Canada’s Best Car Loans

By John Hayden

Finding the best car loans in Canada can be a complex task, with many factors influencing this decision. Exploring some of these factors, this article explains how you can lower the overall cost of buying your car.

Finding the Best Car Loans in Canada

Just like the vehicles they finance, car loans come in all shapes and sizes. That means there’s a perfect deal for everyone in this dynamic market. So here are some practical tips on picking the best car loans in Canada:

  • Never borrow more than you can pay back comfortably each month. That’s because missed payments not only cost you more money, they also tank your credit score. Instead, downsize to a smaller or older model, perhaps with fewer features – do you really need a top-end eight-speaker sound system for your daily commute?
  • Offer the largest down payment you can afford (preferably 20% or more), even if you have to save up for a few months beforehand. By lowering the amount you actually borrow, you might qualify for a lower interest rate (there’s less risk to the lender), and you can pay off your loan over a shorter period, freeing up the amounts earmarked for your monthly car loan payments.
  • Consider a secured car loan (with lower interest rates) by using some other asset as collateral guaranteeing repayment. Another alternative is to find a co-signer, so that your lender knows the debt will be paid off promptly. Although financially beneficial, this option requires careful budgeting, as missing more than a payment or two will lead to the seizure of assets offered as surety;
  • Comparison shop and weigh all the conditions offered by dealerships, mainstream lenders, and alternative sources, including origination, documentation, licensing, and delivery fees. Spending few hours researching all the many different loan sources and repayment plans available to you could save thousands of dollars and interest over the next few years.

Canada’s Best Car Loan Providers 

There are countless places where prospective buyers can check out car loans, some of them also offering pre-approval, for closing deals faster.

Dealerships offer in-house financing directly, often with looser approval requirements to make the sale, but with slightly higher interest rates. Another advantage is streamlined paperwork, often signing off on a deal during a single visit to the showroom.

Credit Unions and Banks may offer better rates on loans, particularly to their own account holders. With instant access to a buyer’s financial data, this is a prudent choice for buyers with decent credit scores and solid repayment track records.

Online Lenders welcome buyers with lower credit scores who might find it difficult to obtain loans through traditional channels. Most have websites where lower-income borrowers with bad credit can open accounts, submit applications, and qualify for sub-prime auto loans, usually at more expensive rates that offset higher risks.

Canada’s Best Car Loan Providers

Auto financing in Canada is a thriving business that responds to a huge range of consumer needs and preferences. At amounts ranging from $500 to $60,000, each transaction has its own interest rate. This can vary from an inviting 0% (often for new vehicles purchased by financially sound buyers) to over 45% (protecting lenders against high default risks).

Another important factor is the term of the loan. This usually hovers between nine months and six years, although some lenders work with a whopping 96 months, which is the longest period allowed under Canadian law.

Here’s a rough guide to Canadian auto loan specialists, with indications of how much you might be able to borrow, for how long, and at what cost:

Lender Borrow This Much Months Pay This Much Interest
Canada Auto Finance $5,000 – $45,000 36 – 72 4.90 % – 29.95%
Canada Drives $500 – $35,000 9 – 60 $29.99% – 46.96%
CarLoans 411 $5,000 – $40,000 12 – 72 Varies
CarLoans Canada $7500 – $59,995 12 -96 3.95% +
Eden Park Varies 12 – 84 11.9% +
Loans Canada $500 – $50,000 12 – 84 Up to 46.96%
SafeLend Up to $50,000 12 – 72 8.99% +
SkyCap Financial $500 – $10,000 9 – 36 12.99% – 39.99%
Splash Auto Finance Up to $50,000 12 – 84 Varies

Personal Data Requirements

Regardless of the amounts involved, almost all auto lenders check credit reports, with higher credit scores ensuring faster approvals and lower interest rates. They also require a full set of personal data. This usually includes:

  • Proof of identity, with proof of residence;
  • Proof of Income, with bank account details;
  • Proof of employment, with job title and income;
  • Down payment amount, together with the vehicle price, make and model.

Remember: Prompt repayment of your car loan in Canada is a great way of building up your credit score – with even more financial benefits in the future.

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