Best Car Loans in Canada: Dealer, Bank and Online Lenders Compared
Loading article…
The best car loans in Canada come from three places: the dealer, your bank, or an online lender. As of October 18, 2026, manufacturer promotions start at 0% on select new models, the big banks finance through thousands of dealerships without publishing a rate, and online platforms advertise car loans starting at 4.99%. This guide compares each option with dated, sourced figures. For every borrowing product we cover, start at our loans hub.
The right choice depends on three things: the vehicle (new, used, or private sale), your credit profile, and how long you plan to keep the car. A 0% promotion on a new model beats any bank loan. On a seven-year-old used car bought from a neighbour, a bank or a personal loan is often the only route.
How car loans work in Canada
A car loan is an instalment loan secured by the vehicle. The lender registers its interest in the car, and you repay a fixed amount each week, two weeks, or month until the balance reaches zero. If you stop paying, the lender can repossess the vehicle.
Your interest rate depends mostly on your credit history, the age of the vehicle, the term, and your down payment. Lenders read your file from Equifax and TransUnion, so it pays to check your credit score before you shop. Our guide to credit score ranges explains where the better rates usually start.
The term matters as much as the rate. The Financial Consumer Agency of Canada (FCAC) notes that a new car may be worth 25% less after one year, then typically loses 15% to 25% of its value each year for the next four years (FCAC). On a long loan, you can owe more than the car is worth. That gap is called negative equity, and it follows you into your next purchase if you trade in early.
Best car loans at a glance
The table below summarizes the main options as of October 18, 2026. Rates come from each lender's own site; banks do not publish car loan rates, so their rate is set when you apply.
| Option | Example | Rate | Term | Best for |
|---|---|---|---|---|
| Manufacturer promotion | Kia 2026 Sportage LX-FWD (Ontario) | 0% | 60 months | New cars with a current promotion |
| Manufacturer promotion | Toyota 2026 RAV4 (national) | 2.99% | 36 months | New cars, shorter terms |
| Bank dealer financing | RBC, TD, Scotiabank | Not published | Up to 96 months | New and recent used cars at a dealer |
| Credit union auto loan | Desjardins Auto Loan | Not published (fixed) | Depends on amount and vehicle | Desjardins members who want to prepay freely |
| Online platform | LoanConnect (not a lender) | From 4.99% | 72 to 84 months | Comparing several lenders at once |
| Online personal loan | Spring Financial | 9.99% to 35.00% | 6 to 84 months | Private sales, fair credit |
Dealer financing and manufacturer rates
Dealer financing is the most common route for a new car. The dealer sends your application to the manufacturer's finance company or to a partner bank. When the manufacturer subsidizes the rate, the result can be lower than anything a bank offers on its own.
Here are examples published on manufacturer sites, as of October 18, 2026:
- Kia 2026 Sportage LX-FWD: 0% for 60 months, Ontario, deliveries from October 1 to November 2, 2026 (Kia Canada)
- Toyota 2027 Prius Plug-in Hybrid: 1.99% for 36 months, national offer, October 1 to November 2, 2026 (Toyota Canada)
- Toyota 2026 RAV4: 2.99% for 36 months, same period
- Hyundai 2026 Tucson Preferred AWD: 4.19% for 60 months (Hyundai Canada)
- Hyundai 2026 Elantra Essential: 4.49% for 60 months
These rates apply to specific trims, terms, and delivery dates, on approved credit. They change monthly and can differ by province, so treat them as a snapshot, not a quote.
Read the fine print on promotions
A promotional rate often covers one term only. Toyota's offers above are for 36 months; if you stretch to 72 months, the rate goes up. Ask the dealer for the rate at every term you are considering.
Fees also sit outside the advertised rate. Hyundai's offers page states that finance offers exclude registration, insurance, PPSA, licence fees, and dealer administration fees of up to $799. Add those to the price before you compare.
Finally, ask whether a cash incentive exists on the same model. Some buyers do better taking the cash and financing at a slightly higher rate elsewhere. Kia also offers current owners a 1% loyalty rate reduction, which can never take a rate below 0%.
Bank car loans: RBC, TD, Scotiabank, BMO, Desjardins
The big banks lend for cars in two ways. Most of their volume goes through dealerships, where you ask for bank financing at the sales desk. You can also borrow directly with a personal loan, which works for private sales.
None of the five lenders below publishes a car loan rate online. Your rate depends on your credit and the vehicle, and you only see it once you apply.
| Bank | How you borrow | Maximum term | Key conditions |
|---|---|---|---|
| RBC | Over 4,500 dealerships; personal loan from $5,000 | 96 months | Vehicles less than 10 years old |
| TD | Dealerships; personal loan from $2,000 | 96 months on select vehicles | Fixed or variable rate; prepay without penalty |
| Scotiabank | Over 4,000 dealerships | 8 years | Up to $200,000; vehicles up to 7 years old; prepay without penalty |
| BMO | Personal loan (no dealer financing since September 2023) | 5 years | Fixed or variable rate |
| Desjardins | Auto Loan through a dealer, from $7,500 | Depends on amount and vehicle | Up to 100% financed; fixed rate; prepay without penalty |
RBC
RBC says its car financing is available at over 4,500 dealerships in Canada, with terms up to 96 months on vehicles less than 10 years old (RBC). For a private sale, an RBC personal loan starts at $5,000 with a term of 1 to 10 years.
TD
TD Auto Finance offers fixed or variable rate financing through dealerships, with terms up to 96 months on select vehicles (TD). TD states that you can pay off some or all of the loan without penalty. A TD personal loan starts at $2,000 over 1 to 7 years.
