Car Deal Canada

Bad Credit Car Loans in Oakville

Bad Credit Car Loans in Oakville

Getting approved for a car loan can be challenging if you have bad credit. Your credit score plays a big role in determining the interest rate and terms you’ll qualify for when financing a vehicle purchase. While lenders have become more willing to work with borrowers who have less-than-perfect credit, bad credit car loans still come at a cost – expect to pay higher interest rates and fees.

In this comprehensive guide, we’ll walk through everything you need to know about getting a car loan with bad credit in Oakville, Ontario. We’ll cover tips for improving your credit, finding the right lender, getting pre-approved, and negotiating the best deal. We’ll also provide advice on buying new vs. used and share options beyond just the dealership for financing. By following the recommendations in this guide, you can get driving the car you need while taking steps to improve your financial situation over time.

Get Pre-Qualified in Under 60 Seconds

All Credit Approved and 0 Money Down Options Available


What is a Bad Credit Car Loan?

A bad credit car loan is an auto loan designed for borrowers with poor or limited credit histories. Lenders consider applicants with credit scores below 580 to have bad credit.



Bad credit refers to credit scores that are considered below average by lenders. This typically includes scores below 580 on the FICO credit score model. Having a poor credit score makes it more difficult to qualify for financing from mainstream lenders.


Types of Bad Credit

There are a few categories of bad credit:


  • Poor Credit – Scores between 580 and 669
  • Bad Credit – Scores between 300 and 579
  • Very Bad Credit – Scores below 300


Subprime lenders may approve borrowers will scores as low as 500, but interest rates are usually quite high.


Reasons for Bad Credit

There are many potential reasons someone may have bad credit, including:


  • Missed or late payments
  • Credit card balances over 30% of limits
  • Defaults on previous loans
  • Foreclosure or bankruptcy
  • Little or no credit history


Understanding the reasons for your credit challenges can help you take steps to improve it over time.


Benefits of Getting a Car with Bad Credit

Getting an auto loan when you have bad credit can provide several important benefits:



Owning a car gives you the freedom and flexibility to get around on your own schedule. You aren’t tied to public transportation or relying on others for rides. This independence and convenience is extremely valuable.


Building Credit

One of the best ways to rebuild your credit is to show you can make regular on-time payments. Taking out a car loan, even with less than perfect credit, and paying it back responsibly will demonstrate to future lenders that you can handle credit.


Access to Jobs

Reliable transportation opens up your employment opportunities. Having a car makes it possible to commute to jobs that aren’t accessible by public transportation. A wider range of job options gives you the ability to find better pay and advancement in your career.


Challenges of Getting a Car Loan with Bad Credit

Getting approved for a car loan when you have bad credit can be challenging. Here are some of the main difficulties you may face:


Higher Interest Rates

The main challenge when your credit score is low is that you will pay much higher interest rates on a car loan. Interest rates are primarily based on your credit score and history. The higher your credit risk, the higher the rate.

For borrowers with poor credit, interest rates can be over 10% and sometimes up to 20% or more. This is significantly higher than rates for those with good credit, which can be as low as 3-5%. The higher rate means you pay much more over the life of the loan.


Lower Loan Amounts

Lenders will also offer lower loan amounts to borrowers with bad credit. They limit their risk by reducing the amount they will finance.

For example, if you want a $15,000 car, a lender may only approve you for a $10,000 loan. That means you need to make a larger down payment.


Need for Down Payment

Speaking of down payments, you can expect to put more money down when your credit score is low. Lenders typically require a 10-30% down payment for borrowers with poor credit.

With a higher down payment, the loan amount is lower, which reduces the lender’s risk. Having some “skin in the game” also shows you are committed to repaying the loan.

While coming up with a down payment may be difficult, it can make a big difference in getting approved and securing better loan terms.


