Car Deal Canada

The Best Online Car Loan Lenders in Canada

The Best Online Car Loan Lenders in Canada

Securing competitive auto financing is one of the most important steps when purchasing a new or used vehicle. With new cars averaging over $40,000 in Canada today, a good interest rate can mean thousands of dollars in savings over the lifetime of your loan. However, navigating the myriad of banks, dealerships, and online lenders to find the best car loan rates can be a daunting task.

This comprehensive guide aims to make the process easier by comparing Canada’s top lenders. We’ll outline the factors that determine your rate, provide tips to improve your credit, and share strategies to get approved for the most competitive auto financing. Whether you’re buying new, used, have great credit or credit challenges, read on to learn how to secure the best loan rates and terms when financing your next vehicle.

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What Factors Determine Your Auto Loan Rate?

When applying for an auto loan in Canada, there are several key factors that affect the interest rate and terms you will qualify for:


Credit Score

Your credit score is one of the most important criteria lenders use to evaluate your application. Borrowers with higher credit scores are seen as lower risk and will qualify for the best rates. Those with poor or no credit will pay higher interest rates if approved.



Lenders want to see you have enough income to comfortably make the monthly payments. Expect to provide recent pay stubs or tax returns to verify your income. Higher incomes may qualify for lower rates.


Loan Term

The length of your loan also impacts your rate. Shorter terms often have lower interest rates. Opting for a longer 5 or 6-year term may mean a higher rate but smaller monthly payment.


Down Payment

The size of your down payment affects rates. Larger down payments lower the amount financed so lenders see you as less risky. Smaller down payments can still qualify but may have a higher rate.


New vs Used

New car loans tend to have lower interest rates than used. However, used car buyers can still find competitive rates from many lenders.


Car Deal Canada- Best Overall Online Lender

Car Deal Canada stands out as the best overall online auto lender thanks to their competitive interest rates, high loan amounts, fast approvals, and financing for both new and used vehicles.

Interest rates start at just 4.99% for qualified borrowers, making Car Deal Canada very competitive with rates from banks and credit unions. They offer loans up to $50,000, providing sufficient financing for most vehicle purchases.

One of the biggest benefits of Car Deal Canada is their fast and easy online approval process. Borrowers can complete the entire application online and receive a lending decision in minutes. This level of speed and convenience simply can’t be matched by traditional lenders.

In addition to great rates and fast approvals, Car Deal Canada offers loans for both new and used vehicle purchases. Many online lenders focus solely on used cars, but Car Deal Canada provides financing options whether you’re buying new or used.

With easy online applications, fast approvals, competitive rates, and loans for new and used cars, Car Deal Canada simplifies securing auto financing for Canadian borrowers.


Auto Credit Express – Best for Bad Credit

If you have poor or no credit, Auto Credit Express specializes in helping Canadians with credit challenges secure auto loans. They offer:


  • Loans for borrowers with credit scores as low as 500
  • Large network of subprime lenders
  • Personal loan advisors
  • Loans up to $50k


With credit scores below 600 considered subprime, Auto Credit Express partners with lenders that work specifically with borrowers in this range. This opens up auto financing options those with challenged credit may not find elsewhere.

A dedicated loan advisor will walk you through the steps from application to funding. They have experience assisting borrowers across the credit spectrum, even those with no FICO credit score due to limited or no credit history.

While interest rates may be higher compared to prime borrowers, approval is more attainable thanks to their network of subprime auto lenders. With loans up to $50,000, Auto Credit Express helps make vehicle ownership a reality regardless of your credit situation.


Carfinco – Best Line of Credit Option

Carfinco stands out by offering an auto loan line of credit up to $50k. Benefits include:


  • Use financing again after paying down principal
  • Only pay interest on what you use
  • Loans for older vehicles
  • Fast approvals


If you want flexibility in your auto financing, Carfinco brings a unique lending option to Canadian car buyers. With a line of credit, you only pay interest on the amount you use. So if you take out a $20,000 line of credit but only use $15,000 for your vehicle purchase, you’ll only pay interest on the $15,000. As you pay down the principal, that available credit can be reused for another auto purchase in the future.

