Car Loan
Calculator
Calculate your monthly car payment, total loan cost, and whether a car loan fits your budget. Includes provincial sales tax and trade-in value.
Vehicle & loan details
Loan breakdown
Results are estimates for informational purposes only — not financial advice. Always consult a licensed professional before making decisions. Terms of use →
Car loan FAQs
What is a good interest rate for a car loan in Canada?
In 2026, car loan rates in Canada typically range from 0% (manufacturer promotional financing) to 12%+ for buyers with lower credit scores. Bank rates for qualified buyers are generally 6–9%. Credit unions often offer slightly better rates. Your rate depends on credit score, loan term, and whether the vehicle is new or used.
Is sales tax included in a car loan?
Yes — in most provinces, the vehicle purchase price (minus trade-in) is subject to provincial sales tax (HST, GST+PST, or QST), which is typically included in the financed amount. This calculator applies the correct tax rate for your province automatically.
How much car can I afford?
A commonly used rule of thumb is that total vehicle costs (payment + insurance + gas + maintenance) should not exceed 15–20% of gross monthly income. Some advisors suggest keeping just the loan payment under 10–15% of gross income. A $6,000/month gross income means a monthly car payment under $900 is generally manageable.
Should I choose a longer or shorter loan term?
Shorter terms (36–48 months) have higher monthly payments but significantly less total interest. Longer terms (72–84 months) reduce monthly payments but often result in being "underwater" — owing more than the car is worth — for several years due to depreciation. Most financial advisors recommend 48–60 month maximum terms for new vehicles.
Car financing in Canada — what you need to know
Canadians lose billions annually to poor car financing decisions. Avoid the common traps.
Long loan terms (72–84 months) lower monthly payments but dramatically increase total interest paid. A $40,000 car at 8% over 84 months costs $11,200 in interest vs $5,400 over 48 months. Worse, most cars depreciate faster than you pay down the loan — leaving you "underwater" for years.
The loan payment is only part of the cost. Add insurance ($150–400/mo in Ontario/BC), gas or charging, maintenance ($100–200/mo), licensing, and parking. A "affordable" $400/mo payment becomes $900–1,100/mo all-in. Canadian financial advisors recommend keeping total vehicle costs under 15% of gross income.
Dealer financing is convenient but rarely the cheapest. Get pre-approved from your bank or credit union before visiting a dealership. In 2026, credit union rates are typically 0.5–1.5% lower than bank rates for the same terms. A 1% rate difference on $35,000 over 5 years saves ~$900 in interest.
Manufacturer 0% financing offers are tempting but come with strings: you typically sacrifice cash-back incentives ($2,000–5,000) that you'd get if you arranged your own financing. Calculate whether the incentive outweighs the interest cost at your bank rate — often the cash-back wins.