Canada Car Loan Calculator
Canadian car loan rates average ~6.50% p.a. — and choosing the wrong term can cost thousands. Enter your vehicle price, down payment and loan term to see your exact monthly payment, total interest cost, and how your rate compares to the Bank of Canada benchmark and Canadian market average.
Enter Your Vehicle & Loan Details
Add your vehicle price, down payment and trade-in value to see your net loan amount instantly.
Set Your Interest Rate & Loan Term
Enter your rate and choose a term from 24 to 96 months — then see how the term affects your total interest cost.
See Your Full Payment Breakdown
View your payment, total interest, full amortization schedule, extra payment savings, and a side-by-side loan comparison.
Car Loan Calculator
Payments · Total Interest · Full Schedule · 2026
Vehicle Details
Loan Details
Payment Options
Include Balloon Payment?
A lump-sum amount due at the end of the loan term — reduces regular payments but means more total interest paid.
Vehicle Use
Used for work / business purposes?
Enables CRA deductibility context. Per CRA, a portion of loan interest may be deductible.
Loan Summary
Based on a vehicle price of C$40,000, a C$5,000 down payment, and a C$35,000 net loan at 6.50% p.a. over 60 months.
Your monthly payment is C$0. Over the full term you will pay C$0 in interest, for a total repayment of C$0.
FCAC — Car Loans | Bank of Canada — Rates | Statistics Canada — Lending Rates
Last verified: March 2026 | BoC policy rate: 2.25% · Prime: 4.45% · Avg new car loan: ~6.50% p.a.
Repayment Schedule
Monthly amortization schedule showing how each payment is split between principal and interest. Annual summary rows are highlighted in purple. Most Canadian car loans use monthly compounding on a reducing balance.
Most Canadian car loans are open loans — you can prepay without penalty. Per FCAC, always confirm whether your loan is open or closed before making extra payments.
| Period | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| Calculating… | ||||
Interest Breakdown
Amortization schedule showing annual interest paid on a reducing balance. Interest charges are highest at the start of the loan when the principal is largest — they fall each year as you pay down the balance.
Annual Interest Paid
Principal vs Interest Split (Annual)
| Year | Opening Balance | Principal Paid | Interest Paid | Closing Balance |
|---|---|---|---|---|
| Calculating… | ||||
Rate Benchmark
Compare your rate against the Bank of Canada policy rate and the Canadian market average for new car loans. Always compare the APR — not just the advertised rate — when choosing between lenders. Per FCAC.
Rate Comparison
Bank of Canada — Rates (2.25%) | Statistics Canada — Lending Rates | FCAC — Car Loans
Last verified: March 2026
Compare Two Loans
Loan A mirrors your main calculator settings. Enter Loan B's rate and term to see a side-by-side cost comparison. The same loan amount and frequency are used for both.
Side-by-Side Comparison
| Metric | Loan A | Loan B | Difference |
|---|---|---|---|
| Interest Rate | — | — | — |
| Term | — | — | — |
| Monthly Payment | — | — | — |
| Total Interest | — | — | — |
| Total Repaid | — | — | — |
Adjust Loan B settings to compare.
Both loans use the same principal. Per FCAC, always compare the APR — the true cost of borrowing including all fees — when choosing between Canadian car loan offers.
For educational purposes only. Payments are calculated using the standard monthly reducing-balance amortization formula: PMT = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where r is the monthly interest rate and n is the total number of payments. This is the standard compounding method used for Canadian car loans (not semi-annual like mortgages). Actual payments will differ based on your lender's rounding method and any fees.
This calculator does not account for GST/HST or PST on the vehicle purchase, dealer fees, extended warranty costs, insurance, or licensing and registration fees. Not financial advice — consult a licensed Canadian financial professional for your specific situation.
Car Loan Types in Canada
Open vs closed, secured vs unsecured, bank vs dealer, and lease vs finance
According to FCAC, most Canadian car loans are open loans — meaning you can pay them off early at any time without a prepayment penalty. This is different from a mortgage. Understanding the loan type before you sign will determine your flexibility and total cost.
