Getting a car loan with bad credit can be challenging because many banks want to avoid taking on the risk that you could default on your loan payments.
Given that you may still need a vehicle for work or convenience, finding an auto loan you can qualify for is important while you take steps to repair your credit.
Below are alternative lenders and loan comparison platforms that offer bad credit car loans, whether you live in Toronto (Ontario), Calgary (Alberta), Winnipeg, B.C., or elsewhere in Canada.
Best Bad Credit Car Loan in Canada – Featured
Cars Fast
Cars Fast is a popular destination for getting a car loan regardless of your credit score. The platform has partnerships with top loan providers, including TD, Scotiabank, RBC, HSBC, and others.
Interest rate: Varies.
Loan term: 12-96 months.
Maximum loan amount: $75,000.
Eligibility: Earn at least $20,000/yr, reside in ON, BC, or AB; and be employed for 3 months+.
Loans Canada
Loans Canada is a loan comparison platform for all kinds of personal loans, car loans, debt consolidation loans, and bad credit loans. It has partnerships with some of Canada’s largest lenders and offers free access to your Equifax credit score.
Interest rate: 2.99% to 46.96%.
Loan term: 4-60 months.
Maximum loan amount: Up to $50,000.
ZoomCarLoans
ZoomCarLoans connects you with a select group of car dealerships and lenders to lend you up to $50,000 with same-day approval. It also offers car loans for those with bad or poor credit.
Interest rate: 2.00% – 46.96%.
Loan term: 12-84 months.
Maximum loan amount: Up to $50,000.
Eligibility: Earn a monthly income of at least $2,000.
Top Bad Credit Car Loan Providers in Canada
1. CarsFast
CarsFast offers bad credit auto loans through LendingArch and a vast network of car dealerships across Canada.
Even if you have gone through a consumer proposal or have no credit history, you could get approved.
To start, visit CarsFast to complete the online application (takes 2 minutes or less). If approved, you can shop for your preferred vehicle at more than 350 dealership partners.
- Loan amount: Up to $75,000
- Interest rate: Varies
- Term: 12-96 months
To qualify for an auto loan through CarsFast, you must meet the following requirements:
- Over the age of 20
- At least $2,000 per month in income (whether employed or self-employed)
- Have a valid driver’s license
- Reside in Alberta, British Columbia, or Ontario.
- Have been employed for over 3 months
Related: CarsFast review.
2. Loans Canada
Loans Canada
Loans Canada is a loan comparison platform for all kinds of personal loans, car loans, debt consolidation loans, and bad credit loans. This company holds an A+ accreditation with the Better Business Bureau and features multiple lenders on its website.
Interest rate: 2.99% to 46.96%
Loan term: 3-60 months.
Maximum loan amount: Up to $50,000.
Eligibility: Resident of Canada and employed for at least 3 months with proof of income.
On Loans Canada’s website
Loans Canada is one of Canada’s largest loan comparison platforms. It has partnerships with lenders that offer auto financing regardless of your credit score.
To get started, complete the online application, and they will match you with a loan provider that meets your needs.
- Loan amount: $500 – $50,000
- Interest rate: 1.99% – 46.96%
- Term: 4-60 months
In addition to bad credit car loans, Loans Canada also works with lenders who offer credit building, debt consolidation, guarantor, and no credit check loans.
Related: Loans Canada review.
3. ZoomCarLoans
ZoomCarLoans
ZoomCarLoans is a loan matching service that connects a select group of lenders and car dealerships with borrowers regardless of their credit history. It relies on employment history to determine their creditworthiness.
Interest rate: 2.00% – 46.96%
Loan term: 2 years – 7 years.
Maximum loan amount: Up to $5,000.
Eligibility: Canadian citizens or Permanent Residents; employed for over 3 months; with a monthly income of at least $2,000.
On ZoomCarLoans’s website
ZoomCarLoans is a platform that offers easy approval of car financing through its Auto Finance Network. It features inclusive access, lower interest rates and affordable monthly payments for eligible applicants.
Get started by filling out the online application form to receive a no-obligation quote. The platform will then match your application with lenders across Canada to help you find the most competitive rates.
- Loan amount: Up to $50,000
- Interest rate: 2.00% – 46.96%
- Term: 2 years – 7 years
To qualify for a car loan from ZoomCarLoans, you must meet the following requirements:
- Be of legal age (18 or 19 years, depending on the province)
- Be a Canadian citizen or a permanent resident of Canada
- Monthly income of $2,000+
- Employed for at least three months
4. LoanConnect
LoanConnect
LoanConnect is a search engine for finding personal loans online from various lenders. You can use it to find a loan that works for your situation regardless of your credit score.
Interest rate: 6.99% to 46.9%.
Loan term: 3-120 months.
Maximum loan amount: Up to $50,000.
