Ontario Car Loan Payment Calculator 2026

Reducing Balance Formula

Canadian auto loans use a reducing balance formula, where interest is calculated on the outstanding balance each period:

Why Bi-Weekly Saves Money

With bi-weekly payments, you make 26 payments per year instead of 12. That's the equivalent of 13 monthly payments — one extra full payment per year. This extra payment goes entirely to principal, reducing your balance faster and cutting total interest.

Amortization Example

On a $30,000 loan at 6.99% over 60 months:

Simple vs Compound Interest

Canadian car loans use simple interest on a reducing balance — not compound interest. This means you never pay interest on interest, only on the remaining principal.

Dealership Purchases

• 13% HST on the sale price minus trade-in
• Collected by the dealership at the time of purchase
• Typically rolled into your loan amount
• Trade-in credit reduces the taxable amount

Example: $40,000 car + $10,000 trade-in → HST on $30,000 = $3,900

Private Sale Purchases

• 13% RST on the greater of purchase price or Red Book value
• Paid at ServiceOntario when you register the vehicle
• NOT financed by most lenders — you pay it out of pocket
• Trade-in credits do NOT apply to private sales

Example: Buy privately for $15,000, Red Book is $18,000 → RST on $18,000 = $2,340

Sub-$1,000 Exception

If both the purchase price AND Red Book value are under $1,000, RST is charged on the actual purchase price — no appraisal required.

OMVIC Consumer Protections

• All-in pricing — advertised price must include all mandatory fees
• Only HST and licensing can be added above advertised price
• Two-thirds rule — after paying 2/3 of loan, lender cannot repossess without court order
• Verify dealer registration at omvic.ca