Improving Your Credit Score

Having credit issues doesn’t mean you’re stuck with a low score forever. There are strategies you can implement now to start raising your credit score so you can qualify for better interest rates on an auto loan in the future:


Make On-Time Payments

One of the biggest factors in your credit score is your payment history. Simply making sure you are consistently paying all your bills – including credit cards, utilities, rent, etc – by the due date can significantly help improve your credit over time. Set up reminders and automate payments whenever possible.


Pay Down Balances

Keep credit card balances low, as the credit utilization ratio (how much you owe versus your total available credit) makes up 30% of your score. Try to keep individual cards below 30% utilization and overall utilization under 10%. Pay down debt aggressively while maintaining minimum monthly payments.


Dispute Errors

Comb through your credit reports and dispute any inaccurate information with the credit bureaus. This can remove negative items weighing down your score. You can access free credit reports annually at


Documents Needed to Apply

When applying for a bad credit auto loan, you’ll need to provide documentation to verify your identity and demonstrate your ability to make payments. Here are some of the key documents lenders will request:


Proof of Income

Lenders will want to see that you have a stable income that can support a car payment. You’ll need to provide documents like:


  • Recent pay stubs
  • Bank statements showing payroll deposits
  • A letter from your employer verifying employment
  • Tax returns if self-employed


Proof of Residency

You’ll need documentation to confirm your address, such as:


  • Rental agreement or mortgage statement
  • Utility bills in your name
  • Bank/credit card statements
  • Driver’s license



Lenders may ask for personal references who can vouch for your character. Ideally these should be long-term contacts like:


  • Family members
  • Friends
  • Landlords
  • Employers


Having these documents ready will help ensure a smooth loan application process.


Finding the Right Lender

Finding the right lender for a bad credit auto loan is crucial to getting approved and securing reasonable rates and terms. There are several options to consider:



Large national banks often have strict credit score requirements and may not be the best option for borrowers with low credit scores. However, some regional or community banks may offer bad credit car loans. It’s worth checking with your local bank or credit union.


Credit Unions

Like community banks, some credit unions specialize in loans for borrowers with less-than-perfect credit. They may offer more flexibility than large banks. Check options like local credit unions or online credit unions.


Specialty Lenders

There are lenders that specifically work with bad credit borrowers, like subprime auto lenders. They are accustomed to dealing with unique credit situations. Just be sure to compare all terms and rates first.



Many dealerships have relationships with lenders to offer financing to borrowers with low credit scores. However, their interest rates may be higher. Shop around and compare options before accepting dealer financing.


Tips for Getting Approved

Getting approved for a car loan when you have bad credit can be challenging, but not impossible. Here are some tips that can help improve your chances:


Lower Loan Amount

Don’t apply for the maximum loan amount you may qualify for. Lenders view smaller loan amounts as less risky, so applying for a lower amount may help your application get approved.


Large Down Payment

Putting down as much money upfront as you can afford shows lenders you are financially committed. Aim for a down payment of 20% or more if possible.


Add a Co-signer

Adding a co-signer with good credit to your application can significantly improve your chances of getting approved. Their good credit helps offset your bad credit in the eyes of lenders.

Having a co-signer does come with risks, so only choose someone you trust and who understands they are equally responsible for repaying the auto loan.


Auto Loan Application Process

The auto loan application process typically involves three main steps:



Getting pre-approved for an auto loan will show sellers you’re a serious buyer and save time at the dealership. To get pre-approved:


  • Submit an application with your personal details and income online or in person
  • The lender will make a soft credit check and estimate the amount you qualify to borrow
  • You’ll receive a pre-approval letter to show the dealer


In-person application

Once you’ve selected the car you want, you’ll provide documents in person and complete a loan application at the dealership, including:


  • Driver’s license
  • Proof of income – recent pay stubs or tax returns
  • Down payment
  • Filled out loan application form



The lender will:


  • Verify your application information
  • Run a hard credit check
  • Send you a final loan decision within 1-2 days


Once approved, you can pick up your new vehicle!