Eligibility: Resident of Canada and the age of the majority in your province or territory.
On LoanConnect’s website
Loan Connect offers loan solutions covering all kinds of necessities, including car purchases, home improvement, debt consolidation, and personal loans.
It operates across Canada and works with individuals who have bad credit.
To apply for a car loan, complete the online application to get pre-approved. Following pre-approval, they present you with a list of options that meet your lending needs.
- Loan amount: Up to $50,000
- Interest rate: 6.99% – 46.96%
- Term: 12-72 months
5. Car Loans Canada
Car Loans Canada provides access to auto financing in ON, BC, AB, MB, NB, SK, NS, NL, and PE.
It has a network of partners, including lenders that offer bad credit car financing.
- Loan amount: Varies
- Interest rate: Up to 29.95%
- Term: Up to 96 months
To qualify, you need a minimum monthly income of $1,800 and a valid driver’s license.
Bad Credit Auto Loans Summary
| Loan Amount | Interest Rate | Term | Apply | |
| Loans Canada | $500 – $50,000 | 1.99% – 46.96% | 4-60 months | Visit |
| CarsFast | Up to $75,000 | Varies | 12-96 months | Visit |
| ZoomCarLoans | Up to $50,000 | 2.00 – 46.96% | 12-84 months | Visit |
| LoanConnect | Up to $50,000 | 1.90% – 46.96% | 12-72 months | Visit |
| Car Loans Canada | Varies | Up to 29.95% | Up to 96 months | – |
Bad Credit Car Loans Explained
Bad credit in Canada refers to a credit score of 559 or less.
It infers that a person is not creditworthy because, at some point, they haven’t been paying their bills on time and may have made some other poor financial choices.
A car loan for bad credit is designed to extend auto financing to those with a bad credit rating that traditional banks tend to avoid.
These loans are often available using lending platforms and car dealerships that accept bad credit loan applications.
Note that while you may not be asked to provide a co-signer or collateral, bad credit loans often require proof of steady income, and you will pay a higher interest rate.
How To Get a Car Loan With Bad Credit
While you can get a auto loan with bad or poor credit, you will need to meet some basic requirements.
Proof of Income: Most lenders want proof that you are currently employed and earning an income. If you can show pay stubs showing you earn $1,800 – $2,000 or more each month, your chances of getting approved for a car loan increase.
Bank Account: Lenders need your bank account details to schedule loan repayments.
Downpayment: If you have a downpayment to put towards your car, it may help in getting approved. Alternatively, you could find a co-signer or guarantor to support your application.
In addition to your pay stubs, employment letter, and banking information, a lender may request the following documents:
- Valid driver’s license
- Proof of address
If you do not know your credit score, you can check it for free.
Compare rates across lenders to find the best rates for your financial situation. And be sure to read the contract terms carefully to ensure there are no small prints relating to hidden fees and penalties.
Make loan payments on time to avoid further damage to your credit rating.
Car Loan Calculator
Pros and Cons of Bad Credit Car Loans
There are several advantages and disadvantages of bad credit car loans:
Pros:
- A bad credit car loan in Canada can help you purchase a vehicle when your bank does not deem you as creditworthy.
- These online loan services are convenient, with their application process mostly completed online and approvals ready within hours to a few days.
- If you continue to make your repayments on time, the loan can help to improve your credit score. This means you could get a loan with better terms in the future.
- You may not need to pay a down payment. The main focus of these types of loans is that you have a steady income source to make your repayments.
- You might be able to get longer terms with this type of loan. While you pay more, it can mean making smaller monthly payments.
Cons:
- Conversely, bad credit car loans generally have higher interest rates than standard car loans.
- Also, there are some predatory lenders in the bad credit loan industry. Because your options are more limited, predatory lenders might take advantage of this, so it’s important to check all the details before you agree to a loan.
- Bad credit car loan lenders may charge excessive fees, which can make it difficult for you to get out of debt.
How To Choose a Car Loan With Bad Credit
You may be concerned about getting a car loan if you have bad credit. But there are several options you can consider.
To choose a bad credit car loan, start by comparing the loans from different lenders. Find out as much as you can about each loan, including:
- The APR
- The down payment and how much you can contribute
- Whether it is a secured or unsecured loan
- The term of the loan
- The amount you will pay each month
- Whether you can pay the loan off early and whether there is a fee to do this.
When you find a suitable loan, do the calculations to determine how much it will cost you overall.
Also, find out about the eligibility requirements to make sure you can apply for it in the first place.
You need to know what you’re getting into, just like with any loan. Some key tips include:
- Don’t go over your budget. Know exactly how much you will have to pay back monthly and over the loan to determine how much you will spend on your vehicle.
- Find out your credit score. When you know your score, you will have a better idea of what your options are, and this makes comparing loans easier.
- Find out about any hidden fees and penalties, including late payment fees.
