Bad Credit Car Loans Canada Guaranteed Approval

Bad Credit Car Loans Canada Guaranteed Approval: Living with bad credit can be challenging, especially when trying to get approval to finance products like a car loan. Most consumers believe that they need excellent credit to get a car loan, when in fact there are many car loans available for those with lower credit ratings. Finding and getting approved for a car loan when you have low credit can be a little tricky but not impossible, so don’t let that dissuade you from even trying.

Here are a few things you should know if you are looking for Bad Credit Car Loans Canada Guaranteed Approval.

What Is A Bad Credit Car Loan?

With a Bad Credit Car Loans Canada Guaranteed Approval, you borrow money from a lender to finance a vehicle. It’s the same process as a traditional car loan, except you’re applying with bad credit, which can make the process a bit more difficult. In this case, the lender would approve you for a car loan despite your bad credit rating.

Do you have bad credit?

In Canada, credit scores range from 300 to 900. A bad credit score is between 300 and 600, while a good credit score is between 700 and 900. This low score can be due to many factors including but not limited to:

  • Too many late, short, or missed payments on your credit account
  • An error in your credit reports, e.g. a wrong address or a wrong name
  • Apply for too much new credit within a short period
  • Holding large amounts of unpaid debt for months
  • Become a victim of fraud or identity theft
  • Going through a debt settlement, consumer proposal, or bankruptcy

Unfortunately, banks, credit unions, and other types of lenders sometimes turn down applicants with bad credit because they have a higher risk of defaulting on their loans. But that doesn’t mean it’s impossible to get a car loan if you have bad credit.

Two main reasons people with bad credit struggle to get approved

1. Your creditworthiness

Credit scores in Canada range from 300 points to 900 points. According to Equifax, one of Canada’s largest credit reporting agencies, a good credit score of 660 likely qualifies you for a loan. However, any score below 660 can make it difficult to get a new loan.

With the average credit score in Canada being just under 660, applying for a loan can be frustrating for many people.

Fixing your credit can seem nearly impossible when your credit is bad. You see, one of the best ways to rebuild credit is to pay off a loan regularly to show lenders that you can be trusted. But here’s the kicker: You’re having a hard time getting a loan because you don’t have good credit. That’s called a riddle.

If you have good credit, you can just go to any bank or dealership and get a car loan approved with ease. However, for a Canadian with little or no credit history, things get a little trickier.

If the banks say no, there are easier ways to finance your car. Some providers specialize in helping customers with bad credit, and they can help you get a vehicle licensed that fits your budget and lifestyle. With a bad credit car loan, a customer not only gets the driver’s seat of a new car but also gets a chance to rebuild their credit history.

2. Your Income

If you have bad credit, you can still get an auto loan approval if you go to a dealer or shop that knows how to help you. Some lenders also consider other factors besides your credit score, such as Your income. Typically, the minimum income for a person to qualify for a low-credit auto loan is $1800 per month before taxes or deductions (i.e. CPP, EI, etc.).

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To put your income requirements into perspective, here’s the breakdown:

Hourly Income:At least $10.50 per hour for 40 hours per week, or equivalent
Weekly Income:At least $420 per week (before deductions)
Bi-weekly Income:At least $845 every two weeks (before deductions)
Twice per month:At least $900 twice per month (before deductions)
Monthly Income:At least $1800 per month (before deductions)

Meeting minimum income requirements is not necessarily an achievement to qualify for auto financing. Some lenders even work with clients who receive their income from government programs. But if you’re on a permanent contract, that’s half the battle.

Why do lenders check your credit history?

When you apply for credit, whether it be a student loan, credit card, car loan, or mortgage, you agree to have your credit report verified by a lender.

When a lender pulls a copy of your credit file to see if you qualify for a loan, they will review your credit history to determine if you are a legitimate candidate for the loan you applied for.

Lenders want to make sure you are in good financial control and can afford to meet your debt obligations.

If you are considered high-risk by banks and other traditional lenders:

  • Your interest rates will go up
  • You will be asked for collateral or a co-signer
  • You will be asked for a larger deposit
  • You will be rejected

As an auto retail and auto financing company, Canada Drives often consults Canadians who are curious about an auto loan without having to check their creditworthiness.

