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How to Compare Loan Offers in Canada

When evaluating two loan offers, the interest rate alone does not tell the full story. A shorter loan term at a slightly higher rate often costs less in total interest than a longer term at a lower rate, because you are paying interest for fewer months. The total cost of borrowing — the sum of all payments over the life of the loan — is the most reliable metric for comparison. Canadian lenders are required by law to disclose this figure along with the annual percentage rate (APR).

In Canada, personal loans, auto loans, and lines of credit are regulated under the Bank Act and provincial consumer protection legislation. The Cost of Borrowing Regulations require lenders to clearly state the APR, which includes the interest rate plus most mandatory fees. For variable-rate loans, lenders must disclose the reference rate (often the Bank of Canada prime rate, currently 4.85% as of early 2026) and the spread above or below it.

Typical Canadian Loan Rates (2026)

Before accepting any loan, request the full amortization schedule showing principal and interest breakdowns for each payment. If you can afford slightly higher monthly payments, choosing a shorter term will save thousands in interest. Always check whether the loan allows prepayments without penalty — Canadian variable-rate loans and most fixed personal loans permit this, but some dealer financing agreements do not.