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How to Finance a Vehicle with Bad Credit?

Steps for Financing a Vehicle with a Bad Credit Auto Loan or a Subprime Auto Loan:

  1. Determine Your Vehicle Needs
  2. Decide on Your Budget
  3. Check Your Credit Score
  4. Freeze The Budget
  5. Read Before You Sign
  6. Keep The Paperwork
  7. Commit to Your Payments


Get Approved for A Car Loan in Toronto

Bargaining with a dealership for a new car is often stressful for customers. Add a bad credit history to the mix and it can be an anxious time indeed. Whether you live in Hamilton, Oshawa, Trenton, Sudbury, Thunder Bay, Belleville, Scarborough, Etobicoke, Brampton, Mississauga, Kitchener, Waterloo, Timmins, London or anywhere else in Ontario, preparation is key when shopping for a poor credit car loan with less than stellar credit. There are definite steps you'll want to take before walking into a dealership to ensure a smooth transaction. We've provided some helpful tips below to make the process more successful and less stressful.

Tip 1: Determine Your Needs

What do you need from your vehicle? You definitely don't want to buy a car that is larger than you require, or that features amenities you really don't need: both lead to higher costs overall. It can be tempting to buy a vehicle with all the latest bells and whistles, but what are your actual day to day needs as a driver? Conversely, do you have a large family, or does your job/business require you to transport goods on a regular basis? You don't do yourself any favours buying a car that fails to meet such needs. Other factors to consider include gas mileage, your total daily commute, and anticipated routine maintenance. Get a firm grip on what you actually need and what costs will be involved in meeting those needs before walking into the dealership. It will lessen the temptation to worsen your financial situation with a car that isn't just right for your individual and family needs.

Tip 2: Budget

Whenever you think about entering into a long-term financing arrangement that involves monthly payments, setting a realistic budget is essential. Check out prices on dealer sites, Kijiji, Auto Trader, Canadian Black Book and manufacturer websites to get a strong feel for the actual prices of makes and models you are considering for purchase. Understanding the true market value of a given vehicle helps prevent overpaying. Another very important consideration is the cost of insurance: before visiting a dealership, arm yourself with quotes from reliable insurance providers. Auto insurance is mandatory in Ontario, and whether you're driving in Toronto or cruising cottage country side-roads up north, you must have valid insurance.

Keep in mind that the longer a poor credit car finance contract is, the smaller the monthly payments will be. Ultimately, you will pay more in interest on a more drawn-out arrangement. Many bad credit loans involve 24-36 month terms rather than the standard 48-60 month terms. This is because it reduces risk to the lender should you default; they will have received more money up front. Budget for those smaller loan terms when calculating which sort of vehicle you can truly afford. Click here for our Car Loan Calculator

Tip 3: Credit History

It's surprising how few people check their own credit histories on a consistent basis, especially in these days of increasing identity theft. Before applying for a subprime car loan, contact one of the credit bureaus we rely on here at the dealership: Transunion ( or Equifax ( to determine your exact credit rating. This information can be obtained once per year free of charge and it is essential to have this information before purchasing a car. Beware of agencies posing as credit bureaus and stick to the two we have suggested for your own safety and security. Also no credit check car loans as these can also rick safety and security. No credit car loans and poor credit car loans are certainly options for you, but they all require a credit check if you are working with a reputable lender.

Buying The Car: With your homework done, you can feel confident walking into the dealership with the facts and figures you need to make an informed and financially reasonable choice of vehicle. Click here to view our Inventory
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Tip 4: Heed The Budget

You went to the effort of making a budget-time to stick to it! It can be somewhat challenging to heed your budget once you're surrounded by shiny new wheels, but it's important to think about the long term. Add-ons will increase your payments and rack up interest, both of which can imperil your ability to make consistent payments on a bad credit loan.