This line of credit approach also makes Carfinco one of the only lenders to provide financing for older vehicles. Most lenders shy away from vehicles over 10 years old, but Carfinco sets no maximum age limit. If the vehicle passes their inspection requirements, they’ll finance it regardless of model year.

The fast approval process also stands out. Applications can be completed online in minutes, with many customers receiving instant approval notifications. Compared to the days or weeks it may take for loan approval with a traditional lender, Carfinco delivers the speed today’s buyers demand.


Canada Drives – Best for Refinancing

If you want to lower your monthly payment or interest rate on an existing auto loan, Canada Drives is one of the top options for refinancing. They offer some of the most competitive refinancing rates in Canada, with fixed rates starting at just 4.99%. This can lead to significant interest savings over the life of your loan.

Refinancing through Canada Drives is a fast and easy process thanks to their online application system. You can get pre-approved in minutes without affecting your credit score. Approval decisions are made quickly as well.

To qualify for refinancing, your vehicle needs to be less than 10 years old with less than 200,000 km. Canada Drives offers loans up to $50,000 for refinancing.

Some of the key benefits of refinancing your auto loan through Canada Drives include:


  • Rates starting at just 4.99% – Lower than most banks and dealerships
  • Loans up to $50,000
  • Fast online application and approval process
  • No prepayment penalties
  • Potentially lower your monthly payments
  • Pay off your loan faster and save on interest


If your goal is to reduce your interest rate and monthly payment, Canada Drives makes it easy to reap the benefits of refinancing your auto loan.


Other Top Online Lenders in Canada

While we covered some of the best and most popular online auto lenders in Canada, there are a few other notable options worth mentioning. Here are a couple other top online lenders to consider:



Ratehub allows you to compare rates from multiple lenders through their online auto loan marketplace. They partner with over 30 lenders, so you can easily compare multiple loan offers side-by-side. Ratehub also provides auto refinancing.



LendingArch is another online loan marketplace, providing access to lenders that offer competitive rates, including options for bad credit borrowers. They also allow you to compare multiple offers to find the best loan for your needs.


Credit Karma

While best known for providing free credit scores, Credit Karma also powers an online auto loan marketplace. Their network of lending partners focuses on offering competitive rates and loan options tailored to your credit profile.

The benefit of using an online loan marketplace is that you can easily compare multiple lenders and offers in one place. This allows you to find the most competitive rates and best loan terms for your situation.


Banks vs Online Lenders

When it comes to getting the best auto loan rates, you have two main options – traditional banks or online lenders. There are some key differences between the two that borrowers should consider:


Interest Rates

Online lenders frequently offer lower interest rates compared to banks, since they have lower overhead costs. Banks may start auto loan rates around 7-10% for good credit borrowers, while online lenders advertise rates as low as 3-6% for the same credit score range.


Qualifying Criteria

Online lenders generally have more relaxed qualifying criteria compared to banks. Those with past credit challenges, low income, or unique situations may find it easier to qualify with an online auto lender.



Online lenders provide more flexibility, often approving loans for older vehicles, private party purchases, higher mileages, and unique situations that banks may decline. This greater flexibility opens up more options for car shoppers.


Funding Speed

Online lenders can fund loans in as little as 1 business day after approval. Banks typically take at least 3-5 days to fund the loan.


Customer Service

Banks with local branches may provide more personalized service and easier access to a loan officer. Those who value face-to-face interaction may prefer a bank’s customer service.

While online lenders offer faster approvals and competitive rates, borrowers who value the personalized service of a local bank or credit union may still find this route meets their needs.


New vs Used Car Loan Rates

When it comes to auto loan rates, you’ll typically see a difference between financing for a new vehicle versus a used one. New cars tend to have lower interest rates for a few key reasons:


  • New cars depreciate less quickly than used models, making them lower risk for lenders.
  • People with higher credit scores tend to buy new, so lenders view new car buyers as less risky.
  • New car loans are often subsidized by manufacturers to help move inventory.


