1. SkipCarDealer
  2. Glossary
  3. How does a credit score affect my car loan rate in Canada?
How does a credit score affect my car loan rate in Canada?
Open Your Account
Car Loan Glossary • credit

How does a credit score affect my car loan rate in Canada?

In Canada, your credit score is a pivotal factor directly influencing the interest rate you'll secure on a car loan. Lenders, from major banks to dealership finance arms, rely on scores from Equifax Canada and TransUnion Canada to gauge your creditworthiness and the probability of timely repayment. A robust score, generally above 660-680, categorizes you as a 'prime' borrower, signaling low risk and granting access to the most competitive rates, which can translate into savings of thousands of dollars over the loan's duration. Conversely, a lower score, typically below 600-620, positions you as 'subprime,' indicating a higher perceived risk of default. This elevated risk results in significantly higher interest rates, substantially increasing your monthly payments and the total cost of the vehicle. For the 2025 market, while economic conditions may evolve, lenders will continue to prioritize strong credit profiles, making a good score even more crucial for favourable terms. To enhance your credit standing before applying, consistently making all payments on time, maintaining low credit utilization, and diversifying your credit mix are essential strategies.
Related Topics: credit scores

Related Financial Terms

What is a co‑signer and when is it helpful?

A co-signer in Canadian auto finance is an individual who legally agrees to share equal re...
Explain a co‑signer and when is it helpful?

A co-signer in Canadian auto finance is an individual who legally commits to sharing equal...
What is a co‑signer and when is it helpful in Canada?

In Canadian auto finance, a co-signer is an individual, typically with a robust credit his...
How does bi‑weekly accelerated payment work?

Bi-weekly accelerated payment in Canadian auto finance is a strategic payment option where...

Need more help?

Explore our full glossary or get in touch with our financing experts.

View Full Glossary
Search Glossary
Type a keyword and hit enter
Browse by Letter
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Popular Terms

Ready to get approved?

Skip the dealership hassle and get pre-approved for your car loan today.

Apply Now

With over 50 years of experience in the automotive industry, we know what we're doing when it comes to getting the best deals. We specialize in credit building and rebuilding, and with our expertise, we're sure to find a solution that suits you! Its our Skip Car Dealer Guarantee.

Credit Solutions

Loan Types

Programs

Partners

155-2 King Street West, Unit #107, Hamilton, ON, L8P 4S0 888-270-SKIP (7547)

PARTICIPATING LENDERS MAY VERIFY YOUR SOCIAL INSURANCE NUMBER, DRIVER'S LICENSE NUMBER, PROVINCIAL ID, OR ANY OTHER GOV IDENTIFICATIONS AND REVIEW YOUR INFORMATION AGAINST FEDERAL DATABASES TO INCLUDE BUT NOT LIMITED TO EQUIFAX, TRANSUNION, AND EXPERIAN TO DETERMINE CREDIT WORTHINESS, CREDIT STANDING AND/OR CREDIT CAPACITY. BY SUBMITTING YOUR APPLICATION AND INFORMATION ON THIS WEBSITE, YOU AGREE TO ALLOW ANY AND ALL PARTICIPATING LENDERS TO VERIFY YOUR INFORMATION AND CHECK YOUR CREDIT. SKIP CAR DEALER FOLLOWS BEST PRACTICES OF THE CANADIAN FAIR TRADING ACT OF 1999. ALL FINANCE IS SUBJECT TO EMPLOYMENT STATUS AND INCOME. APPLICANTS MUST BE 18 OR OVER, TERMS AND CONDITIONS APPLY, GUARANTEES AND INDEMNITIES MAY BE REQUIRED. WE CAN INTRODUCE YOU TO A NUMBER OF FINANCE PROVIDERS BASED ON YOUR CREDIT RATING. WRITTEN QUOTATION ON REQUEST.

This site uses cookies so that we can provide you with the best user experience. By continuing to use the site you are consenting for cookies to be used. Further information on cookies and how you can disable them is available on our cookie policy.

Copyright © 2020 Skip Car Dealer All Rights Reserved.

Terms of use | Privacy Policy

Top