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Bad Credit Car Loans in St. John's

Bad Credit Car Loans in St. John's

Getting a car loan with bad credit can seem like an impossible task. However, according to statistics, over 30% of Canadians have bad or poor credit scores. With the right preparation and knowledge, getting approved for a car loan with bad credit in St. John’s, NL is an achievable goal.

In this comprehensive guide, we will cover everything you need to know about getting a car loan with bad credit in St. John’s, Newfoundland. You’ll learn the minimum credit scores required by most lenders, tips for improving your chances of approval, the documents you’ll need, expected interest rates, the step-by-step process for getting approved, and much more.

By the end of this guide, you’ll have all the information you need to successfully get financed for a reliable vehicle, even with less-than-perfect credit. Understanding the loan process and arming yourself with the right strategies can make a big difference in accessing affordable auto financing in St. John’s. So let’s get started!

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What is Bad Credit?

Bad credit is defined as having a credit score below 620. The credit score indicates your creditworthiness and determines the interest rates you pay when borrowing money. Credit scores range from 300-850 and fall into the following categories:


  • 300-579 – Very poor
  • 580-669 – Fair
  • 670-739 – Good
  • 740-799 – Very good
  • 800-850 – Exceptional


There are a few main factors that can lead to bad credit:


  • Missed or late payments – Failing to pay bills like credit cards, loans, rent or utilities on time can significantly lower your score.
  • High credit utilization – Using a large percentage of your available credit limits negatively impacts your score.
  • Too many hard inquiries – Applying for multiple new credit accounts in a short timeframe causes hard inquiries that hurt your score.
  • Short credit history – Having a limited history of using credit can translate to a lower score.
  • Collections – Neglected unpaid bills that get turned over to collections agencies will show up on your credit report.


Understanding what bad credit means and what causes it is an important first step to improving your credit situation.


Challenges of Getting a Car Loan with Bad Credit

When you have bad credit, getting approved for an auto loan can be challenging. Here are some of the common difficulties bad credit borrowers face:


Higher Interest Rates

Lenders view borrowers with lower credit scores as riskier, so you will typically pay a much higher interest rate than borrowers with good credit. Interest rates on car loans for borrowers with bad credit can be over 20% at some lenders.


Fewer Lender Options

Most traditional banks and credit unions will not approve auto loans for borrowers with credit scores below 600. This means you have fewer options and may need to turn to subprime lenders that specialize in bad credit loans.


Need for Larger Down Payment

To offset the additional risk, many lenders require a higher down payment from bad credit borrowers. While good credit borrowers may only need to put 10% down, you may need 20% or more if your credit is poor.


Benefits of Getting a Car with Bad Credit

Getting approved for a car loan when you have bad credit can provide some useful benefits:


Improve your credit score – Making timely payments on a car loan can help rebuild your credit history and improve your credit score over time. This will open up more affordable financing options down the road.


Open up more transportation options – Having a reliable vehicle allows you to get to work, school, appointments, errands and more. This can expand your opportunities and make your life easier overall.


Potentially lower insurance costs – In some cases, financing a newer car through a dealership can help lower your car insurance rates compared to an older or unreliable vehicle. This is because newer cars often have more safety features and lower repair costs.


Minimum Credit Score Needed

The minimum credit score required to get approved for a bad credit car loan can vary quite a bit between lenders. However, there are some general credit score guidelines to keep in mind when applying for an auto loan with poor credit:


Used Cars – For a used car, most lenders will require a minimum credit score between 500-600. The average credit score for a used car loan approval is around 625.


New Cars – Since new cars carry more risk for lenders, the minimum credit scores required tend to be higher. Expect most new car lenders to require a credit score of at least 620, with an average approved score around 675.


It’s important to remember that the minimum credit score is not a hard cutoff. Factors like your income, debt levels, down payment amount, and loan terms will also impact your approval chances. Even if your credit score falls below the minimum threshold, you may still qualify by strengthening other areas of your application.

Generally speaking, the higher your credit score, the better your chances of getting approved and securing lower interest rates. For both new and used cars, applicants with scores in the good to excellent range (680+) will have the most loan options available.


Improving Your Chances

When you have bad credit, getting approved for an auto loan can be challenging. However, there are some steps you can take to improve your chances of getting a car loan with bad credit:


Save for a Larger Down Payment

Putting down a larger down payment shows lenders you are financially committed to repaying the loan. If you can put down 20% or more on the car purchase, lenders may be more willing to approve your loan request despite the low credit score.


Find a Co-signer

Asking a friend or family member with good credit to co-sign the loan with you can significantly boost your chances of approval. Their good credit helps offset your bad credit in the eyes of lenders. Just make sure your co-signer understands they are equally responsible for repaying the loan if you default.