Used car loans will generally have interest rates 1-5% higher than new vehicles. The main factors determining used car loan rates are:


  • The age of the used vehicle
  • Mileage on the used car
  • Your credit score
  • Down payment amount


While used car loans cost more, they provide an affordable way for buyers to get into a vehicle they can’t afford brand new. With an online lender, interest rates can still be competitive even for a used auto purchase.


Improve Your Credit to Get Better Rates

One of the biggest factors that determines your auto loan interest rate is your credit score. The higher your credit score, the lower the rate you’ll qualify for. Here are some tips to improve your credit and get the best possible rate:


  • Pay all bills on time – Payment history makes up a significant portion of your credit score, so pay all your bills on time each month.
  • Pay down balances – Keep credit card balances low. High utilization hurts your score.
  • Limit new credit – Applying for too much new credit at once can lower your score.
  • Dispute errors – If you find mistakes on your credit report, dispute them.
  • Monitor your credit – Check your credit reports and FICO score so you know where you stand.
  • Become an authorized user – Being added as an authorized user on someone’s credit card with good payment history can help.


It takes time, but consistently practicing these habits will help raise your credit score so you can qualify for the lowest auto loan rates possible.


Pre-Approval and Shopping Around

One of the best ways to secure the most competitive auto loan rates is to get pre-approved before visiting dealerships. Pre-approval provides you with a loan offer, allowing you to negotiate strictly on the vehicle price rather than both the price and financing terms.

To get pre-approved:


  • Submit a loan application online including details on income, expenses, and credit history
  • Lenders will provide a loan offer if approved, specifying rate, loan amount, and terms
  • This pre-approval gives you power when negotiating with dealers since you already have financing locked in


It’s also wise to get pre-approved from multiple lenders and compare offers. Each lender uses different formulas and factors to determine rates and loan amounts. By having multiple offers, you can select the best loan terms and even use offers to negotiate with other lenders for an even lower rate.

At a minimum, compare offers from:


  • Your bank or credit union
  • 1-2 large online lenders like CanadaDrives
  • The dealership’s financing department


Having 3-4 pre-approvals provides negotiating power to lock in the most competitive auto financing.


Down Payment Options

The amount you put down as a down payment can significantly impact your auto loan rate and monthly payments. Here are some common down payment options to consider for your next auto loan:


20% Down or More

Putting down 20% or more on your vehicle purchase will help you qualify for the lowest rates. With a substantial down payment, lenders view you as lower risk because you are financing less of the vehicle’s value.


10-20% Down

A down payment between 10-20% is still seen favorably by lenders. While rates may be slightly higher than 20% down, a 10-20% down payment shows lenders your commitment to the purchase and can help secure competitive financing.



Using a trade-in can lower your out-of-pocket down payment amount. Lenders usually allow your trade-in value to count toward your down payment. Just be sure your trade-in is worth enough to meet any minimum down payment requirements.


Little to No Down Payment

While possible, zero down auto loans typically come with higher interest rates and stricter credit requirements. If you can afford any down payment amount, even a few thousand dollars, it can help improve your rate significantly.

Explore all your down payment options to balance the monthly payment you can afford with getting the most competitive auto loan rate possible.


Watch Out for Predatory Lenders

With so many lending options available, it’s important to watch out for predatory lenders who aim to take advantage of borrowers. Predatory lenders often target those with poor credit or limited financial knowledge. They lure borrowers in with offers that seem too good to be true, such as guaranteed approvals or absurdly low interest rates. However, these lenders use deceptive practices and hide fees in the fine print.

Some common signs of a predatory lender:


– Interest rates significantly lower than the market average

– Offers for guaranteed approval regardless of credit

– Asks you to falsify information on the application

– Tries pushing unnecessary add-ons like extended warranties

– Focuses on monthly payment only, not total loan cost

– Charges large origination fees or prepayment penalties


Doing your research is key to avoiding predatory lending practices. Stick to reputable lenders, and be wary of offers that seem too good to be true. A loan with slightly higher rates from an ethical lender will save you money compared to hidden fees from a predatory lender.


