Best Car Loan Rates in 2020


Best Car Loan Rates in Canada in 2020

While the best auto loan may vary from borrower to borrower, there are several personal loan products and lenders out there that can be used to finance and refinance your auto vehicle purchase. Below is a guide for three potential car loan lenders that can be used, as well as other considerations that have to be kept in mind when making an auto purchase.

Top Car Loan Rates in 2020


With the private auto market growing in Canada from 2015 – 2019, AutoArriba is one of the most well-known options for financing and refinancing private sale vehicles. As a web-based app, the customer signs up and creates a profile that details his/her vehicle needs as well as basic information. After that, the user has to select the desired vehicle and provide a few details about the selling party. Once all this information has been received, AutoArriba sends out an inspector to validate all details before initiating the quotes and financing process.

If the inspector comes back with a clean report, then the appropriate contracts are set up and sent across to the buyer for signatures. Thereafter, the keys change hands from the buyer to the seller, and ownership is officially transferred once insurance documentation and proof of registration is uploaded onto the app. Offering term lengths of 1 to 7 years, interest rates offered on the app range from 8.99% to 29.5%.

With an app-based platform, the main advantage offered to the customer is the burden of paperwork for private vehicles being taken care of entirely by the app. The alternative lending platform also enables buyers to apply for financing before shopping for used vehicles with funding times as quick as 24 hours to ensure that a deal can be locked in quickly if required by the buyer.

Splash Auto Finance

Splash Auto Finance is a division of Rifco National Auto Finance that helps customers get pre-approved for the vehicle they are looking to purchase. This is done via a simple credit application process that the customer has to fill out when they enter the website. The process starts with the customer being asked to select between whether they are looking to purchase a car, truck, SUV or van. Thereafter, they are directed to provide basic employment information and personal details including name, date of birth and address before the company contacts a credit agency for an inquiry about income and credit information.

Once the information has been compiled on their end, the company’s credit specialists get to work in structuring a good auto loan that fits the customer’s needs. After approval is granted by these specialists, the company sends that approval to a nearby dealership from where the customer can sign the paperwork and receive the keys to their vehicle.

Typically offering loan terms from 2 to 7 years, Splash Auto Finance enables borrowers with bankruptcy, divorce, bad credit and no credit histories to obtain auto loans that range between 9.9% and 31%.

Car Loans 411

Car Loans 411 partners up with regional automotive dealerships and lenders to help borrowers obtain top auto loan rates regardless of their credit or financial situation. Offering a 3-step process, the first step begins with the customer filling out basic information including name, date of birth, address and income. Note that the SIN is not asked as part of this process. After receiving the information, the website helps customers get approved for a loan. Once the approval is received, customers can pick their vehicle from the host of options that the website provides in conjunction with its dealership partner network.

Due to its positioning as an alternative lender for borrowers with poor credit, loan amounts are capped at $40,000 with interest rates starting at 2.9%. Loan terms themselves are for 2 to 6 years, and the dealership network comprises of manufacturers as diverse as Ford, BMW, Lexus and Honda.

Information and Documents Needed for Car Loan Applications

Getting a car loan can often be a very detail-oriented process which requires the borrower to have several pieces of documentation ready at all times. While there are different requirements imposed by each lender, at a base level it can be helpful if the borrower has the following information ready to go prior to applying for a car loan.

  • Credit reports:

    Available from TransUnion and Equifax as well as other credit agencies, the credit reports offer a deep-dive view to the lender of the prospective borrower’s borrowing activities and repayment patterns. These are distilled into one single credit score (out of 900). The higher the score, the better the credit and the lower the interest rate that will likely be available to the borrower. If the score is on the lower end though, borrowers would do well to try and improve it by paying down outstanding credit card balances and resolving any errors that may be evident in the report. These errors should be corrected prior to application to ensure that the rate received reflects an accurate credit profile.

  • Type of car:

    The make and model of the car are important in the credit application process as they provide the lender with a starting point for structuring the principal and terms of the loan.

  • Personal Information:

    Lenders will often ask for basic information such as legal names, date of birth, contact information and address to validate the borrower’s identity prior to extending the loan. Some institutions will even ask for SIN.

  • Financial Information:

    In terms of financial information, lenders will often want to see the outstanding debt balances that the borrower currently has to assess capacity for further personal debt. This includes everything from credit cards and student loans to mortgages, personal loans, and lines of credit.

  • Employment Information:

    Because the primary method of repayment is the customer’s own cash flows, lenders look at the income levels of the customer to determine how much they can potentially pay back each month in auto loan payments. The length of the employment is also an important consideration here as a person who has been employed for 5+ years is a more stable credit candidate than someone who just recently began working.

  • Bank Accounts:

    At times, lenders may request a void cheque or ask the borrower to fill out a preauthorized payment form to be able to automatically withdraw the payments for the car loan for each month.

A Third Option: Buying it Outright

While the most commonly discussed topics are loaning and leasing, there is a third option available to prospective buyers when looking for a new car. This involves buying the vehicle outright in cash. While the initial cash outlay is highest for this method of purchase, there are other advantages that can potentially turn the tides in this option’s favour. The two largest ones are:

  • No payments thereafter:

    Once the car has been purchased via cash, the buyer is not on the hook for any payments going forward. This means that if he/she can afford the initial cash outlay, they are then free of having to pay any interest payments that buyers who obtain a loan have to pay.

  • Incentives:

    Being paid in cash up front is an advantage to the dealership as well as they then do not have to take on the credit risk of the customer’s loan for the life of the loan. For this reason, dealers will often offer rewards and cash incentives by way of promotions and discounts on the car itself. To the buyer, this means getting the car for a cheaper price even without factoring in the added interest costs.

Suggested Steps

  • Get all vehicle loan documentation ready as outlined above

  • Select the best vehicle suited for your needs

  • Shop around for the best car loan rates and more importantly, the overall best car loan

  • Use an online auto loan calculator to figure out monthly payments

  • Sign and drive away!

Step 3 is particularly important as it allows the borrower to potentially negotiate deals with individual lenders to obtain the best rates possible. In Step 4, online car financing calculators are a great way to benchmark the various vehicle loan rates received in Step 3 and define the amount that will be paid each month. It is then up to the borrower to put together this quantitative consideration as well as the qualitative aspects of the vehicle loans to select the best car finance rates for them.