Car loan calculator online in Canada in 2025. How to figure out an auto loan yourself?
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Decided to get yourself on the road? Purchase of a new car is overwhelming and requires a significant financial investment. Many car buyers don’t have savings and much cash, so they need to take out an auto loan to buy a car. If you can't afford to pay for a car upfront, you'll need to take out a car loan. A car loan is a personal loan in which a lender concedes funds to a borrower the funds required to buy a vehicle. In exchange, the borrower agrees to repay the lender the loan amount with interest, typically in monthly payments, until the loan is fully paid off. An auto loan is designed for purchasing a vehicle, and its term usually varies from 12 to 96 months in Canada. Monthly money is withdrawn from the borrower's accounts to auto loan lenders. If the borrower becomes delinquent, the lender mainly has the legal right to repossess the vehicle.
A car buyer may come across the following types of auto loans:
As the name says, secured loans by a lien or an asset. Since the borrower is more likely to pay on the loan as it is guaranteed by the vehicle, secured loans are generally offered at relatively low-interest rates. The main risk is that the car can be legally repossessed in case of non-repayment of the loan.
Unsecured loans, on the contrary, are not guaranteed by any collateral. That means that defaulting on the loan may result in the lender’s repossession of the vehicle. Unsecured loans tend to carry higher APR than secured ones, as no collateral is attached, and they are considered riskier for the lenders.
Simple interest loans are flexible loans with interest accrued on a preset periodic basis, for instance, daily. Borrowers make monthly payments, and the interest decreases with each on-time payment. The borrower can accelerate the payoff and limit interest expenses by making larger or additional principal payments while paying less interest.
Pre-computed loans are the type of loans with scheduled car loan payments on a pre-determined basis. Each payment is precalculated and assigned a precise share of the loan's principal and interest. Making extra payments doesn't decrease the principal and interest owed over the tenure. If you plan on paying off early, this loan may not make the most sense. However, a limited budget or anticipation of an adverse change to your financial picture in the future can make a precomputed loan that allows for a predictable payment schedule to be your best choice.
A financial option for those who are leasing a car is lease buyout loans. With lease buyout loans, you can refinance the vehicle purchase that was leased before. A lease is renting a car long-term. An asset guarantees a lease buyout loan. Therefore, the lender takes the title to the car as collateral during the period when the borrower makes payments. These loans are a good idea if the price is lower than it would be for the same vehicle on a dealer’s lot.
Title loans are secured loans reserved for people who own their cars outright. A title loan works almost the same way as a home equity loan. Not only does the lender get the title to the current car as collateral, but also, in case of the borrower’s delinquency, he will be entitled to repossess the vehicle. To obtain the loan, the lender places a lien on the car and takes possession of the title until the borrower fully pays off the loan. As the loan is repaid, the vehicle is retained by the borrower.
Another form of secured car loan is a balloon loan. That type of loan has unique payment terms: they offer smaller monthly payments during the life of the loan in exchange for a considerable sum that the borrower will come up with all at once at the end of the auto loan’s tenure. After a specified time, around 35 months or as long as 60 months, the borrower will reach the time when the balloon payment is due.
Business and fleet auto loans are intended for business owners or governments to buy vehicles needed for work-related operations.
Purchasing a new car should be fun. But it's also expensive, and the process can be stressful. Without knowing your financing eligibility, you cannot recognize a good deal or make a smart decision. Getting a new car for most people is a financial burden, so understanding your budget and planning on financing is generally the first step toward purchasing a vehicle. But before you sign on the dotted line, you need to get a realistic idea of how much you could borrow and what your car loan payments and interest rates could be. The calculator can assist you with an estimation so that the car-buying journey goes much smoother.
Simple car loan interest accrues daily based on the original amount you borrowed (the principal) and is typically calculated daily. With compound interest calculated at each payment, interest implies charging on both the principal and the interest accrued since the beginning of the loan.
When you sign up for a car loan, you should receive a financial disclosure, which expresses the interest rate as APR (annual percentage rate). This considers the total cost of borrowing and includes compounding interest, fees, and anything else you may be required to pay. Therefore, this represents the actual overall cost of the car loan.
Due to its reference nature, the calculator results should not be relied upon as specific financial or other advice.
