2025 Car Loan Rates in Canada – What to Know Before You Sign
2025 Car Loan Rates in Canada – What to Know Before You Sign
Posted on April 7, 2025
Car shopping in 2025? Understanding how car loan interest rates work in Canada can help you save thousands over the life of your loan. Whether you’re buying new or used, your interest rate plays a major role in your monthly payments—and it’s more than just a number. It’s shaped by your credit score, loan term, lender, and even where you live.
If you’re planning to finance your next vehicle in British Columbia, here’s what you need to know before driving off the lot.
What Are Car Loan Interest Rates in 2025?
As of early 2025, average car loan interest rates in Canada range from about 6% to over 20%, depending on credit history and whether you’re buying a new or used vehicle. According to WOWA, buyers with excellent credit may qualify for rates around 6% to 9%, while those with lower credit scores may see rates in the double digits.
Used car loans generally have higher financing rates than new vehicle loans, as used vehicles present a slightly higher risk to lenders. Also, longer loan terms can lead to higher overall interest paid, even if the monthly installments seem lower.
What Impacts Your Interest Rate?
Credit Score
Your credit score is one of the biggest factors. Higher scores (680 and above) usually mean better rates. If your score is under 600, expect higher interest—but don’t worry, there are still financing options available.
Loan Term
Shorter loan terms (36 to 48 months) usually come with lower interest rates than longer terms (60 to 84 months). However, shorter terms also mean higher monthly payments.
New vs. Used Vehicles
New cars often qualify for promotional rates or lower interest from lenders. Used cars might come with a slightly higher rate, but they're usually cheaper upfront.
Down Payment
Making a higher initial payment can lower your interest rate and reduce the risk of negative equity, helping you save money and build equity in your vehicle sooner.
Choosing the Right Lender Matters
Banks, credit unions, and speciality lenders all offer auto loans in Canada, but their rates and requirements can vary a lot. Working with a lender specialising in bad credit or subprime car loans can make the process easier if your credit isn't perfect.
Fixed vs. Variable Rates – Which Should You Choose?
Most car loans in Canada come with fixed interest rates, meaning your payment remains the same for the entire term. This gives you predictability, which is important when budgeting. Variable rates change with the market and are less common for auto loans and typically carry more risk—especially if rates rise.
For most drivers in Nanaimo and throughout B.C., a fixed rate offers peace of mind in today’s shifting economy.
Final Tip: Get Pre-Approved Before You Shop
Before heading to the dealership, getting pre-approved gives you a clear idea of your budget and interest rate. It also puts you in a stronger position to negotiate and shows sellers you’re a serious buyer. Know your budget before and boost your buying power. Achieve pre-qualification for your next vehicle with confidence, knowing exactly what you can afford.
Get Pre-Approved Anytime with Wheaton Subprime in Nanaimo!
Looking to finance a used car in Nanaimo? Wheaton Subprime (Island Auto Loans) is one of the top auto loan providers in British Columbia, helping drivers get approved quickly—even with credit challenges. Contact us today to explore your options and drive away with confidence!