Interest Rates and Terms

When getting a bad credit auto loan, the interest rate and loan term length can significantly impact your monthly payments. Here’s what you need to know about rates and terms for bad credit car loans:


Average Interest Rates

Interest rates on bad credit car loans can be quite high compared to loans for people with good credit. According to Experian, in Q1 2023, the average interest rate on new car loans was 14.08% for people with deep subprime credit scores below 550. For used cars, the average interest rate was 21.32%. Rates from individual lenders may be higher or lower based on your specific credit situation.


Loan Term Lengths

Bad credit car loans typically have shorter term lengths than loans for people with good credit. Term lengths range from 24 to 72 months for bad credit borrowers. Shorter terms mean higher monthly payments, but you pay less interest over the life of the loan. Longer terms have lower payments but more interest paid.


Impacts on Monthly Payments

The higher interest rate and shorter loan term typical with bad credit auto loans mean borrowers will have higher monthly payments. For example, a $15,000 loan at 21% interest over 36 months would have a monthly payment around $575. Extending the term to 60 months at the same rate would drop the payment to about $385. Shop for the most favorable rates and terms you can qualify for to make the payments affordable.


Buying a Used vs. New Car

When getting a car loan with bad credit, you’ll need to decide whether to buy new or used. There are pros and cons to each option.


Pros of Buying a New Car

Some benefits of buying a new car with bad credit include:


  • Latest model year with the newest tech and safety features
  • Full warranty coverage for defects and repairs
  • Chance to build equity as you pay off the loan
  • Wide selection of makes/models to choose from
  • No history of previous owners or accidents


Cons of Buying a New Car

Downsides of purchasing a new vehicle with poor credit include:


  • More expensive upfront cost
  • Immediate depreciation once driven off the lot
  • Higher interest rates and payments
  • May require larger down payment
  • Limited negotiating room on price


Pros of Buying a Used Car

Benefits of choosing a used car with bad credit:


  • Significantly lower purchase price
  • Wider selection of affordable options
  • Lower loan amounts and monthly payments
  • Depreciation has already occurred
  • More flexibility negotiating the price


Cons of Buying a Used Car

Drawbacks of buying used with poor credit:


  • No factory warranty coverage
  • Possibility of higher maintenance and repair costs
  • Limited or no remaining life left on brakes/tires
  • May have cosmetic wear, tear and dents
  • Unknown history and previous owners


Dealership Financing vs Outside Lender

When trying to get approved for a car loan with bad credit, you have two main options – going through the dealership’s financing department or getting a loan from an outside lender like a bank or online lender. Both options have their pros and cons.

Dealership financing can be convenient since you take care of everything in one place. However, their interest rates may be higher since they are incentivized to make the deal. Here are some key pros and cons of dealership financing:




  • One-stop shop – apply for financing and purchase the car at the same place
  • Immediate decisions – dealers can often approve loans on the spot
  • Variety of lenders – dealers work with many lenders and can find one that will approve you
  • May offer discounts – dealers may give you a discount if you finance through them




  • Higher interest rates – dealers want to make a profit on financing
  • May encourage bad terms – salespeople get paid commissions so may encourage loans you can’t afford
  • Limited options – dealer is motivated to work with their preferred lenders


Getting a loan pre-approval from an outside lender before going to the dealer gives you more control. You know the rate and terms you qualify for ahead of time. Some benefits of outside lenders include:




  • Lower rates – banks and credit unions offer lower interest rates than dealers
  • Fixed rates – online lenders often offer fixed rates while dealers give variable rates
  • More options – apply with multiple lenders to compare offers
  • No pressure – approvals happen before you visit dealer so no pushy sales tactics




  • Extra steps – need to secure financing, then shop for the car
  • Potential hard credit check – some lenders will do a hard pull that dings your credit
  • Possibility of multiple inquiries – each lender you apply with may do a hard pull


The best option depends on your personal situation. Having financing already secured can give you negotiating power at the dealer but their financing department may secure better terms. Evaluate both dealership and outside lender offers to find the best loan for your needs.