| Loan / Finance Type | Compounding | Key Feature | Best For |
|---|---|---|---|
| Open Car Loan (Bank/CU) Most common in Canada | Monthly | Can be paid off at any time with no penalty. Fixed or variable rate. You own the vehicle outright from day one. | Borrowers who want flexibility to pay off early or refinance if rates fall |
| Closed Car Loan (Dealer) Less common | Monthly | Prepayment may incur a penalty. Terms fixed. Less flexible than an open loan. | Borrowers who want the lowest possible rate and plan to hold the full term |
| Secured Auto Loan Standard type | Lower Rate | The vehicle itself is collateral. Lower rate because the lender can repossess if you default. Requires vehicle registration in lender's name until paid off. | Most car buyers — standard for all bank and dealer financing |
| Unsecured Personal Loan No collateral | Higher Rate | Not secured against the vehicle. Higher interest rate than a secured auto loan. Often used for older vehicles lenders won't finance. | Private-sale purchases, older vehicles, or borrowers who already have a line of credit |
| Dealership (0% / Promotional) Manufacturer financing | 0–3% | Manufacturers (Ford Credit, GM Financial, Toyota Financial) occasionally offer very low promotional rates on new models. Usually requires strong credit and a standard term (36–60 months). | New vehicle buyers with excellent credit willing to accept a fixed term and model |
| Vehicle Lease Not ownership | Money Factor | You pay for depreciation + interest (money factor), not the full vehicle cost. Lower payments but you don't own the vehicle. Mileage caps, wear-and-tear charges apply. | Drivers who want lower payments, drive a new vehicle every 3–4 years, and don't rack up high kilometres |
Buy (Finance) — Advantages
- ✓You own the vehicle — no mileage restrictions
- ✓Equity builds as you pay down the loan
- ✓Can modify, sell, or trade in anytime
- ✓CRA deductibility on business-use interest (up to C$350/month)
- ✗Higher monthly payment than leasing the same vehicle
Lease — Advantages
- ✓Lower monthly payments for the same vehicle
- ✓Drive a newer vehicle every 3–4 years
- ✓Business: lease cost deductible (up to C$1,100/month — unchanged 2025/2026)
- ✗Mileage caps — typically 20,000 km/year, excess charged at 10–25¢/km
- ✗No equity — you return the vehicle at lease end
Bank vs Dealer financing: Always get pre-approved from your bank or credit union before visiting a dealership. Banks typically offer lower rates than dealership financing (except during manufacturer promotions). Pre-approval gives you a reference rate to negotiate against — dealers can often match or beat it to earn your business. Ask for the APR (Annual Percentage Rate), not just the monthly payment or "money factor." Per FCAC.
Source: FCAC — Car Loans
What Affects Your Car Loan Rate
Rate benchmarks, credit score bands, and factors that drive your APR
Per Statistics Canada, the average Canadian car loan rate was ~6.50% p.a. in October 2025, up significantly from ~4.45% in 2017. The Bank of Canada policy rate (2.25%, March 2026) and prime rate (4.45%) form the floor from which lenders price car loans. Your individual rate depends on several factors below.
| Factor | Typical Rate Impact | What This Means |
|---|---|---|
| Credit Score (Excellent 760+) | 4.00%–6.50% | Access to the most competitive bank and dealer rates. Pre-approval straightforward. Eligible for manufacturer promotional rates. |
| Credit Score (Good 700–759) | 6.00%–8.00% | Good rates available from banks and credit unions. May miss manufacturer promotional rates. Worth shopping multiple lenders. |
| Credit Score (Fair 600–699) | 8.00%–14.99% | Limited to some banks and credit unions plus alternative lenders. Higher deposit may help secure approval and reduce rate. |
| Credit Score (Poor <600) | 15%–29.99% | Likely requires alternative or subprime lenders. Consider a co-signer or building credit before applying. |
| New vs Used Vehicle | +1%–3% for used | New vehicles receive lower rates (better collateral value, predictable depreciation). Used vehicles above 5–7 years or high mileage attract higher rates. |
| Loan Term | +0.5%–2% for longer | Longer terms (72–96 months) typically carry higher rates. Shorter terms (24–48 months) usually get the best rates. |
| Down Payment | Lower rate with more down | A larger down payment reduces the lender's risk and may unlock a lower rate. Also reduces negative equity risk. |
| Lender Type | Banks < Credit Unions < Dealers < Alt. Lenders | Rates generally increase in this order (except during manufacturer promotional periods). Credit unions are often competitive for members. |
Negative equity warning: Choosing a long loan term (72–96 months) means your vehicle's market value depreciates faster than you pay down the loan. This leaves you "underwater" — owing more than the car is worth. Per FCAC, aim to limit car loan terms to 60 months (5 years) or less wherever possible. Never roll negative equity from a trade-in into a new loan — it compounds the problem.
Source: Statistics Canada — Consumer Credit | Bank of Canada — Rates | FCAC — Car Loans
CRA Vehicle Tax Deductions (2026)
Interest cap, CCA classes, lease limits, per-km rates for business use
If you use your vehicle to earn business income, the CRA allows you to deduct the business-use proportion of your vehicle expenses. A CRA-compliant logbook is required. All limits below are per the Department of Finance Canada — 2025 announcement (2025 limits are confirmed; 2026 announcement expected December 2025/January 2026 — check CRA for any updates).
