Can You Get a Car Loan With Bad Credit?
Yes — many Canadian lenders specialize in bad credit auto financing. While traditional banks may decline your application, alternative and subprime lenders work specifically with borrowers who have credit scores below 600. These lenders look beyond your credit score — they consider your income, employment stability, and ability to make payments.
What Credit Score Do You Need?
For standard bank financing, you typically need 650+. For alternative lenders: 500-650 approval is common. Below 500: some specialty lenders will work with you but expect higher interest rates (12-29%). No credit at all: first-time buyer programs exist.
How to Improve Your Approval Odds
1) Make a larger down payment (10-20%+)
2) Get a co-signer with good credit
3) Choose a cheaper vehicle
4) Show stable employment (6+ months at same job)
5) Reduce your debt-to-income ratio before applying
What Interest Rate to Expect
Good credit (680+): 4-7% APR
Fair credit (600-679): 8-14% APR
Poor credit (500-599): 15-22% APR
Very poor (below 500): 20-29% APR
Rates vary by province and lender. Ontario and BC tend to have more competitive rates due to higher lender density.
Should You Finance Through a Dealership?
Dealer financing is convenient but often more expensive. Dealers mark up the interest rate from the lender and pocket the difference (called "dealer reserve"). Getting pre-approved through FundPath before visiting a dealership gives you negotiating power. Walk in with a rate and watch the dealer try to beat it.