Getting a co-signer on your auto loan can help improve your chances of getting approved if you have bad credit. A co-signer is someone with good credit who agrees to be responsible for the loan if you can’t pay. While a co-signer can help you get approved, it also impacts them so it’s not a decision to make lightly.


When They Help

Having a co-signer benefits you because it allows the lender to consider the co-signer’s good credit when approving the loan. This can offset issues like low income, limited credit history, or past credit problems. Many lenders allow co-signers which gives you more options.



While being a co-signer helps you, it also carries risk and responsibility for them. They are equally responsible for repaying the loan. If you miss payments, it damages their credit too. They also can’t remove themselves from the loan until it’s fully paid off. Make sure any co-signer understands the commitment they are making before agreeing.


Down Payments

Making a down payment on your car loan is one of the best ways to get approved and get better loan terms, especially if you have bad credit. The larger down payment you can afford, the better.

Typical down payment amounts for bad credit car loans are:


  • 10-20% for new cars
  • 15-30% for used cars


Putting down more money upfront shows lenders you are financially committed to repaying the loan. It also lowers the amount you have to finance, reducing risk for the lender.

Making a larger down payment can help in several ways:


  • Increase chances of approval
  • Lower your interest rate
  • Reduce your monthly payments
  • Shorten loan repayment term


Even putting down as little as $1,000 extra could make a difference. Work within your budget to put down as much as you can afford.



Getting approved for a bad credit car loan in Oakville can seem daunting, but with the right preparation and knowledge, it is possible. Here are some final tips and key takeaways:

Do your research to find a lender willing to work with bad credit borrowers. Be sure to compare interest rates, loan terms, and eligibility requirements.

Improve your credit score before applying by paying down debts, disputing errors on your report, and lowering credit utilization. This can help you qualify for better loan terms.

Gather all required documents like proof of income, residence, auto insurance, and valid ID. Having paperwork ready shows lenders you are serious.

Make a reasonable down payment if possible – lenders view this as less risk. But avoid draining savings just to put money down.

Consider adding a cosigner with good credit to improve your chances. But weigh carefully, as they will be responsible if you default.

Shop for used vehicles if your budget is tight. Opt for reliable models with good fuel economy to keep costs down.

With preparation and persistence, access to transportation is possible even with poor credit. Do not get discouraged – you can get back on the road in Oakville.

Get Approved Today

See if you qualify in under 60 seconds

Oakville Bad Credit Car Loan Questions

Yes, it is possible to get approved for a car loan in Oakville even if you have bad credit or no credit history. Many dealerships and lenders in Oakville work with subprime borrowers and have programs available for those with credit scores below 600. You may need to provide a larger down payment, have a cosigner with good credit, or accept a higher interest rate. But with the right lender, getting auto financing is achievable.

Most lenders require a minimum credit score between 500-600 for auto loan approval in Oakville. The higher your score, the better interest rate you can qualify for. With a score below 500, you may need to take steps to improve your credit or bring on a cosigner before getting approved. Aim for a score above 600 to qualify for prime lending rates.

Several dealerships and lenders around Oakville specialize in financing for bad credit borrowers, including:


– Right Turn Auto Credit

– Budds’ Auto Credit

– Northway Ford

– Oakville Nissan

– Dixie Auto Loans

– Peel Chrysler Jeep


These lenders understand the unique needs of subprime borrowers and have more flexible qualification requirements. They can help find a loan program that matches your budget and situation.

The easiest places to get approved for auto financing with bad credit in Oakville are buy here pay here (BHPH) dealerships like Right Turn Auto Credit and Budds’ Auto Credit. BHPH dealers are more likely to approve those with low credit scores as they finance cars in-house. You may pay more in interest but they simplify the lending process.

Yes, getting pre-approved for an auto loan before visiting dealerships can strengthen your negotiating position and financing options. Pre-approval letters show sellers you are a serious, qualified buyer and allow you to shop knowing your budget. This prevents haggling over monthly payments. Most Oakville lenders allow online pre-approval applications.


