February 15, 2019

Having bad credit can make you feel a bit waking up with a broken leg. Your choices become limited, you have to move very carefully when considering your next move, and you know it’s going to be a long time before you’re completely healed up.

In Canada, your credit score can range between 300 all the way up to 900. TransUnion targets the average Canadian score at 650, although some 20% of Canadians have a score less than 600.

So what does all this mean if you’re trying to buy a car in Canada despite having a sub-par credit score? While some dealerships will reject you without a second thought, others are willing to work with you in order to make a sale and get you in a vehicle. However, remember that car dealerships are not charities. Their primary motivation is to make as much money for themselves. If your credit score is lacking, they will usually balance the increased risk with more stringent loan conditions.

If you have bad credit, most lenders require that you make at least $1,800 per month before taxes and other deductions. Providing pay stubs or bank account entries is the best way to prove this to a lender.

If your income is less than $1,800, you’re still not out of luck. Certain dealers are willing to incur more of a risk in granting you an auto loan if you can provide them with alternate forms of assurance. Here are three great ways to enter into a dialogue with these lenders.


  1. Save up for a larger down payment. If you know you want to buy a car in the next year, start a savings plan to bring as much money to the table as possible when you make the purchase. Even $50 a week adds up rapidly over time and can equal $2,600 at the end of the year. The more money you can pay upfront, the lower your monthly costs will be over the course of the loan. Lenders may offer lower interest rates as well, as your ability to pay for a chunk of the total price upfront eases their concerns of having to spend money to collect payments from you down the road.
  2. Methodically pay off other debts before applying for a car loan. Credit scores have a tendency of dropping quickly and rising slowly. But you can deliver documentation that proves to lenders that you’re paying off your debts in a consistent matter. When you go to apply for a car loan, bring credit cards statements that show you are paying down your debt on outstanding accounts. This will help establish you as a reliable bill payer.
  3. Do your homework. Every lender and dealer will do things just a bit differently. Target ones in your area that offer loans to customers with bad credit, call them in advance of an in-person meeting to learn their process, and read reviews of their financial process online from previous customers. The more information you have going in, the more likely you are to drive home in a new vehicle.

When you’re ready to improve your credit quickly, the best way to do it is by searching for the right car loan that fits you.

But there are a lot of different loans and loan sites online, it can be overwhelming to even start!

Don’t worry, Car Loans Now is constantly researching the best auto loans for responsible Canadian Drivers like you. Their helpful team is here to guide you to the perfect loan for your needs and get you on the road to better credit, today.

All you need to do is fill out a quick, no obligation form to see what you qualify for and get started building your credit immediately!

Don’t wait, the sooner you sign up, the quicker you can improve your credit.