The Bank of Canada has left its key interest rate unchanged at 2.25% at every announcement in 2026 so far, most recently on September 2, 2026. The rate has been at 2.25% since the Bank’s last cut on October 29, 2025 — that’s seven holds in a row. The next scheduled decision is October 28, 2026.
Does the Bank of Canada rate set my car loan rate?
Not directly. The policy rate influences what banks and lenders pay to borrow, which flows through to prime rates and, over time, to loan pricing. But the rate you’re offered on a car loan depends mostly on:
- Your credit history — the single biggest factor.
- The vehicle’s age and kilometres — older vehicles usually carry higher rates and shorter maximum terms.
- The loan term — longer terms can come with higher rates.
- Your down payment and trade-in — borrowing less of the vehicle’s value lowers the lender’s risk.
Most car loans are fixed-rate, so if you already have one, a Bank of Canada decision won’t change your payment.
How much does the rate really matter?
Here’s what a $25,000 loan over 84 months looks like at different rates, paid bi-weekly with $0 down:
| Interest rate | Bi-weekly payment | Total interest |
|---|---|---|
| 6.99% | $174 | $6,646 |
| 7.99% | $180 | $7,677 |
| 9.99% | $191 | $9,798 |
| 12.99% | $209 | $13,124 |
The difference between 6.99% and 12.99% is only $35 per bi-weekly payment — but nearly $6,500 in extra interest over seven years. That’s why it pays to shop your rate, not just your vehicle.
Three ways to lower your cost of borrowing
- Get pre-approved first. Knowing your approved rate and budget before you shop keeps you in control. Apply online here — it doesn’t affect your credit score.
- Put something down. On the same $25,000 loan at 7.99% over 84 months, a $2,500 down payment cuts the bi-weekly payment from $180 to $162 and saves about $770 in interest.
- Choose the shortest term you can comfortably afford. At 7.99%, the same $25,000 costs $5,363 in interest over 60 months versus $8,873 over 96 months.
Should you wait for rates to drop?
Nobody can predict rate moves with certainty, and a quarter-point change makes a modest difference to a car payment compared with your credit, term and down payment. Waiting for a small rate change rarely beats finding the right vehicle at a good price today — and if rates do fall later, you may be able to refinance.
Source: Bank of Canada — Policy interest rate. Payment examples are estimates for illustration only, on approved credit; taxes and fees extra.