Securing a Car Loan With Bad Credit in Canada: A Guide
Securing a Car Loan With Bad Credit in Canada: A Guide

Securing a Car Loan With Bad Credit in Canada: A Guide

Used car loan interest rates in Canada

Most of us don’t have 30 or 40 grand sitting in our bank accounts, and a third have less than $15,000. Considering the average car costs three times that, many Canadians must finance their vehicles. Financing is another task, and having a not-so-stellar credit score can make it challenging. Here’s what you need to know if you’re in the market and looking for bad credit car loans.

What Are Bad Credit Car Loans?

Bad credit car loans work like regular car loans, allowing you to borrow money from a lender to finance a vehicle. The key difference is that you’re applying with a less-than-ideal credit score. Having bad credit might pose challenges in qualifying for the loan, and it often results in higher interest rates, making the overall cost of the loan more expensive.

What Constitutes a Favorable Car Loan Interest Rate in Canada?

  • New car loan rates usually range from 0% to 7.5% for individuals with good credit, varying based on the vehicle’s make and model.
  • Used car loan interest rates in Canada are higher, typically falling between 8% and 10%.
  • Car loans for those with bad credit carry higher rates, as lenders face increased risk. Rates for bad credit auto loans usually range from 14% to 29.99%.

 Where Can You Find a Bad Credit Car Loan in Canada?

The positive news is that despite having bad credit, you have various options for finding the right car loan in Canada. Here are some of the top sources for bad credit car loans:


Car dealerships are a common choice for individuals with bad credit seeking car loans. Many dealerships are willing to work with individuals of varying credit standings, increasing the likelihood of securing a deal.

Private Lenders

If the dealership isn’t offering favourable terms or interest rates, exploring private lending could be viable.

How to Apply for a Car Loan With Bad Credit

  1. Plan Your Budget

First, figure out a budget by considering your monthly expenses, like rent and utilities. You can also check online sites like, fill out their forms, and see if you’re pre-approved.

  1. Get Quotes from Car Dealerships

If you prefer local dealerships, talk to them about your budget. Online loan companies and reputable car dealers like CarEvo will assess what you can afford and provide suitable offers.

  1. Compare and Choose

When comparing offers, consider factors like car details, loan terms, payment frequency, and income. Find the monthly payment that fits your budget.

  1. Gather Required Documents

Once you decide on a lender or dealer, gather and submit documents like proof of income, bank details, driver’s license, address proof, and assets/liabilities proof to secure the loan.

Getting the Right Car Loan With Bad Credit

Car loans aren’t just for people with excellent credit scores. If your credit isn’t perfect, it doesn’t have to stop you from getting a new car and the loan to pay for it. Just follow our steps, keep an eye on your money situation, and you can purchase a vehicle that fits your budget and situation. At CarEvo, we work with big lenders in Canada to find you the best used car loan rates in Canada and terms for your car loan, even with a bad credit history.

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