October 2, 2026 · 6 min
Why a 540 or 560 score often means a mid-teens car rate
The approval is not a failure. It is a price. Here is what that price is usually paying for, and what it is not.
The scale, first
Canadian scores from Equifax and TransUnion run from 300 to 900. A good Equifax score is often described as starting around 660. Around 540 you are still in the lower band. At 560 you are on the edge of what Equifax calls fair. Neither of those is prime pricing.
Prime is not a mood. It is a lender’s cutoff. Below it, the store can still get the car done. The rate is how the lender prices the risk it is taking.
What “mid-teens” actually means
On a lot of Canadian files in this range, the approval lands around 14 or 15 percent. Sometimes lower, if the car is newer, the term is shorter, or there is money down. Sometimes higher. A rate near the legal ceiling exists. It is not the ordinary story, and we do not use it as one.
The rate on this contract does not fall because you start paying on time. This loan keeps the rate you signed. What changes is the next approval: a refinance, or the next vehicle.
Same car, different file
An illustration, not an offer. On $22,000 over six years, 15 percent is about $465 a month. Nine percent is about $397. Across the term that is roughly $4,900 of interest. The car can be identical. The file is what moved.
Lenders also look at income, the down payment, the age of the vehicle, and the term. A score is the loudest number. It is not the only one.
What to do with the rate you have
Take the car if you needed the car. Then treat the payment as the first bill that reports. A payment thirty days late is the one that reaches the bureau, and it can erase the progress you were counting on.
The work after that is ordinary: cards brought down, one collection only when the written number fits the money, both reports read. That is the distance between this rate and a lower one.
General notes for Canadian files. Not a rate quote, and not a reading of your Equifax or TransUnion report.
7 min
When refinancing the car is a real conversation
A refinance is not a reward for wanting a lower payment. It is a new loan, and the file has to be able to carry it.
6 min
Paying a collection does not delete it
In Canada, money can change the status of a collection. It does not erase an accurate item. Spend it only when the writing is clear.