It is possible through some institutes, but the lenders who promise car loans without a credit check drastically increase interest rates with high down payments and monthly installments.

Because lenders don’t check your credit for a car loan, you’re likely paying thousands of dollars more than if you applied for a credit-checked car loan.

If you have bad credit, there is a better alternative to unverified credit with “guaranteed” approval.

Thanks to the advent of financial technology, a growing number of lenders are now able to approve applicants based on information beyond mere creditworthiness.

Loan applications can be bundled

If you’re looking for a no-credit check loan because you’re concerned about your creditworthiness on a rigorous check (or multiple rigorous checks), you’ll be pleased to know that auto loan credit checks can be bundled together.

But what does that mean?

When a lender or company asks to see your credit report, it’s commonly referred to as a hard pull or hard request.

This activity will lower your credit score by a few points.

However, there is a window where you can search for the best rates available on any loan application without hurting your credit score.

The credit bureaus — Equifax and TransUnion — both have an auto loan window of at least 14 days.

During this time, you might think that multiple car loan applications from different lenders will result in multiple harsh investigations and consequently badly damaged credit scores.

All of these questions only count as one application.

This is important because many people think every survey will hurt their credit score, but that won’t be the case if you ask all of your questions within these 14 days.

How To Get A Bad Credit Car Loans Canada Guaranteed Approval?

Here are a few tips that can help you with Bad Credit Car Loans Canada Guaranteed Approval.

Total time:

  • 120 minutes

What you need:

Here are the documents needed to get a bad credit car loan

  • Confirmation of work
  • Account Statements
  • Mobile
  • Driver’s license

While credit-friendly lenders and auto dealers have easier restrictions, you’ll need several personal and financial documents to apply, including:

Proof of Employment – Before you get a major loan, most credit sources will want to confirm that you have a steady job, so copies of your most recent paychecks or paychecks may be required.

Proof of Income, Assets, and Liabilities – The lender/dealer should also know how many cars you can afford. Therefore, they may ask for your most recent bank statements, as well as papers describing your existing debts and property.

Driver’s License and Proof of Address – When applying, you must provide proof that you are a registered driver in your province or territory. An invoice with your address (utility, internet, etc.) may also be required to confirm your residency status.

Understand your budget

To find vehicle options that fit your budget, you need to have an idea of ​​how much you can afford each month. The car loan calculator gives you a rough estimate of what to expect. If you’re looking to trade in your current vehicle for a newer one, your trade-in vehicle will lower your monthly payment, so be sure to take that into account.

In addition to your loan payments, consider these other common car expenses:

  • Gas/electricity
  • Repair
  • Maintenance
  • Ties
  • Insurance
  • Registration

Consider a used car

If you want to get approved financing for a good deal, check out the used car market. It’s extremely rugged in Canada, so whether you’re looking for a truck, SUV, or passenger car you’re sure to find what you’re looking for. You get almost all the benefits of a new car but at a lower purchase price. Depreciation isn’t too much of an issue either if you’re buying used.

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Obtain pre-approval online

While some dealers and lenders are unable to help customers with bad credit, online dealers like Canada Drives can help you pre-qualify for free and connect you to dozens of great vehicle options. With pre-approval in your pocket, you know exactly how much you can afford, saving you a lot of time and frustration.

Opt for a deposit

Decide if you want to pay a deposit and how much you want your deposit to be. The deposit is a percentage of the prepaid purchase price. Paying a deposit increases your chances of approval even more. But paying a deposit isn’t for everyone, nor are there any installment options to explore.

Select a co-signer

Do you have a co-signer ready to sign, or are you the only name on your auto loan agreement? A co-signer is a trusted friend or family member who agrees to share responsibility for your loan. A co-signer can increase your chances of approval because it lowers the risk for the lender. However, like a deposit, a co-signer is not a viable option for everyone, and you can be approved without it.

How Does a Car Loan Help Improve Bad Credit?

If you don’t know where your finances stand before applying for car financing, it’s best to do some research on where your credit score lands. At Borrowell, you can download your credit report and find out your creditworthiness for free. If your score is bad or fair, you should look for ways to improve it. With a few small adjustments, you can see your credit score improve in just 30 days. Luckily, a car loan can help you improve your credit score!