If you are buying a car, consider a lot before taking the plunge. First, you can use an auto loan calculator to determine the monthly payment on your new ride and how much interest you can expect to pay on your loan overall. To utilize the calculator, key in the auto price, loan interest rate, tenure in months for which the car loan is sought, and the payment frequency. After that, input the initial payment you will make in the “Down payment” field. Next, plug in the trade-in value if you are exchanging your old car. Then fill in sales tax depending on the province you’re buying your vehicle in (sales tax is 5% in Alberta, NWT, Yukon, and Nunavut; 11% in Saskatchewan; 12% in BC; 13% in Manitoba and Ontario; and 15% in Quebec, PEI, Nova Scotia, New Brunswick, and Newfoundland). Next, indicate other fees, as a car purchase comes with costs other than the vehicle's original price. Finally, check the box in case all administration fees should be included in the loan. Next, click the “calculate” button to display your monthly payment, overall loan amount, and total interest costs.
A pie chart with the distribution of the total payment amount as a percentage will also be displayed. It will specify the amount of the principal debt and the total amount of interest payable. The amortization graph is provided to show changes in the balance of debt, annual interest rate, and payments throughout the tenure of the loan. Finally, the amortization schedule is displayed to reveal payments made every month/year for the entire loan duration showing how much in principal and interest is paid and the ending balance of each period.
During the initial loan period, a significant portion of each payment is accounted for by interest. The payment schedule also shows the outstanding intermediate balance for each year, which will be carried over to the following year. Refer to the amortization table for a years-wise plan of repayments throughout the loan tenure.
Remember that the calculations are illustrative and can't be the basis for legally significant actions.
A car loan calculator will help you compare car loans to determine the best deal for your individual circumstances. It can display how much the loan will cost compared to another loan. To compare two loans, search for an auto loan calculator, a comparison tool. To begin, plug in the car's purchase price, down payment, loan term, and interest rate. After that, the calculator will display how much exactly and which loan will cost you more (cost difference). You should also have access to sections, such as payments showing a comparison of the monthly payment and total interest paid on the two loans and an amortization table revealing the monthly payment, balance, principal paid, interest paid, and cumulative interest for each specific period throughout the tenure of the loan.
Everyone decides what a reasonable interest rate is. APR usually depends on the lender, factors like credit score, and whether or not the vehicle is used or new. The average interest rate for a client with good credit is between 3% to 6%. A borrower with less than perfect credit can expect an interest rate of 6.5% to 15.9%, depending on how low the credit score is. Interest rates vary depending on the applicant’s financial status as well. Getting a good interest offer would be more challenging if you've had past credit problems. The higher your credit score, the more likely you will qualify for the lowest interest rate possible. If you’re buying a pre-owned vehicle, the lowest rate you’re likely to get is 3.99%.
According to Internet data, credit approval by Canadian lenders is usually granted to consumers with a credit rating of 630 or higher when it comes to providing car loans. The good news is there's no minimum credit score for a car loan in Canada. As with most things in the financial world, the better your credit history, the better your options for financing a vehicle. You might not have the same options as someone with a higher score, but you can still get an auto loan with a 600 credit score. A poor score is considered when it falls from 300 to 579. In case of a poor score, you might want to consider increasing your credit score before financing a car to gain access to offers with better interest rates.
A car loan can be obtained through direct lending or dealership financing. Direct lending is a form of a typical loan since the car loan comes directly from a bank, credit union, or financial institution. Direct lending provides more leverage for buyers to walk into a car dealer with most of the financing done on their terms. Banks are great places to get approved for an auto loan if you have good or excellent credit. But they can be frustrating to work with because of multiple in-person appointments and paperwork. Their main downside is that they only cater to customers with higher credit scores. Dealership financing is when a loan is arranged by the dealership selling the vehicle instead. You can get the car and the financing in one place with the dealerships. Worth remembering that most dealerships may reject bad credit and no credit applicants. You can consider the option of online banking, where you can apply for a car loan without leaving the comfort of your home.
Loan repayment will depend on different variables. Note the differences between the amount of your down payment, loan term, and interest rate. Estimate your monthly payments with a car loan calculator and see how factors like loan term, down payment, and interest rate affect payments. The calculator generates the calculations based on the interest earned from investing the difference in monthly car loan payments. The research assumed interest rates and compared financing options to gauge the loan rate. To make sure you’ll get the best loan for your means, utilize an online calculator by entering required variables, and it will display your assumed repayment.
Note! The calculations are provided for information purposes and should not be construed as financial, legal, or tax advice.