Tip 5: Read Before Signing

Contracts make for boring reading, but do yourself a favour before signing and read every clause. Once you ink your name, you are legally obliged to that bad credit auto loan contract and there is no turning back. It is your responsibility as a consumer to read your contract. If you have questions, ask. If you feel pressured by the dealer, decline to sign until you can process the terms carefully before signing. Never sign anything that makes you uncomfortable, and be wary of any dealer who brushes off your questions or tries to rush you through a contract. Get Pre-approved here

After The Purchase

You've made the purchase, signed on the dotted line, and your bad credit loan has been approved. You're now driving your new car around the GTA, loving life. Here are some important post-purchase tips to follow.

Tip 6: Keep That Contract

Before leaving the dealership, you should have a copy of your fully signed and dated contract in hand. Do not wait for it to come in the mail, and be sure it has been filled out with one hundred per cent accuracy and completeness. Keep it in a safe place, and for good measure, scan a digital version for online storage as well. If you need to refer to it in future, accessing it will be so much easier this way.

Tip 7: Make Your Payments

As the recipient of a bad credit car loan, you likely already understand the consequences of late or missed payments in your financial life. Set up automatic payments if keeping track of bills is a challenge for you, and whenever possible, pay more to help decrease interest in the longer term. If you find yourself struggling to make the agreed-upon payments, don't throw your hands in the air and avoid paying. Contact the loan provider immediately to see what options are available to you if you feel you might miss a payment. As the high-risk recipient of a bad credit loan, even one missed payment can result in the repossession of your vehicle, not to mention further damage to your credit score.

Q: What's the Average Interest Rate for Bad Credit Car Loans?

A: A consumer with good credit pays an average of 4-6% on a loan. Subprime car loan borrowers pay closer to 10-19.9%, depending on their credit score, and certain lenders may go even higher.

Get Approved for A Car Loan in Toronto

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    As a valued customer, we want to ensure that your private information is kept private and only shared with those companies that are authorized by yourself or that are allowed or required by law. This document explains our privacy policy, gives you reasons why we ask for the type of information we do, and if we do reserve a right to share information with non-affiliated third parties, lets you "opt-out" of our reservation to do so. Please take a moment to read this entire policy.

    Collection of Information
    The purchase of a motor vehicle requires considerable accumulation of non-public personal information. For example, if we sell or lease you a vehicle—extending credit to you at your request—we will receive information from you in order to determine your creditworthiness. We may also obtain information from a credit reporting agency. We may also obtain information from third parties such as employers, references and insurance companies.

    Some of the information we obtain from you may be required by provincial or federal agencies, such as the Department of Motor Vehicles or the Canada Revenue Agency. This information may be required even if you were to pay cash for your vehicle. Examples would be a driver's license or social security number.

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    We safeguard nonpublic personal information according to established industry standards and procedures. We maintain physical and electronic safeguards that comply with provincial and federal law. We restrict access to non-public personal information about you to those employees and outside contractors who need to know the information to provide goods or services to you. We prohibit our employees and agents from giving information about you to anyone in a manner that would violate any applicable law or our privacy policy.

    Information Sharing
    Unless we have indicated our desire to share your non-public personal information with non-affiliated third parties (by checking the box in the section below), we share information:

    A) For everyday business purposes, such as to process transactions, maintain account(s), to respond to court orders and legal investigations, or to report to credit bureaus.

    B) For the purposes of processing a sale or lease transaction at your request or authorization, such as submitting information to third party financial institutions that may be requested to take an assignment of the contract, or verifying insurance coverage information.

    C) When using outside service providers to help us provide you with products and services. Before providing information to our service providers, we enter into contractual agreements prohibiting them from disclosing or using the information other than for the purpose for which it was disclosed.

    D) With "Affiliated" companies. Companies that are affiliated with us include any company that controls us, any company that we control, or any company under common control with us.
    I am interested in purchasing or leasing a vehicle and request that my Consumer Credit Report be obtained, at no cost to me, in order to help determine the types and extent of financing which may be available to me.

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