Get Approved For a Car Loan with Bad Credit in Canada [2025]

What Are Bad Credit Car Loans?

To qualify for a car loan, you usually require a good credit history in Canada. The range for credit scores ranges from 300 to 900 in Canada. According to a report by FICO, credit scores or credit ratings falling below 590 are known to be low credit scores. With bad credit car loans, you can borrow a car from the dealership and improve your credit score.

According to the Canadian Fair Credit Reporting Act, if you want to check your credit report, then you can check it from Canada’s credit bureaus once a year for free. You can access the report in person, using the phone, through mail, or even online.

Recommended: Essential Tips for Buying A Used Car in British Columbia

How To Apply For A Car Loan With Bad Credit

To apply for a bad credit auto loan, the following steps will be useful:

Step 1: Plan Your Budget

Before you apply for a car loan, it is essential for you to set a clear budget where you take into account your overall monthly finances and financial situation. Car loan payments are a long-term financial investment, so make sure to take note of the costs for:

• The car’s fuel
• Repair charges
• Timely maintenance
• Tires of the car
• Insurance
• Registration fees

Read this blog to learn how to register a vehicle in BC.

Step 2: New or Used Vehicle? Choose Wisely

When you are applying for auto financing, the interest on car loan rates in British Columbia will vary depending on the type of vehicle. If you are financing a new car model, then it may be a safer option despite the higher rates of interest. Meanwhile, a used car would be much more affordable in terms of interest rates.

Step 3: Contact Car Dealerships

Now that you have come to the final decision of going for an auto loan, the next step is to contact the car dealership. Look around for a good dealership offering the best deals such as First Nation financing in British Columbia. After you have chosen the right dealership, you will be required to provide the following details during the pre-approval process:

• The details of your income.
• The length of your loan plan
• How often do you want to pay the loan?
• The car’s make, model, and year of manufacture.

Step 4: Find The Best Deals And Submit Necessary Documents

The lender from the car dealership will offer you different plans suited to your needs and preferences. After comparing the deals, choose the best one and move forward with the process. Make sure the auto dealership offers flexible and affordable financing options.

After you are done finalizing the deal, you will be required to submit the following documents for the car loan application:

• Proof of identity
• Proof of income and employment
• Driver’s license
• Details of bank account
• Proof of liabilities and assets

Read Also: Does Financing a Car Build Credit in Canada: A Detailed Guide

Advantages of Bad Credit Car Loans

With a bad credit car loan, you will be able to finance a car although you may not be eligible in most places. Moreover, you will be able to improve your credit rating slowly with monthly payments. Bad credit car loans are also known to provide flexible terms, allowing you to finance a car without any hassles. 

Disadvantages of Bad Credit Car Loans

While it is beneficial for your overall credit score, a bad credit car loan usually comes with higher interest rates. Other than that, to be approved for an auto loan with poor credit, you are usually required to give a down payment, state your minimum income, or find a co-signer to get approved for your loan. Some dealerships may even charge additional fees for bad credit car loans.

Where Can You Get A Car Loan In Canada With Bad Credit?

You can get an auto loan with bad credit in Canada with Auto Lending Hub. We specialize in providing loan options for people with bad credit wanting to rebuild credit. Our dealership provides a range of benefits, such as affordable and flexible financing options, and many more. We do not charge any hidden fees during the process of car financing and always put your needs and preferences at the forefront. Reach out to us today by filling out an application online for your bad credit car loan!

Read More: How To Avoid Paying Taxes On Used Car Purchases In BC

Conclusion

When applying for a bad credit car loan, it is important to read all terms and requirements carefully. A bad credit car loan may come with certain disadvantages; however, it should not stop you from driving your dream car!