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Looking For An Auto Loan? It’s Never Been Easier!

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Obtaining a loan for your vehicle can be a frustrating process. Not only is it confusing, but there are so many factors involved! It gets hard to keep track of what’s going on, and what you need to do to get the rates you want. To make the process a little easier, we’ve gone ahead and put together a guide listing everything you need to know about obtaining an auto loan in Canada. We’re going to discuss what an auto loan entails, the best way to get an auto loan, and everything in between. Stay tuned, this guide is about to become your best friend.

How to go about getting an auto loan

Honestly, the hardest about applying for an auto loan is finding someone to approve your application. For some people this is easy, but for others, it can be tough. Someone without a credit rating, or worse, a bad credit rating, may find it difficult to get approved. Fortunately, there are a lot of institutions out there that help people with horrible credit. For anyone curious, the average crediting rating is below 660 in Canada. 660 is the typical approval rating for most high ranking banks and dealerships in terms of auto loans. Below we’ve put together a quick synopsis of how the application will work.

  1. First, you’re going to want to fill out the application provided to you by either a private dealer or a dealership. On this application, you’ll be prompted to fill out your personal information, as well as your banking and financial information. Be prepared to have your SIN number, all of your contact and address information, and any financial information you may have access to.
  2. Next, you’ll be required to submit a few necessary documents. This may include pay stubs, income records, invoices, tax sheets, and other similar items. You’ll also be required to provide information pertaining to the vehicle you are attempting to secure an auto loan for. This includes the make, model, year, VIN number, mileage, condition and a variety of other factors.
  3. Now that you’ve done the difficult parts, all you have to do now is wait. It may take a few days, or even a week for some companies, but you’ll hear back eventually. Some people find this difficult because waiting days just to be denied is not fun!

Is there a “best” way to apply for an auto loan

To say that one method is better than any other would be incorrect. Each method is best with respect to certain situations. Below we’ve gone in-depth as to the details of each method. The three options are dealerships, banks, and the newest to the scene, online service providers.


Banks are a great option with respect to obtaining auto loans for people who have splendid credit. Banks tend to look down upon people who don’t have great credit. If you do have bad credit yet manage to pull off an approval, chances are you won’t get great rates. If anything your rates will be unaffordable and ridiculous. For people who do have great credit, you’ll most likely prefer banks. After all, they’re designed to work in the favor of people with great credit ratings.


Mainstream dealerships like Honda and Dodge are great places to get auto loans. Especially considering the fact that you can get a vehicle and auto loan in the same place! Unfortunately for people with bad credit, mainstream dealerships tend to prefer customers with good credit ratings. What they tend to call their prime business. For people with great credit, go to dealerships. For people with bad credit, you’ll need to visit used car dealerships for better rates. Used car dealerships can be just as good as mainstream dealerships, depending on the specific dealer of course.

Online Service Providers

If you’re not interested in obtaining an auto loan from banks or a dealership, try using an online service provider. All the work is done online, and you don’t even have to leave your home. These service providers are dedicated to helping people with less than satisfactory credit. Securing an auto loan has never been easier for people with bad credit.

Required Information

Before you can fill out an application for any of the above options, you’ll need to have some information readily available. The list below will be accurate for most lenders. Anything differing from this list should be minor and relatively insignificant.

  • You’ll, of course, need to provide identification to prove you’re Canadian. (Passport; Drivers License; Health Card; Birth Certificate)
  • Proof that you reside in Canada
  • Proof that you have a steady income
  • Proof that you have car insurance readily available
  • You’ll, of course, need to be of age in your province or territory.
  • You’ll need to provide consent for a credit rating scan

How to go about paying off a loan

When it comes to paying off your loan, it’s actually quite simple. All you need to do is pay a monthly rate to your lender. Your rates depend on the agreement you and your lender have made. Make sure you make the payments each and every month on time otherwise you’re putting your credit rating at risk. If your credit rating is already bad, paying your loan on time is the perfect way to repair it.

If you’d like to, you and your lender can always set up automatic payments. This way there is no way for you to forget. Also, you always have the option to pay a higher amount for one of your payments. If you come into some money, say a bonus at work, you can put that towards your loan (depending on your agreement) in the same way that you can put more money towards a house mortgage.

Credit Score

When it comes to your credit score, it’s best to be around 660. If you’re below that don’t worry. Believe it or not, the average credit rating in Canada is actually below 660. A lot of lenders out there don’t mind if your credit rating is below 660, as long as it’s not REALLY bad. Keep in mind that a bad credit score is not the end of the world. Most lenders look at more than just that. Your income is also very important. Just the fact that you have a steady income and job is enough for a lot of lenders.

