What is a Good Finance Rate for a Car in Canada?

Finding a good car finance rate in Alberta and across Canada requires navigating a landscape of rising interest rates. As of now, the Bank of Canada has set the policy interest rate at about 5%. This benchmark rate influences the rates offered by banks and other lenders for car loans.

Additionally, interest rates can vary based on several factors including your credit score, the loan term, and the type of vehicle you’re financing or whether you have negative or positive equity. At House of Cars, we’re here to help you understand how this all works.

Here’s a breakdown to help you understand what a good finance rate is when buying a car:

1. Prime Rate Influence: The prime rate, which is closely linked to the Bank of Canada’s rate, is currently around 5.25% in July, 2024. 
2. Credit Score: If your credit score is excellent (above 750), you can score car loan rates as low as 5.5% to 6%. For good credit (700-749), expect rates around 6.5% to 7.5%. But if your credit is fair or poor (below 700), rates can climb above 8%, sometimes even hitting double digits.

*Rates mentioned are not guaranteed and are examples based on statistics from the time this article was written only. Please consult with a finance professional for more accurate rates.

1. Loan Term: The length of your car loan affects your interest rate. Shorter terms, like 36-48 months, usually offer lower rates but come with higher monthly payments compared to longer terms, like 60-72 months. It’s a trade-off between saving on interest and managing monthly costs.
2. Vehicle Type and Age: New cars typically qualify for lower interest rates compared to older cars. This is because new vehicles have a more predictable depreciation rate and are considered lower risk by lenders.

With inflation and interest rates in flux, locking in a great car loan rate can be tough but doable. As of mid-2024, the Bank of Canada notes that core inflation is easing up, which could mean rates might stabilise or even drop soon. So, while it’s tricky, there’s still a shot at securing a good deal on your car loan!

Where to get the best interest rates on used cars in Alberta

At House of Cars, we have a strong network of lenders, offering you competitive financing options. Whether you’re having trouble finding a good rate elsewhere or just want to know your options, we can help. 

Visit us online or at any of our dealership locations in Alberta to speak with our finance experts. We can help you secure a car loan that fits your budget.