To improve your credit score and qualify for the lowest available interest rates in Oakville, make sure to:


– Pay all bills on time

– Lower credit utilization below 30%

– Avoid applying for new credit frequently

– Check credit reports for errors to dispute

– Consider becoming an authorized user on someone else’s account


It takes time, but consistently demonstrating responsible credit habits will raise your score.

Yes, some dealerships like Oakville Nissan and Hyundai of Oakville will work to get you financing for a new or used car even with no prior credit history. Having no credit score is better than bad credit in some cases. Be prepared to make a larger down payment and potentially have a cosigner to get approved with no credit background.

While 0% financing incentives are sometimes offered, they usually require very good credit, scores above 700. With lower credit, the best bad credit car loan rates from Oakville lenders and dealerships typically range from 5-20%. Getting approved at a higher rate is better than not being able to finance a car at all.

When applying for a car loan with bad credit, most Oakville lenders require documents verifying your identity, income, residence, down payment funds, and insurance coverage including:


– Valid Canadian driver’s license

– Recent pay stubs

– Proof of address

– Bank statements

– References

– Existing auto insurance info


Having these ready speeds up the loan review process.

Adding a creditworthy cosigner with a good income and high credit score can vastly improve not only your chances of being approved, but also the loan terms like interest rate. The right cosigner makes lenders view your application as lower risk. Make sure to pick someone reliable who won’t default and damage your credit further.


Used car loans typically require a 10-20% down payment to get approved. Putting down 20% or more makes lenders see you as less of a risk, increasing approval odds. With extremely bad credit below 500, you may need to put 30-50% down on a used vehicle. Save up as much as you can for the down payment when car shopping in Oakville.

Based on current lending trends, used car buyers with low credit scores between 500-600 can expect average interest rates of 15-25% in Oakville. Rates are higher than for prime borrowers due to the increased risk. Improving your credit score and putting more money down can help you qualify for the lowest bad credit rates.


The best way to get affordable car insurance despite having bad credit is to:


– Shop around for quotes frequently

– Ask about discounts available

– Consider raising deductibles

– Limit coverage to mandatory minimums

– Check for usage-based “pay-as-you-drive” options


Comparing rates between insurers and limiting coverage can yield major savings.

Yes, used car dealerships like Right Turn Auto Credit, Budds’ Auto Credit, and Dixie Auto Loans all provide specialized in-house financing options in Oakville for customers with poor credit. They understand bad credit buyers better than banks and credit unions. Getting pre-approved directly through the dealership streamlines the buying experience.

If financing a used $10,000 vehicle in Oakville with bad credit, you can expect:


– Vehicle Price: $10,000

– Interest Rate: ~20%

– Loan Term: 5 years

– Monthly Payment: ~$245

– Insurance Per Month: ~$200


So with bad credit, expect total monthly costs of ~$445 to finance a $10,000 used car in Oakville factoring in both loan payments and insurance.

Yes, filing for bankruptcy will make getting approved much more difficult as it devastates your credit score, at least for the short term. Most lenders will want to see you have reestablished positive payment history after bankruptcy before extending financing. The good news is reputable dealers like Right Turn Auto Credit work with buyers even post-bankruptcy.

Those with poor credit tend to have better luck getting approved when applying directly through specialized subprime lenders at dealerships instead of big banks. Dealerships are usually more flexible on factors like credit score minimums, income requirements, and down payment amounts. Banks approve very few applicants with scores below 600.

Most top lenders in Oakville want to see you have made regular payments on a consumer proposal for at least 12 months before they will consider extending a car loan. Meeting all terms of your proposal on time for a year demonstrates stability that makes approval more likely. After 2 years, approval odds increase further.

Yes. When you finance a car, the dealership can place a lien on the title. If you fail to make timely payments, the lien authorizes them to legally repossess the vehicle in Oakville until any missed payments and fees are paid. They can also repossess if you default on other terms like maintaining insurance coverage.

Get Approved Today

See if you qualify in under 60 seconds