Auto Loan Calculator Canada: How Much Will You Pay?
Monthly payments :
$ monthly_payment | number_format(2, '.', ',')
| Principal | $ total_principal_amount | number_format(2, '.', ',') |
| Total Interest | $ total_interest_amount | number_format(2, '.', ',') |
| Amount reimbursed | $ total_amount_from_bank | number_format(2, '.', ',') |
What is the best rate for my car loan?
Are you shopping for a new car? Like many buyers, you may need a car loan to do so. If you are overwhelmed by the options or the cost, this tool is for you.
Our car loan calculator can help you determine your ability to pay a loan and prepare to speak with a lender. Fill in a few numbers, and let our calculator estimate your next car loan.
How do I calculate a car loan?
Need to calculate payments for your car loan? It is simple. Simply, enter the following numbers into the car loan calculator:
- The price of the automobile
- The down payment
- The length of the loan
- The sales tax in your province
- The total interest rate
Our car loan calculator will determine your monthly installments with interest.
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What is an auto loan?
At its most basic, a car loan breaks the large expense of a car into monthly installments. Your lender buys the car and you pay them back in installments over a set period.
When you decide to purchase a car, your car dealer generally provides you with car loan offers from their partnered financial institutions. Alternatively, you can contact a bank before shopping to get a preapproved car loan.
How does car loan interest work?
Interest is the amount that you pay in exchange for the bank lending you money.
Once you have received a car loan, you will need to pay back the total sum with interest. Note that your lender technically owns the car until you have completed repayment. Generally, the car loan is paid back in monthly or bi-monthly installments. Each installment represents a portion of the total borrowed sum and interest. Initial installments have a larger proportion of the payment going towards interest than later ones. As what you owe shrinks, so does the total interest paid in each installment. Once you have finished reimbursing the car loan, the car is yours.
What is a good interest rate on a car loan?
Currently, under 6% is considered a good interest rate for borrowers with a credit score in the mid-600s.
If you have an excellent credit score, you may be eligible for lower interest rates ranging from 2 to 3%. Occasionally dealerships may offer a 0% interest car loan as a special promotion.
The interest rates could exceed 10 %or 15% if you have a bad credit score. Interest rates are often lower on new cars than on used ones.
In the market for a new car? Our quick and anonymous car loan comparison tool will help you find a match:
Dreaming of a new ride?
What credit score is required for a car loan?
There are no specific credit score requirements for obtaining a car loan. It is at the discretion of the lender. Most buyers with a score of 660 and sufficient income should have no difficulty getting approved for a car loan from a traditional bank or credit union.
A credit score is a number that reflects how risky your profile is to a lender. It is divided into categories ranging from poor (under 559) to excellent (above 760). Creditors use it to decide if they will offer a loan, the terms and interest rates.
| Category | Credit Score |
|---|---|
| Poor | 300-559 |
| Fair | 560-659 |
| Good | 660-724 |
| Very Good | 724-759 |
| Excellent | 760-900 |
When you apply for a car loan, lenders are not only interested in evaluating credit scores, but also details like your employment history, income or the car’s value. Below that 660 score threshold, alternative lenders can be an attractive option. They offer more flexible standards, albeit at less favourable rates.
How can I get a car loan with bad credit?
Specialty lenders can help you get a car loan with bad credit.
A bad credit score does not signify a dead end. Some lenders specialize in car loans for risky profiles.
As you are more likely to be approved for a smaller loan, it is important to consider purchasing a less expensive car if you have bad credit. You should also expect to pay a higher interest rate than a borrower with a better credit score. Borrowers with fair or poor credit can pay in excess of 10 or 15%.
Getting a cosigner can help to make your application more attractive and lower the interest rate.
Another way to counter the increased interest is to request a shorter loan term. This does increase the monthly payments though.
For example, a $10,000 loan at 10% paid back over 24 months would total $11,074.78 with interest.
That same $10,000 loan at 10% paid over 48 months would come in at $12,174.02
How the length of a car loan affects total interest:
| Loan | Amount | Term | Interest rate | Monthly payment | Total payment | Total interest |
|---|---|---|---|---|---|---|
| Loan A | $10,000 | 24 | 10% | $461.45 | $11,074.78 | $1,074.78 |
| Loan B | $10,000 | 48 | 10% | $253.63 | $12,174.04 | $2,174.04 |
What is the best car loan?
The best car for one person may not the best for someone else. It depends on your down payment, the vehicle you wish to buy, your credit score and a number of other factors.
For profiles with good to excellent credit scores, a traditional loan from a bank or through a dealership may give the most competitive rate. The downside is that they have more strict lending standards, so people with bad credit scores may not be approved.
Here are the estimated car loan rate ranges from popular banks:
| Banks | Car loan rates |
|---|---|
| BMO car loan | 4.79% to 9.24% |
| CIBC car loan | 4.79% to 7.99% |
| Desjardins car loan | 4.99% to 8.99% |
| RBC car loan | 4.89% to 8.97% |
| Scotiabank car loan | 4.89% to 9.13% |
| TD Bank car loan | 4.99% to 8.48% |
Alternatively, if you have a credit score under 660, online lenders may be a better option for you. Expect to pay a higher interest rate than a borrower with a better credit score.
See what interest rates you could qualify for:
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Why are interest rates higher on used car loans than on new car loans?
Used car loans are often at higher interest rates because used cars are less valuable on the resale market.
If you are unable to repay your car loan, you risk having your vehicle repossessed. If this were to happen, the lender assumes a greater risk of losing money when they resell it.