| Deduction | 2026 Limit | How It Works |
|---|---|---|
| Car Loan Interest | C$350/month max | Interest paid on a passenger vehicle loan is deductible — but capped at C$350/month (unchanged from 2024). If you pay C$500/month interest, only C$350 is deductible. Multiply by business-use % to get actual deduction. |
| CCA — Class 10 Vehicles ≤ C$39,000 (before tax, 2026) | 30% declining balance | Passenger vehicles costing C$39,000 or less go into Class 10. You can claim 30% CCA per year on the declining balance (half-year rule applies in year of purchase). |
| CCA — Class 10.1 Vehicles > C$39,000 (2026) | C$39,000 ceiling | Higher-cost passenger vehicles are in Class 10.1, capped at C$39,000 (2026, up from C$38,000 in 2025). You can only claim CCA on the prescribed maximum — any amount over C$39,000 is not deductible. |
| CCA — Class 54 (ZEV) Zero-emission vehicles | C$61,000 ceiling | Fully electric vehicles and qualified plug-in hybrids (7+ kWh battery) get a higher CCA ceiling of C$61,000 and may qualify for accelerated first-year deduction. |
| Lease Deduction | C$1,100/month max | Lease payments for business-use vehicles are deductible up to C$1,100/month (before tax) for leases entered into in 2025. Multiply by business-use % for actual deduction. |
| Per-Kilometre Allowance Employer reimbursement method | 73¢/km (first 5,000 km) | Employers can reimburse employees for business driving at 73¢/km for the first 5,000 km and 67¢/km thereafter (2026, provinces). Territories: add 4¢/km. Self-employed persons can use the logbook method instead. |
Logbook requirement: To claim actual vehicle expenses (versus the per-km allowance), the CRA requires a detailed mileage logbook recording: date, destination, reason for trip, and kilometres driven for every business trip. The business-use % = business km ÷ total km driven. This % applies to all deductible expenses (fuel, insurance, maintenance, interest, CCA). A logbook must be kept for a complete 12-month period initially; subsequent years can use a 3-month sample period. See CRA — Motor Vehicle Expenses.
Source: Department of Finance Canada — 2025 Automobile Limits | CRA — Motor Vehicle Expenses
Smart Car Financing Tips for Canadians
Pre-approval, negotiation, APR, and avoiding common traps
Per FCAC, Canadians should compare all aspects of a car loan — not just the monthly payment — before signing. A lower monthly payment due to a longer term often means thousands more in interest paid.
Before You Visit the Dealership
- ✓Get pre-approved from your bank or credit union — gives you a reference rate and negotiating power
- ✓Check your credit score — know where you stand before any lender pulls your report
- ✓Set your budget — including insurance, fuel, maintenance, and registration — not just the loan payment
- ✓Research vehicle value — use Canadian Black Book or AutoTrader to know what the car is actually worth
- ✓Calculate total cost of loan — not just the monthly payment — using a calculator like this one
At the Dealership
- ✓Negotiate the vehicle price first, then discuss financing separately
- ✓Ask for the APR — Annual Percentage Rate — not the money factor or just the payment
- ✓Negotiate your trade-in separately — dealers may inflate the trade-in while inflating the vehicle price
- ⚠Be wary of add-ons — extended warranties, paint protection, gap insurance — price these separately
- ✗Don't focus only on the monthly payment — a lower payment via a longer term costs more overall
Example — total cost comparison: C$35,000 loan at 6.50% p.a.:
60 months → C$683/month, total interest ~C$5,980
84 months → C$518/month, total interest ~C$8,512
The 84-month loan saves C$165/month but costs C$2,532 more in total interest — and leaves you at greater risk of negative equity. Always use the shortest term your budget allows. Per FCAC.
Source: FCAC — Car Loans
Car Loan Repayment Formulas
How Canadian car loan payments, interest, and affordability are calculated
Unlike Canadian mortgages (which use semi-annual compounding by law), car loans use monthly compounding — the same method used in most other countries. The monthly interest rate is simply the annual rate ÷ 12. Payments reduce the balance each month (reducing balance method).
Canadian car loans use simple monthly compounding — divide the annual rate by 12 (unlike mortgages which are semi-annual).
Example: 6.50% p.a. → r = 6.50 ÷ 12 = 0.5417% per month
Standard reducing-balance amortization formula. Each payment covers interest first, with the remainder reducing the principal.
P = loan | r = monthly rate | n = months. Example: C$35k at 6.50% / 60mo → PMT = C$683/month
Reverse of the PMT formula — finds the maximum loan you can afford given a monthly budget, rate, and term.
Add your deposit and trade-in to PV to get your total vehicle budget
A balloon payment reduces regular payments because you're financing less principal over the term — but the balloon amount is due in full at the end.
PMT = pmt(r, n, Effective_PV)
The balloon amount earns interest throughout the full term — total interest paid is higher than with no balloon
Extra payment impact example — C$35,000 at 6.50% over 60 months: Standard monthly payment: C$683. Total interest: ~C$5,980. Adding an extra C$100/month saves ~C$730 in interest and pays the loan off approximately 8 months early. Adding C$200/month saves ~C$1,270 and cuts ~14 months. Most Canadian car loans are open — you can make extra payments at any time without penalty. Per FCAC.
Source: FCAC — Car Loans | Bank of Canada — Rates
Frequently Asked Questions
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About this calculator
This calculator provides estimates for educational purposes. Interest rates and fees vary by lender and are subject to approval. Rates shown are indicative only and updated regularly but may not reflect current market conditions. Always verify rates directly with lenders before making decisions.