But how?

Making your car payments on time every month improves your credit score, as your payment history contributes to 35% of your credit score. A good payment history tells lenders that you will repay them if you are a reliable borrower. With a better credit rating, you qualify for better interest rates on future loan products!

Where To Bad Credit Car Loans Canada Guaranteed Approval In Canada

The good news is that whether you have bad credit or not when looking for the right car loan, you have several choices. Below are some of the best sources for bad credit car loans in Canada.


Usually, banks can’t give you credit if you have bad credit, but it’s worth a try. Try contacting the banks and credit unions in your area. Explain why they should approve your car loan application. While the results may not be fruitful, at least exercise all of your options.


One of the most common places for people with bad credit to look for auto loans is at the dealership itself. Dealers are often willing to work with anyone, and chances are they can help close a deal. However, some merchants may try to take advantage of you based on your poor credit score, so it’s important to pay attention to the offer they’re offering you and, if possible, shop around to make sure you’re not being scammed.

Private Lender

If the merchant isn’t willing to work with you or doesn’t offer you an interest rate or deal that you think is reasonable, going the private route may be a good idea. There are hundreds of personal loan options out there, but of course, they can often be riskier than getting a loan from an established company, website, or merchant. You must research the lender thoroughly when deciding on a car loan.

Now that you know some of the options available if you have bad credit and need a car loan, let’s take a look at some tips to help you get the best possible deal and make the process as easy as possible. You can learn how to get a bad credit car loan in Calgary here.

The Best Bad Credit Car Loans Canada Guaranteed Approval Loan Providers In Canada

1. Loans Canada

Loans Canada is one of Canada’s largest loan comparison platforms. It has partnerships with lenders that offer car financing regardless of your credit history.

First, fill out the online application and they will match you with a lender that suits your needs.

  • Loan Amount: $500 – $50,000
  • Interest: 1.99% – 46.96%
  • Duration: 4-60 months

In addition to bad credit auto loans, Loans Canada also works with lenders that offer loan construction, debt consolidation, guaranteed loans, and no credit check loans.

Visit Loans Canada.

2. CarsFast

CarsFast offers bad credit auto loans through LendingArch and an extensive network of dealerships across Canada.

Even if you’ve gone through a consumer proposal or don’t have a credit history, you can still be approved.

First, go to CarsFast to complete the online application (takes 2 minutes at most). Once approved, you can buy your favorite vehicle from over 350 retail partners.

  • Loan Amount: Up to $75,000
  • Interest: Varies
  • Duration: 12-96 months

To be eligible for a car loan through CarsFast, you must meet the following requirements:

  • Over 20
  • An income of at least $2,000 per month (both employed and self-employed)
  • Have a valid driver’s license
  • Live in Alberta, British Columbia, or Ontario.
  • Employed for more than 3 months

Visit CarsFast.

3. LoanConnect

Loan Connect offers loan solutions for a variety of needs, including car purchases, home improvement, debt consolidation, and personal loans.

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It operates across Canada and works with people with bad credit.

To apply for a car loan, complete the online application to be pre-approved. After pre-approval, they will present you with a list of options that match your credit needs.

  • Loan Amount: Up to $50,000
  • Interest rate: 1.90% – 46.96%
  • Duration: 12-72 months

Visit LoanConnect.

4. Car Loans Canada

Car Loans Canada offers access to car 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: up to 29.95%
  • Term: up to 96 months

To qualify, you must have a minimum monthly income of $1,800 and a valid driver’s license.

Get a car loan.

Costs to consider for a bad credit car loan

Before financing a vehicle with a bad credit car loan, it’s important to find a payment plan that fits your budget. Here are some of the biggest costs to consider:

Term of the car loan:

A longer loan term comes with lower monthly payments, which can be attractive. However, a longer-term means more interest is paid over time. Sometimes a shorter loan term is the best option to save money and pay off your loan faster.


Bad credit car loans can have high-interest rates. So the best way to lower your rate is to apply with a solid income, a deposit, and/or a co-signer. Financing a cheaper vehicle also allows you to pay less principal and interest.

