What is a Good Interest Rate for Your Car Loan?

Man Sitting at Desk Doing Calculations

If your credit score is lacklustre, you may not expect a good interest rate for a car. Even still, it’s important that you know what a fair car interest rate in Canada is on a car given your credit score, so that you can avoid overpaying. If you are unsure how car finance rates in Canada best correspond with your credit score, you can consult the chart below. Be sure to keep reading for a breakdown of how to negotiate for the best rate that you can get, as well as for information on what the average interest rate for a car loan is. If you have any questions about car interest rates in Canada that aren’t addressed, be sure to reach out to the Mercedes-Benz Burlington finance department.

Average Credit Score for Car (2023) Annual Percentage Rate (2023)
725-900 3.88% to 7.99%
660-724 6.5% to 12.99%
560-669 13.5 to 22%

How to Get the Best Interest Rate on a Car

To get the very best car interest rate in Canada, Milton drivers should check their credit score in advance, then look at the chart above to determine what the average car interest rate on a car loan is for that score. Be sure to take note and bring that information to the negotiating table.

Is your score lacklustre because of a business loan or another reason that doesn’t necessarily reflect your behaviour as a spender? Can you prove that you can make timely payments or have records of other positive financial behaviour? Be sure to bring proof. At Mercedes-Benz Burlington, we understand that many of our neighbours with less-than-ideal credit scores have good reasons for their financial records. We can take a close look at your financial history and help you strategize as you apply for loans. We also have well-established relationships with national lenders, so working through us can help you increase your chances of securing a better car finance rate in Canada.

Another way to negotiate for a lower interest rate is to put up a larger down payment, which demonstrates to the lender that you’re committed to paying your loan. We also recommend identifying any small loans you can pay off before applying. If you can quickly spruce up your score a bit before applying, you’ll save money in the long run. So, what is a good interest rate on a car loan? Any car finance rate in Canada that is better than the average listed above given your credit score.

What is the Average Interest Rate on a Car Loan?

In 2023, the average car interest rate in Canada was 7.21%. Remember that this is an aggressive loan term, and the car finance rate in Canada you get may vary depending on your own financial history. Also, bear in mind that car interest rates in Canada for a car can vary from one year to the next, depending on the health of the economy.

Get Flexible Financing in Burlington

Now that you know what a good interest rate for your car loan is given your credit score and what the average interest rate on a car loan is, give Mercedes-Benz Burlington a call at 877-557-3007. We’ll make sure you get a contract that is fair and works for your needs and budget. If you have other questions about car financing, be sure to explore our site for informative reads about trading in trading in a car for credit and how to sell your car to a dealership. We have a number of helpful car-buying tips to help you navigate every step of your car-buying journey in Oakville and  Mississauga! We look forward to helping you secure a competitive car interest rate in Canada!

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