Repair Credit Issues

Before applying for a car loan, work on improving your credit by paying down debts, disputing errors on your credit reports, and lowering your credit utilization ratio. The higher you can get your score before applying, the better.

Taking these proactive steps to improve your credit profile and down payment amount can help offset a low credit score when seeking bad credit auto financing.


Types of Lenders

When shopping for a bad credit auto loan in St. John’s, NL, you’ll find there are a few different types of lenders to consider:


Traditional Banks

Getting approved for a car loan with bad credit at a traditional bank like RBC, TD, or Scotiabank can be challenging. These banks tend to have strict credit score requirements and may not be willing to work with borrowers who have scores below 600. However, if you have an existing relationship with the bank, they may be more flexible.


Online Lenders

Online lenders like Canada Drives and CarLoanCanada specialize in bad credit auto loans. They offer quick online applications and can approve borrowers with credit as low as 500. Interest rates may be higher than at banks. Make sure to compare multiple online lender quotes.


Buy Here Pay Here Dealers

Some used car dealers, known as buy here pay here (BHPH) dealers, offer in-house financing to borrowers with poor credit. This allows flexibility, but interest rates are usually very high. The dealer owns the car until it’s fully paid off, and may install GPS trackers on vehicles. Do your research before going this route.


Documents Needed

When applying for a car loan with bad credit in St. John’s, NL, having the right documents is key to improving your chances of getting approved. Here are some of the main documents lenders will require:


Proof of Income

Lenders want to see that you have a stable income source to make the monthly car payments. Bring recent pay stubs, bank statements showing direct deposit of your salary, or tax documents if you’re self-employed. Make sure your documents span at least a few months.


Proof of Residency

You’ll need documents to verify your current home address like a utility bill, lease agreement, or bank statement. These help lenders confirm your identity and place of residence.



Personal and professional references vouch for your character and reliability. Get written references from employers, landlords, or long-time contacts. Their confidence in you reassures lenders.


Down Payment

A larger down payment reduces the lender’s risk so increases your chance of approval. Come prepared with 10-20% of the vehicle’s cost as a down payment if possible. Bring evidence like bank statements, money orders, or proof of a trade-in.


Interest Rates

When applying for a car loan with bad credit in St. John’s NL, interest rates are typically higher than for borrowers with good or excellent credit. Here’s what to expect:


Average Interest Rates

For borrowers with credit scores below 600, interest rates on auto loans can range anywhere from 15% to 30%. The average interest rate for someone with poor credit is around 21%. This is significantly higher than rates for those with good credit, which average around 4-7%.


Factors That Determine Your Rate

Several key factors go into determining your specific interest rate when you have bad credit:


  • Your exact credit score – the lower it is, the higher your rate
  • Your debt-to-income ratio
  • The age and mileage of the vehicle
  • The lender you choose
  • How large of a down payment you put down
  • The loan term length


By having a co-signer with good credit, providing a larger down payment, and choosing an older used vehicle, you may be able to get a lower interest rate than if you didn’t take those steps.


Steps to Getting Approved for a Bad Credit Car Loan in St. John’s NL

Getting approved for a car loan with bad credit in St. John’s NL takes some preparation and planning. Follow these key steps:


Check your credit report: Review your credit report for any errors or issues that may be dragging your score down. Dispute any inaccuracies with the credit bureaus.


Research lenders: Look into lenders that specialize in bad credit auto loans, like subprime lenders, buy here pay here dealers, and credit unions. Compare interest rates and loan terms.


Prepare documents: Gather required documents like a valid driver’s license, proof of income, residence proof, and references.


Apply and get pre-approved: Submit your car loan application and required documents to get pre-qualified. This shows sellers you are serious.


Shop for cars: With your pre-approval letter in hand, start searching for cars in your budget. Focus on reliable used models that hold their value and require minimal maintenance.


Following these key steps carefully will help ensure your highest chance of bad credit auto loan approval in St. John’s NL.


Tips for First Time Buyers

If this is your first time purchasing a vehicle, there are some key tips to keep in mind as you navigate the process:


Consider used vs new – New cars depreciate quickly, so buying used is often the more affordable option, especially for first-time buyers or those with lower budgets. Make sure to have any used car inspected thoroughly before purchasing.


Take someone experienced with you – Bring an experienced friend or family member who has bought cars before and understands the process. They can help ask the right questions, negotiate and spot potential issues.


Know costs besides loan payment – The loan payment is not the only cost. Be sure to factor in insurance, gas, maintenance and repairs. Get quotes beforehand so you understand the total costs.


