Home » Loans
Advertiser Disclosure

The content on this website includes links to our partners and we may receive compensation when you sign up, at no cost to you. This may impact which products or services we write about and where and how they appear on the site. It does not affect the objectivity of our evaluations or reviews. Read our disclosure.

Bad Credit Car Loans in Canada (2022)

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.

In this article, I cover 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.

What is a Bad Credit Car Loan?

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.

Top Bad Credit Car Loan Providers in Canada

 Loan AmountInterest RateTermApply
Loans Canada$500 – $50,0001.99% – 46.96%4-60 monthsVisit
CarsFastUp to $75,000Varies12-96 monthsVisit
LoanConnectUp to $50,0001.90% – 46.96%12-72 monthsVisit

1. Loans Canada

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.

Visit Loans Canada.

2. 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

Visit CarsFast.

3. LoanConnect

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: 1.90% – 46.96%
  • Term: 12-72 months

Visit LoanConnect.

4. Car Loans Canada

Car Loans Canada provides access to auto financing in ON, BC, AB, MB, NB, SK, NS, NL, and PE.

It’s 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.

Get a Car Loan.

How To Get a Car Loan With Bad Credit

While you can get a car loan with bad or poor credit, you will need to meet some basic requirements.

Proof of Income: Most lenders want to see 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 so they can set up scheduled loan repayments.

Downpayment: If you have a downpayment to put towards your car, it may help in getting approved. Alternatively, you could also find a co-signer or guarantor to back up 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 terms of the contract 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

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 make payments on time, the loan can help to improve your credit score.

On the flip side, bad credit car loans generally come with higher interest rates.

Also, there are some predatory lenders in the bad credit loan industry that may charge excessive fees and make it difficult for you to get out of debt.

Bad Credit Car Loans FAQ

What is the minimum credit score for a car loan in Canada?

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).

Can I get a car loan with a credit score of 500?

Yes, there are auto financing lenders in Canada that offer bad credit car loans. The alternative lenders are available through Loans Canada, CarsFast, and LoanConnect.

What type of car can I get with a bad credit car loan?

Car dealerships that accept bad credit offer new and used car brands including Toyota, Hyundai, Honda, Mazda, Volkswagen, Lexus, Subaru, and more.


Top Loan Offer this month

Compare the best loans for good and bad credit in Canada

Get the best loan rates from lenders regardless of credit score.

Quick online application from the comfort of your home.

Borrow up to $50,000 for 3 months to 60 months.

Loans for any reason with rates from 2.99% to 46.96%.

Retirement 101 eBook - 3D


Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch is passionate about helping others win with their finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, CBC News, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, and many other personal finance publications. You can learn more about him on the About Page.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.