- Don’t sign up for the first deal you can get. Spend some time looking around and contacting several lenders.
- Know the length of the term. Some lenders have long terms over several years. This can lead to paying more interest, but the monthly payments may be smaller.
- Know your budget. Work out how much the loan will cost you, depending on the car you want to buy and your credit score, and find an option that works for you.
- Don’t apply until you know you have a good chance of being accepted. Full applications require a hard credit check, which can hurt your score if you do it frequently.
How To Apply for a Bad Credit Car Loan
Use the information above to choose a loan. Once you have found one that looks suitable, it’s time to apply.
You may find a few different lenders offering suitable loans, so use the above factors to determine which might be best for your situation.
When you are ready to apply, use the pre-approval option if there is one. You can do this with several lenders, and you will need to provide basic information like the car you want to buy, your monthly income and the loan length.
This will give you a better idea of what you can qualify for. Don’t make any applications that require a hard credit check until you are ready.
Remember that this quote can change when you apply for the loan, but it gives you a good idea.
If you apply for a loan, you will normally need to gather documents. These include:
- Proof of employment – The lender will want to know you have a steady income, so you might need to show recent paychecks.
- Assets – You may have to show your latest bank statements and paperwork regarding your debts and assets to provide a clearer financial picture.
- Driver’s license – You must show that you are a registered driver.
- Proof of address – Usually, a utility bill with your address on it.
- Car insurance – You may be asked to show this.
Before applying, it’s a good idea to consider how you can increase your chances of qualifying.
The most obvious way is to improve your credit score. If you are not in a rush, take a few months to get your score into shape.
You could apply for a secured credit card that reports your payment activity to the credit bureaus. Don’t borrow much, and make regular payments on time to build your credit score over time.
You might be able to do a trade-in with your existing car with a dealer. This way, you could get a lower price on the new car you are financing.
Also, checking your credit report for mistakes is a good idea. If there are mistakes on it, this could be hurting your score. Contact the creditor to fix any mistakes.
You could also consider using a cosigner with a better credit score, like your partner. This can increase the chances of getting approved.
When you are ready and have all the documentation, simply apply for the loan by providing all the information required. Again, you can usually do this online.
Bad Credit Car Loan Options in Canada
Where should you apply for a bad credit car loan? You have a few options, and you may want to look at all of these to find the best option.
Dealerships
Dealerships are perhaps the most common choice when applying for a bad credit car loan. This is because they are usually willing to help if there’s a chance of selling a car.
Just be very clear on what you can and cannot afford. Know what you are looking for before you enter, and don’t be afraid to shop around. You want to know you’re getting a good deal, so don’t be pressured into anything.
Private Lenders
Private lenders can also be good places to get a loan. Again, there are many to choose from, but they can be slightly riskier because they are often not as established.
Always do lots of research and know what you’re getting into. Many private lenders specialize in lending to people with bad credit, so you often have a good chance of getting accepted.
Banks
You could always try your bank as well for a traditional car loan. They typically work with people with good credit scores, but it’s worth asking if you have been a customer for a while.
They could provide you with a better interest rate, and you also know that you are borrowing from an established institution you can trust.
What Is the Interest Rate on Bad Credit Car Loans?
Bad credit car loans often have higher interest rates. However, you need to find out the interest rate and how much you will pay back monthly and in total.
Your loan may have a long term, meaning you make lower payments, but you pay back more interest over time.
Interest rates typically range between 9.99% and 29.99%. However, this can be affected by the down payment, your income and how stable your income is.
The interest rate might also be affected by your credit score. The lower your score, the higher the interest rate may be. For example, the lower end of the range for auto loans generally requires a good credit score.
Let’s say you want to buy a car for $16,000. You provide a down payment of $3,500 and take out a 24-month loan with an APR of 29.99%.
In this case:
- You would borrow a total of $12,500.
- Your monthly payment would be $698.85.
- You would pay a total interest of $4,272.30 over the course of the loan.
- Your total payment would be $16,772.30
Bad Credit Car Loan Alternatives
While a bad or poor credit car loan may be the right choice for your circumstances, don’t forget to consider your other options because you may have alternatives.
For example, you might find that you can use a credit card to pay for a cheaper car, perhaps a used model, without applying for a car loan.
You might be able to get a personal loan instead from your bank. This might have a lower interest rate, and you could use it to buy a car.
Bad Credit Car Loans FAQ
Credit scores in Canada range from 300 to 900. You may be able to get an auto loan even if you have bad credit (300-559).
Yes, there are auto financing lenders in Canada that offer bad credit car loans. The alternative lenders are available through Loans Canada, CarsFast, ZoomCarLoans, and LoanConnect.
Car dealerships that accept bad credit offer new and used car brands, including Toyota, Hyundai, Honda, Mazda, Volkswagen, Lexus, Subaru, and more.
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