Don’t take first offer – Don’t take the first offer from a dealer. Negotiate for a better deal, shop around for competitive offers, and be willing to walk away if you aren’t getting fair terms.


Alternative Options

If you are unable to qualify for a bad credit auto loan, there are some alternative transportation options to consider:


Public Transportation

Many cities and towns have public bus systems, subways, or trains that can provide affordable transportation without needing to own a vehicle. While less convenient, public transportation may be a viable option if a car loan is out of reach. Do your research to see if there are good public transit options in your area.


Ride Sharing

Services like Uber and Lyft allow you to book rides on-demand from drivers using their personal vehicles. This can provide affordable point-to-point transportation without a car. However, it is less predictable than having your own vehicle available at all times.


Car Sharing

Car sharing services like Turo and Zipcar let you rent vehicles by the hour or day. They provide the convenience of having a car without the long-term costs. Requirements may include background checks, deposits, membership fees, etc. But it can be an alternative to owning.



For shorter urban trips, electric bikes, scooters, and traditional bicycles can provide inexpensive and active transportation. Bike sharing systems in some cities provide access without needing to purchase your own. This works best for shorter distances with proper infrastructure.


Save Up to Buy With Cash

If you have the ability to save up, buying an inexpensive used car with cash avoids financing altogether. While it takes discipline and patience, saving up cash to buy a car outright means no interest charges or credit checks. Just be sure to have the vehicle inspected first.

Weigh the pros and cons of these alternatives to determine if they could meet your transportation needs. They require some sacrifice in terms of convenience and practicality compared to owning your own vehicle. But they are options to consider if a bad credit auto loan does not seem feasible based on your situation.


Maintaining Loan Payments

Once you’ve been approved for and received your car loan, it’s important to be diligent about maintaining your payments so you improve your credit and are able to refinance the loan in the future. Here are some tips for maintaining your auto loan payments:


Make payments on time

One of the most important things you can do is make your monthly payments on time. Setting up automatic payments through your bank is an easy way to ensure you never miss a payment. Just be sure the payment clears by the due date.


Pay extra when possible

Making larger payments than the minimum due will allow you to pay down the principal faster and reduce the amount of interest you pay overall. Even an extra $20-50 per month can make a difference over the life of the loan.


Avoid additional debt

Try not to take on any new debt like credit cards or personal loans while repaying your auto loan, as more debt obligations make it harder to keep up with payments. Consolidate existing debts whenever possible.


Refinance when credit improves

After a year or more of consistent on-time payments, your credit score will likely have improved enough to qualify for refinancing at a lower interest rate. This can save you a lot of money over the remainder of the loan. Just be sure to shop around for the best refinance rates.


Improving Credit After Loan

After you’ve secured a car loan with bad credit, it’s important to take steps to start improving your credit right away. This will help ensure you get approved for better rates on future loans. Here are some tips:


Make all payments on time – Set up autopay through your lender if possible, and be diligent about paying at least the minimum (though more is better) by the due date each month. Payment history makes up a significant portion of your credit score.


Pay down balances – Try to pay more than the minimum payment if you can. This will lower your credit utilization ratio, which measures how much of your total available credit you’re using. Lower utilization leads to a better score.


Limit new credit inquiries – Each application for new credit dings your score slightly. Avoid applying for new credit cards or loans unless absolutely necessary while rebuilding your credit.


With responsible credit habits, you can see your score start to improve within a few months. Keep at it, and your strong payment history will begin outweighing past mistakes.



In conclusion, getting a car loan with bad credit in St. John’s, NL can be challenging, but is certainly possible with the right preparation and persistence. Having reliable transportation is crucial for many aspects of life, from getting to work, school, medical appointments, and more. While your credit score is one factor lenders look at, taking steps to improve your overall loan application can offset a low score.

With the tips provided in this guide, you can get the process started on the right foot. Seek out lenders that specialize in bad credit loans and understand your situation. Have all required documents ready to submit and make a larger down payment if possible. Maintaining your loan payments and continuing to build your credit over time will open up more affordable options in the future.

While it may take some extra effort, the rewards of having personal transportation can be life-changing. Don’t get discouraged if your first application is denied – persistence and the right lender match can make your car ownership dreams a reality. Wishing you all the best as you embark on this journey.

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St. John's Bad Credit Car Loan Questions

Yes, there are options for getting approved for a car loan in St. John’s even if you have bad credit or no credit history. Many dealerships offer special financing programs for people with credit challenges. You may need to provide a larger down payment, have a co-signer, or accept a higher interest rate. But with persistence, you can find a lender willing to work with you.


Most mainstream lenders require a minimum credit score in the low 600s to get approved for a car loan in St. John’s. But some special financing dealers and subprime lenders may work with credit scores as low as 500. The lower your score, the higher your interest rate will likely be. Improving your credit score can help you qualify for a better loan.