How to get an auto loan with bad credit

It’s, of course, possible to obtain an auto loan if you have bad credit. As mentioned, your credit rating does not make the final decisions. You are more than just a number. However, credit ratings do have a lot of sway. After all, they are a good way of telling lenders whether or not you’re a reliable customer. To repair your credit score you simply need to prove that you’re reliable. To get an auto loan so you can do this, we’ve put together some tips below.

Used Cars

Used cars are of course lower on the totem pole than new and fancy cars. Not to mention the cheaper the car is the more likely you’ll receive the loan. Cars like pickup trucks, small SUVs and minivans are typically cheapest and easiest to come by. Getting an auto loan for something like this is ideal if you have bad credit because you can use the loan to show your reliability. Pay it off as soon as you can, and you’ll see your credit rating spike.


A co-signer acts as a security blanket of sorts. The lender is comforted knowing that someone with a decent rating is signing alongside you, and will most likely approve the loan. This way you can make payments and repair your credit rating. Unfortunately, co-signers are difficult to come by as they take the majority of the brunt if you fail to pay the loan.


Finding a co-owner is a decent option. This means you won’t have sole ownership, but rather, 50% ownership. Both you and your partner will own the car, and both of you will pay the amounts specified in your initial agreement. If one partner has great credit and the other does not, this gives the lender comfort knowing that the good credit partner is their security blanket. You then get to repair your credit!

Budget Your Money

If you’re able to obtain an auto loan and are working on repairing your credit rating, make sure you budget appropriately. Failing to pay off the loan will not only ruin your credit rating further but destroy your chances at getting another auto loan. This means that in the future, any car or house you buy will need to be paid for in full. Not many people have the money to do that.

Down Payments

If you’re struggling to obtain a loan, try offering a larger down payment. The lender you negotiate with is more likely to approve you if they know you’re committed. A large down payment is one of the best ways to do that. Unfortunately, not many people can afford to put down large down payments, but for those who can, this is an excellent option.

Credit Checks

It’s very important that you are aware of your credit score taking a hit every time a credit check is pulled. Each time your credit report is viewed by a potential lender, it takes a slight dip. Because of this, you need to ensure that you don’t apply to dozens of possible lenders all at once. Just an important item to keep in mind.

30 Day Grace Period

Fortunately, there is an exception to the above credit checks hit. Canadian credit bureaus provide a 30 day grace period to customers looking for the best rates. This means you can apply to a whole bunch of lenders just to see who has the best rates. During this 30 day grace period, regardless of how many times your credit report is viewed, your credit rating will only dip once. Canadian credit bureaus understand that applicants are simply looking for the best rates. To deny them that freedom would be ludicrous.

Outside Fees

When considering whether or not you can afford to pay back an auto loan, you need to be aware of the prices that other factors maintain. If the vehicle you are buying has an ICE (internal combustion engine), you’ll need to factor in gas money. Depending on the vehicle that could be an extra couple hundred a month. That factor alone is significant. If the vehicle is an electric vehicle, you’ll need to factor in the larger energy bills.

One big factor that certainly plays a role in your insurance rates. Depending on your age, where you live, the vehicle you drive, and your driving history, your insurance rates can sink you. Today’s large insurance brokers will take any opportunity to raise your insurance rates, and that makes obtaining an auto loan impossible for some people.

Although not a monthly payment type of thing, you will definitely need to factor in maintenance and repairs. You’re going to need an oil change every few months, and you’ll need to have cash on hand to fix any unexpected damages to your car. Maybe you got a flat tire or chipped your windshield. These are expenses you need to be prepared for.

For students who travel to school every day, you more than likely need to pay for parking. Parking can be expensive, especially at Canadian universities. Make sure to factor this into your budget.

Avoiding Lenders Who Claim They Don’t Do Credit Checks

Lenders who don’t perform credit checks are probably not legitimate. It’s a good idea to avoid these companies the best you can. Even if they are legitimate, and they really don’t check your credit score, they’ll most likely charge you terrible interest rates. Rates that are unaffordable to most people. Companies that do check your credit but are flexible and lenient with customers who have bad credit are usually okay. Just be careful with companies that seem too good to be true. Chances are it actually is too good to be true.

Zero Money Down Options

Zero money down payment plans is definitely a real thing that many legitimate companies offer. However, this does not mean you’re saving money. The cost of the usual down payment is typically split up into your monthly payments. This way you’re still spending the same amount of money, but the big scary number to start the process is hidden. Many people find this appealing because they don’t like to drop a lot of money all at once.

Final Thoughts

When it comes to obtaining an auto loan, we here at the Auto Loan Centre know it can be quite difficult. Hopefully, this article made the process easier to understand. For more information do not hesitate to contact us.