The 3 Alternatives for your Next Car Loan

As we regularly do at LeaseCosts™ Canada Inc., today I want to share with you some insights. These will certainly help you prepare for your next vehicle purchase/lease: break down your alternatives to pay the less interest possible on a loan.

Car Loan Interest Rates Historically

Back in the 1980s, when the Bank of Canada interest rates were above 20%, it was a pretty big deal to get a car loan. A brand new 1980 BMW M3 used to cost about $7,000, and you could end up paying up to $2,800 more for 3 years, which would be almost $9,000 today, adjusted for inflation. But since, rates have been going down to the point that the average new car loan in 2020 was 4.38%, with some 84-month finance offers at 0%. (Stats Can).

This is why a car loan is the most popular way of "financing" a vehicle acquisition/lease today. Getting the right loan is crucial for a fair cash flow <-> value relationship in your personal finances, so make sure to know all your available options:

The 3 Main Alternatives

  • Credit Score 750+ | Evaluate the manufacturer rates: if you are looking to lease or finance a brand new car, the manufacturer will likely be your first preferable option. Due to their intention to sell vehicles massively, rates show up as a very competitive option.
  • Credit Score 680+ | Consider your own bank rates: Your bank can also give you some personalized alternatives. They know your finances, they store your financial assets and will likely be better positioned to get you a good rate.
  • All Credit Scores | Evaluate a loan search engine: Multiple services help you find the right loan for your specific needs. Think of it as a "reverse" search: you have your conditions and, instead of looking for a bank to adjust to it, dealerships and banks will do it for you. The most popular out there is Loans Canada, and it takes just a couple of minutes to apply. And it is FREE!

There are Always Options

As I mentioned before, you should always consider the options that will lead you to the most comfortable, affordable and reliable solution. Either if you drop by a dealership or call your bank, there is always the fastest alternative of knowing right now what your best options are.

About the author

Jorge Diaz is a passionate car lover, winter driver & Software Engineer. For the last 10 years, he has built Online Solutions used by more than 5,000 companies across the globe. He founded LeaseCosts in 2016 with the purpose of simplifying and helping Canadians to better understand the complex market of car leasing in Canada. You can connect with Jorge at or send him a direct message.