Other Auto Loan Tips

In addition to shopping around for the best rates, here are some other tips when taking out an auto loan:


Consider a Co-Signer

If you have little credit history or low credit scores, adding a co-signer with good credit can help you qualify for better rates. The co-signer will be equally responsible for repaying the loan, so make sure you choose someone you trust and who understands the obligation.


Watch Out for Fees

Some lenders charge fees for processing applications or early repayment. Make sure to ask about any fees so you can accurately compare the true cost of the loan between lenders.


Know the Loan Term Impacts

The longer your loan repayment term, the lower your monthly payment will be, but the more interest you’ll pay overall. Try to strike the right balance between an affordable payment and minimizing total interest costs.


Understand the Fine Print

Carefully read the loan agreement to understand the interest rate, monthly payments, fees, loan term, prepayment penalties, and other terms that impact the cost of your financing.


Set Up Autopay

Most lenders offer a slight interest rate discount for enrolling in autopay so your monthly payments are automatically deducted. This can save a little on interest and helps avoid late fees.



Finding the best auto loan lender for your needs starts with understanding your credit and finances. While securing a loan from your bank or credit union is still an option, online lenders have changed the game – offering fast approvals, competitive rates, and lending to borrowers across the credit spectrum.

Based on the key factors explored in this guide, here are the top online auto lenders in Canada for 2024:


  • Car Deal Canada – Best overall lender with low rates starting at 4.99% and fast approvals.
  • Auto Credit Express – Specializing in loans for borrowers with poor or no credit.
  • Carfinco – Unique line of credit lending up to $50k.
  • CanadaDrives – Offers the lowest rates for refinancing, starting at 4.99%.


By understanding what each lender offers, you can find the best loan rates and terms tailored to your credit score, finances, and vehicle needs. With a little research, Canadian car buyers can secure auto financing that fits their budget and gets them on the road.

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Questions About Online Car Loan Lenders in Canada

Some of the top car loan lenders in Canada include **RBC Royal Bank, Scotiabank, BMO Bank of Montreal, TD Canada Trust, CIBC, and Desjardins**. These major banks offer competitive interest rates and flexible terms. Credit unions like **Coast Capital Savings** and online lenders like **LoanConnect** are also good options for getting approved for an auto loan. When comparing lenders, look at interest rates, fees, loan terms, and eligibility criteria.

The best way to get the lowest interest rate is to have a good credit score over 720. Also, opting for a shorter loan term like 3 years instead of 6 will mean a lower rate. Putting 20% or more down and choosing a fuel-efficient, gently used vehicle can also score you better rates. Finally, get quotes from multiple top lenders, negotiate using those rates for leverage, and be willing to buy out your loan contract early with no penalties.

To get approved for the lowest auto loan rates in Canada, you typically need a minimum credit score of 720 or higher. Applicants with scores in the good (680-719) or fair (620-679) ranges may still qualify but should expect higher interest rates. Those with poor credit below 620 often need to turn to special financing dealers to get approved.

Use an online auto loan calculator to estimate your monthly car payment. Input details like the vehicle purchase price, your down payment amount, the loan interest rate, term length (e.g. 4 years), and optional fees. The calculator will then output your estimated monthly payment amount along with the total interest paid over the loan term. Account for taxes and insurance separately.

As of early 2024, the average interest rate for new auto loans from a bank in Canada is around 5.99% for terms between 24-84 months. The average used car loan rate is approximately 8.95% for terms up to 84 months. Rates range from 0% for select new models up to over 15% for consumers with poor credit.

Car loan terms in Canada usually range from 24 months to 84 months (7 years). Shorter terms of 2-4 years are best to save on interest and depreciation costs. Buyers looking at luxury vehicles or with tight budgets may opt for longer 5-7 year loans to lower their monthly payments at the expense of much higher total loan costs.