Costs extra

Bad credit car loans can also come with high service and administration costs. This is especially true if you’re financing your car through a dealer, who may also incur fees such as vehicle prep and documentation.

Total cost vs monthly payment

The selling price of your car may not be what you pay when you finance it. When you factor in fees and interest, all of your monthly loan payments can add up to a lot more than that.

Bad credit car loan tips

Here are some other ways to get an affordable bad credit car loan:

Make a deposit

Saving up for a down payment before buying a new or used car is always good practice. It may even help increase your chances of admission. However, there is no auto loan down payment options offered by certain lenders.

Get a co-signer

Asking someone to co-sign your car loan is another way to get better terms if you have bad credit or don’t have a down payment. This person must be of fair to good credit and be responsible for your payments if you fail to do so.

Make a trade-in

If your current car has trade-in value, a car dealer may allow you to trade it in for a lower price on the car you’re financing. However, you may not get the true value of the car as the dealer needs to make a profit.

Meet the lender’s minimum requirements

Since you have bad credit, the right dealer/lender will focus on other aspects such as Your income. Here are the minimum income requirements for most alternative lenders and dealers:

Income TypeMinimum Income Before Taxes & Deductions
Monthly$1,800 a month
Bi-Monthly $900 twice a month
Bi-Weekly$845 every two weeks 
Weekly$420 a week
Hourly$10.50 per 40-hour workweek (or equivalent) 

Avoid these car loan traps with bad credit

Unfortunately, bad credit means certain lenders and dealers will try to take advantage of you because they think you’re desperate enough to make a deal. Watch out for these pitfalls when looking for a car loan with bad credit.


The most common and probably the most obvious pitfall is credit tokens. Your dealer will benefit by trying to get you a more expensive loan, sticking to your plan, and not accepting an offer you can’t afford.

Yo-Yo Funding

At this point, your dealer will allow you to take your chosen vehicle home before you are officially approved for a loan and will call you back a few days later to let you know that your loan application has been declined. They have now tricked you with a new price and interest rate, knowing that you will most likely pay whatever they ask.

“Buy here, pay here”

These types of dealers will offer you a loan regardless of your credit history or score. While this might seem like exactly what you need, some downsides might end up costing you. Not all “buy here, pay here” traders are bad, but you should do your research and know what kind of interest you might qualify for, as they could try to cheat you out of an incredibly high one.

Frequently Asked Questions About Bad Credit Car Loans

Do Bad Credit Auto Loans Help Build Credit?

Yes, reporting your payments to one or more Canadian credit bureaus can help your credit score improve over time. Remember that every credit score reacts differently, so it’s difficult to predict exactly how and when your score will improve.

How can I improve my chances of getting a car loan if the credit bureau is bad?

Don’t worry if you have bad credit. There are several other ways to increase your chances of getting a bad credit car loan, such as:

  • Make a big deposit
  • Find a co-signer
  • Offer collateral to secure the loan
  • Apply with a good income and the same job over several years
  • Pay off existing debts
  • Get exempt from debt settlement, consumer filings, or bankruptcy

Do I have to pay a down payment to get a car loan if I have bad credit?

While some lenders and car dealers don’t require down payments, lowering the selling price by at least 20% of the car can significantly increase your chances of approval.

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

Credit scores in Canada range from 300 to 900. You may be able to get a car loan even if you have bad credit (300-559).

Can I get a car loan with a Schufa of 500?

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

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

Bad credit dealerships offer new and used makes of cars including Toyota, Hyundai, Honda, Mazda, Volkswagen, Lexus, Subaru, and more.

Conclusion – Bad Credit Car Loans Canada Guaranteed Approval

Auto loans are not reserved for people with good credit ratings. Your low credit shouldn’t stop you from looking for a new car and a loan to pay for it. Make sure you follow our steps and keep up to date with your financial situation to get the car you want and need.


I am Mr. 9jaboizgist, a dedicated content writer and the proud owner of 9jaboizgist, a versatile blog covering a wide array of topics. With a passion for blogging and a knack for delivering up-to-the-minute information, I specialize in curating engaging content in the fields of technology, business, finance, banking, loans, insurance, and the Internet.