Updated: April 2025  |  bremo.io financial guides

Credit Score Needed for a Car Loan in Canada

Auto loans in Canada are available across a wide range of credit scores — far more flexible than mortgage approvals. However, your credit score still has a major impact on the interest rate you pay, which directly affects your monthly payment and the total cost of the vehicle over time.

Minimum Credit Score for a Car Loan in Canada

There is no universal minimum, but here is a practical breakdown by lender type:

• Major banks (RBC, TD, BMO, Scotiabank, CIBC): Generally want to see 650 to 680 or above for standard auto loan approval at competitive rates
• Credit unions: Often more flexible; may approve 620 to 640 with other compensating factors (stable employment, down payment)
• Dealership financing (captive lenders): Dealerships often have access to multiple lenders and can sometimes approve scores as low as 550 to 600, though at higher interest rates
• Subprime auto lenders: Specialize in bad-credit auto loans; will approve very low scores but at rates of 15% to 30% or more

How Your Credit Score Affects Your Car Loan Rate

The interest rate difference between a good credit score and a bad credit score on a car loan in Canada can be dramatic:

• 700+ (excellent/very good): Rates typically 5% to 9% depending on the lender and vehicle
• 650–699 (good): Rates typically 8% to 14%
• 600–649 (fair): Rates typically 12% to 20%
• Below 600 (poor): Rates typically 18% to 30% through subprime lenders

On a $25,000 car loan over 60 months, the difference between 7% and 22% interest is approximately $100 in total interest paid. Your credit score is literally worth thousands of dollars on an auto purchase.

Getting a Car Loan With Bad Credit in Canada

If your score is below 620 and you need a vehicle now, here are your realistic options:

Dealership Subprime Programs

Many dealerships work with lenders who specialize in bad-credit auto loans. They will approve most applicants but require a larger down payment (often 10% to 20%) and charge high rates. While expensive, this can be a practical option if you need transportation urgently and can make the payments.

Buy Here, Pay Here Dealers

Some smaller used car dealers offer in-house financing with no third-party credit check. These have the highest interest rates and often the worst consumer protections. Avoid unless there is truly no other option.

Get a Co-Signer

If a family member with good credit co-signs your auto loan, you may qualify for much better rates. The co-signer is legally responsible for the debt if you default, so this requires significant trust from both parties. If you make all payments on time, the loan builds your credit history.

Save a Larger Down Payment

A larger down payment reduces the loan amount and gives the lender more confidence. Even 15% to 20% down on a used vehicle can make a meaningful difference in whether you are approved and at what rate.

Rate Shopping for Auto Loans

As with mortgages, applying to multiple auto lenders within a 14-day window is treated as a single hard inquiry by Canadian credit scoring models. This means you can compare rates from several lenders (your bank, a credit union, dealership financing) without multiplying the credit score impact. Do your rate shopping within a concentrated period for maximum efficiency.

Should You Wait to Buy?

If you have flexibility on timing, even 6 to 12 months of credit building can move your score into a significantly better rate tier. Going from 600 to 660 could cut your auto loan rate in half with some lenders. If you do not urgently need a vehicle, the math often favours waiting and improving your score first.