Yes, getting pre-approved for car loan financing from your bank or lender beforehand is recommended so you can negotiate at the dealership from a position of strength. Pre-approvals take just minutes online or by phone, with no impact to your credit score. You’ll secure current rates and terms and gain insight on the amount you can comfortably afford.

Paying cash upfront is the cheapest way to acquire a vehicle since you avoid all financing charges and interest. An auto loan is next best, followed by leasing which typically has the highest fees and restrictions. Get quotes for all options before deciding what works for your budget and ownership needs. Cash and shorter-term loans maximize long-term savings.

Watch out for administrative fees, documentation fees, lien registration fees, origination fees, and prepayment penalties with Canadian car loans. Ask if fees are negotiable, capped, or waived for certain loan terms or amounts. Avoid lenders who charge prepayment penalties and early repayment fees that penalize you for paying off your loan faster.

Yes, newcomers and foreigners living in Canada can finance cars with certain lenders that offer auto loans to non-residents and recent immigrants. Options include banks like RBC, Scotiabank, and TD that facilitate loans for eligible work permit and permanent resident holders. The challenge is having little local credit history, so securing a good co-signer helps expedite approvals.

If you default on car loan payments in Canada, the lender can legally repossess your vehicle after 60 days without payment. They may voluntarily extend this period, or you can voluntarily surrender the vehicle sooner. Written notice is provided after 30 missed days. Within 15 days after repossessing the car, the lender must provide you a notice of seizure and intent to dispose the vehicle.

Some top options for bad credit auto financing in Canada include RouteOne,, Canada Drives, Auto Credit Express, and Freedom Auto Finance. These lending networks are connected to dealers and lenders that specialize in approvals for past bankruptcies, consumer proposals, collections, late payments, and other issues. Expect higher than average interest rates.

When applying for Canadian auto financing, have these documents ready for yourself and any co-signers: valid government ID, social insurance number, proof of income (pay stub or tax return), proof of address (utility bill), collateral information (vehicle make, model, VIN), and account details for direct deposit of funds.

Yes, you can trade in a vehicle you still owe payments on. The dealership will pay off your remaining loan balance (up to the vehicle’s value) directly to your original lender, subtract that amount from your new car purchase, and get you financing for the rest. Just ensure your new loan term equals or exceeds the remainder of your current term.

Refinancing replaces your existing auto loan with a new one that has better terms to save money each month or overall. It makes sense to refinance if you qualify for at least a 2% lower rate. Calculate potential interest savings vs. any penalties or fees first. The refinancing application and approval process is similar to getting a new car loan.

Many Canadian lenders offer optional creditor insurance products to protect auto loan borrowers in case of job loss, disability, illness or death. Check if your bank provides mortgage or credit insurance. Other options are credit protection plans from insurance companies like Manulife, Sun Life, or Canada Life. Fees apply but provide peace of mind.

Taking over a car lease or loan involves getting approved as the new owner and legally assuming responsibility for payments. The original financing agreement stays the same. Your credit, income, and down payment must qualify. The lender will charge an assignment fee around $300+ to process the transfer paperwork and account change.

Specialized lenders like Eccentric Funding, Classic & Vintage Auto Funding, and Woodside Credit offer loans tailored specifically to classic cars in Canada. They consider the vehicle’s make, era, condition, collectability and other unique factors versus just its age and value. This allows buyers to finance restoration project cars and other collectibles banks won’t finance.

The federal EVIP offers purchase incentives from $500 to $5,000 for eligible electric or hybrid vehicle buyers in Canada to make greener cars more affordable. When combined with manufacturer rebates, discounted financing rates, and provincial incentives, significant savings are possible. Details are available at the Transport Canada website.

Yes, Canada offers affordable car loan financing to eligible veterans, retired CF members, and current serving personnel. Options include the Veterans Affairs Canada Funeral and Burial Program or collaborations with lenders like LendCare. Benefits include low rates, flexible terms, and easy approvals for those with military credentials.

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