end, you can take the car back or purchase it. And here are the reasons leasing is for you:

  • Drive new vehicle – If your idea is to drive a new car, leasing may work for you as never deals with used cars.
  • You love high-end cars – Lease is the best option if you are after nicer vehicles which also mean your budget will be high.
  • You drive short distance – The majority of leases have kilometer limit
  • Affordable payments – If you don’t have enough cash flow, lease payments are favorable than car loan repayments.
  • Low Maintenance – Lease deals with new vehicles, and you are less likely to have car breakdown or repairs.

The disadvantage of Car Lease

  • It is costly in the long run
  • Mileage limitation
  • You cannot customize it
  • Not easy to cancel

Finance a Vehicle

Financing a vehicle means acquiring a loan to purchase it, and the end, it will be completely yours. This choice can work if:

  • You plan to own the car after completing repayments of your car loan
  • You want to customize the vehicle by adding more features than its original look
  • You want to have a good credit score by making timely repayments
  • You want to drive without kilometer limit restrictions

The disadvantage of financing a Vehicle

  • You’ll pay more than lease monthly payments
  • Depreciate by the time you’re completing to repay your loan
  • You pay for maintenance and repair costs

Buying Car in Cash

You will not worry about monthly payments

You get cash incentives when you purchase in cash

No interests and therefore saves you lots of money

Application Checklist for a Vehicle Loan

Are you ready to start the car loan process? You need to gather a few items to be prepared ahead of time. Here are important things you need to get ready.

Credit Score & Credit Report

The better your credit score, the higher your chances of getting low-interest rates. That enhances your credit score before a car loan application can eventually win you a great deal. Lenders are interested in your credit history and reports showing your past financial journey.

The only way to impress the lenders is improving your credit score by making timely payments of your bills.

Car Details

The terms of your loan depend on the car details you provide. So, have with you the make and model information before loan application.

Personal and Financial Information

The lender requires your personal and financial details to learn about your full names, date of birth, plus current address. Further, the lender wants to know whether you have any outstanding debts such as a mortgage, or rent. They may ask you to provide bank statements too.

Driver’s Licence

The lender may ask for your driver’s license even though it’s not necessary. However, borrowers with a driving license are more committed to paying back their vehicle loan.

Employment proof and Income

Lenders check your employment history to ascertain whether you are capable of paying the car loan. They further check about your income details to know if you are making enough money to qualify for a loan.

Bank Details

Your lender may ask for a void cheque and need you to complete a preauthorized form. Of course, this will show whether your bank is in Canada and allow the lender to make automatic withdraw payments from your bank account.


There you have the best car loan rates in Canada. The next step is to make regular plus timely payments when you get the right lender. If you don’t have ready cash to purchase the car, loan is the best option.

Finally, you should focus on improving your credit score without defaulting.  If possible, try to lower the interest rate when your income increases by increasing the car loan monthly payments.