Scotiabank
Scotiabank finances through over 4,000 dealerships, up to $200,000 and up to 8 years, at a fixed or variable rate (Scotiabank). The vehicle can be new or up to 7 years old. You can prepay at any time without penalty and choose weekly, bi-weekly, or monthly payments.
BMO
BMO wound down its indirect auto financing through dealers in September 2023, as Reuters reported at the time. Today, BMO presents its personal loan as an option for large purchases such as a car. That loan runs 1 to 5 years, at a fixed or variable rate.
Desjardins
The Desjardins Auto Loan through a dealer starts at $7,500 and can finance up to 100% of the purchase (Desjardins). The rate is fixed for the term, and you can prepay in part or in full at any time without penalty. Desjardins says the term depends on the loan amount and the type of vehicle.
Online lenders and loan platforms
Online platforms match you with several lenders after one application. LoanConnect states that it is not a lender; it advertises auto loans starting at 4.99% with repayment terms between 72 and 84 months (LoanConnect). Its general personal loans range from $500 to $50,000, from 8.99% to 35%, over 3 to 120 months.
Personal loans from online lenders also work for a used car bought privately. As of October 18, 2026, published ranges include:
- Spring Financial: $500 to $35,000, 6 to 84 months, 9.99% to 35.00%
- Fairstone secured loan: 19.99% to 25.99%, 36 to 120 months
- Fairstone unsecured loan: 29.99% to 34.99%, 6 to 60 months
These rates sit well above dealer promotions. They make sense mainly when you cannot get dealer or bank approval, or when the vehicle is too old for a standard car loan.
Car loans with bad credit
With a low score, expect fewer options and higher rates. Some manufacturers run programs for credit-challenged buyers. Kia, for example, describes a special financing program for customers who have never had a car loan, have late payments, or have not yet been discharged from bankruptcy, on approved credit.
Subprime offers can approach the legal limit. Before you sign, compare the total cost over the full term, not the weekly payment. A larger down payment or a shorter term lowers both the rate risk and the chance of negative equity.
In the meantime, work on your file. Our guide on how to build your credit score covers the habits that move your score in a few months.
How to compare car loan offers
Get a pre-approval from your bank or a platform before you visit the dealer. It gives you a reference rate, and the dealer then has to beat it. Negotiate the vehicle price first, then the financing, never the monthly payment alone.
Compare offers on total interest paid. A longer term lowers the payment but raises the total cost. To see how extra payments shorten a loan you already have, try our debt payoff calculator.
Check three terms in every contract: the prepayment rules, the fees added to the amount financed, and any optional products (extended warranty, loan insurance) folded into the loan. Each of these changes the real cost.
- Total interest: compare the full cost over the term, not the monthly payment.
- Prepayment: confirm you can pay extra or pay off the loan early without a penalty.
- Fees: list every fee added to the amount financed, such as administration, registration, and PPSA fees.
- Add-ons: decline optional products you did not ask for, or price them separately.
- Term: keep the term shorter than the time you expect to keep the car.
Conclusion
For a new car, start with the manufacturer's current promotion; a rate between 0% and 3% is hard to beat. For a used car from a dealer, compare bank financing at RBC, TD, Scotiabank, or Desjardins with a platform quote. For a private sale, a bank personal loan usually costs less than an online lender. In every case, keep the term no longer than you plan to keep the car.
Get rate changes and new offers in your inbox: subscribe to the Ratesopedia newsletter.
Frequently asked questions about car loans
What is a good car loan rate in Canada right now?
As of October 18, 2026, manufacturer promotions on new cars run from 0% to about 6% depending on the model and term. Bank rates are not published and depend on your credit and the vehicle. Online platforms advertise car loans from 4.99%. A rate below the prime rate of 4.45% usually means a subsidized promotion. See our loans hub for related guides.
Is it better to finance through the dealer or the bank?
For a new car with a manufacturer promotion, the dealer usually wins because the manufacturer subsidizes the rate. Without a promotion, banks and dealers often offer similar rates, since the dealer frequently sends your file to a bank. Get a bank pre-approval first so you can compare. Your credit score range shapes both offers.
How long can a car loan be in Canada?
RBC, TD, and Scotiabank offer terms up to 96 months on eligible vehicles, as of October 18, 2026. Longer terms lower the payment but increase total interest and the risk of owing more than the car is worth. The FCAC notes that a new car may lose 25% of its value in the first year. Our debt payoff calculator shows how faster payments cut the cost.
Can I get a car loan with bad credit?
Yes, but at higher rates. Some manufacturers run special financing programs for buyers with past late payments or an undischarged bankruptcy, and secured personal loans are another route. Fairstone's secured loans ran from 19.99% to 25.99% as of October 18, 2026. Improving your file first can save thousands; start with our guide to building your credit score.
Can I pay off a car loan early without a penalty?
Often, yes. TD, Scotiabank, and Desjardins all state that you can prepay without penalty, as of October 18, 2026. RBC says to check your loan agreement for any prepayment terms. Paying early reduces the interest you owe, and our debt payoff calculator estimates the savings.
How do I finance a car bought from a private seller?
Dealer financing does not apply to private sales, so most buyers use a personal loan. Bank personal loans start at $2,000 at TD and $5,000 at RBC, and Desjardins offers a personal loan for private purchases. Online lenders also lend for private sales at higher rates. Have the vehicle inspected and check for existing liens before you pay. Our car insurance guide covers what you need before you drive away.