When applying for a bad credit car loan in St. John’s, be prepared with:


– Proof of identity (driver’s license or passport)

– Proof of income (recent pay stubs, bank statements, tax returns)

– Proof of address (utility bill, bank statement with address)

– References (family, employers, etc)

– Down payment

– $500-1000 is common but can vary by lender


Having all your documentation ready will help demonstrate your ability to repay the loan.

Yes, some subprime lenders offer car loans to people in St. John’s who are on social assistance or disability benefits. You’ll likely need to provide proof of those steady benefit payments. The lender will want to confirm your ability to make the monthly loan payments. Interest rates may be higher to account for the increased risk.


Some well-reviewed dealerships for bad credit financing in the St. John’s area include:


– East Coast Kia

– Capital Auto Centre

– Avalon Ford

– Hickman Motors

– Steele Auto Group


These dealers work with special finance companies and have dedicated bad credit specialists to help get you approved. They understand credit challenges and take the time to find solutions.

Applying in person at a dealership often yields better approval odds for bad credit borrowers in St. John’s. The dealer can advocate for you with their special financing partners. Applying online is faster but won’t allow for explaining unique credit situations. For optimal results, apply online to get pre-approved then complete the process at the dealership.

Tips for getting approved for a bad credit auto loan in St. John’s include:


– Lower your requested loan amount

– Put down a larger down payment, ideally 20% or more

– Bring a co-signer with good credit

– Show steady full-time employment or income

– Explain past credit issues

– Be open to higher interest rates

– Apply at dealers with special financing programs


Improving certain aspects of your application can help offset credit score challenges.

The easiest way to get a car loan with bad credit in St. John’s is to apply at a dealership that specializes in financing credit-challenged applicants. Dealers like Capital Auto Centre, East Coast Kia, Avalon Ford, Hickman Motors, and Steele Auto Group all have dedicated bad credit financing programs to help make the process smooth and simple for you.

“Buy here pay here” dealerships should be approached cautiously. They finance car loans in-house for credit-challenged borrowers in St. John’s. However, they typically charge much higher interest rates and tend to repossess vehicles quickly after one late payment. Make sure to read all financing terms carefully before signing anything at these dealers.

Major banks and credit unions in St. John’s are less likely to approve bad credit car loans. However, some community banks and smaller credit unions – like Newfoundland and Labrador Credit Union (NLCU) – may consider applications from credit-challenged members. Interest rates won’t be as low as with good credit. Building relationships within those institutions can help your chances.


While 0% down payment car loans do exist, they are very rare for borrowers with bad credit in St. John’s. Most subprime lenders will require at least 10-20% down to reduce their risk, especially for customers with lower credit scores. Putting more money down shows commitment, reduces what you finance, and can help offset challenges on other parts of your application.

Many dealerships advertise approving loans with credit scores as low as 500 in the St. John’s market. In practice though, approval odds increase significantly once your score reaches 550 and higher. Interest rates will be quite high for very subprime borrowers – possibly 25% or more. Take time to improve your credit before applying if possible.

For borrowers with below average credit in St. John’s, expect to pay interest rates ranging from 10% to 29% for a used car loan, with lower amounts for newer vehicles. Factors like your specific score, down payment, and chosen lender will determine where your rate falls within that range. The good news is rates drop as you demonstrate on-time payments.


Yes, getting pre-approved before shopping is highly recommended if you have bad credit. It shows the dealer exactly what terms, rates, and amounts you qualify for. That can expedite the financing process after you’ve chosen your vehicle. If the numbers don’t work for your budget, you can adjust expectations before falling in love with any car.

Taking over another person’s existing car loan can help you get a vehicle quickly with bad credit. However, if the original owner misses future payments that default will also show on your credit history. Carefully consider the person’s payment history and only take over payments you know you can afford going forward. Their missed payments won’t impact your score though.

Some well-reviewed dealerships offering quality used cars combined with in house subprime financing in St. John’s include Capital Auto Centre, East Coast Kia, Hickman Motors, Avalon Ford, and the Steele Auto Group. Shopping at these dealers gives you access to vehicles and flexible financing all under one roof.

When financing a rebuilt or salvage title vehicle in St. John’s, expect loan approval to be more challenging and for interest rates to be much higher due to the increased risk with such cars. Provide as much detail on the previous damage and quality of repairs as possible. Also be prepared for the car to potentially be worth less when reselling down the road.


Most mainstream lenders want to see your score reach the mid 600s before they will consider refinancing a car loan you have with bad credit in St. John’s. Bringing your score up even into the high 500s may help qualify for refinancing with subprime lenders and credit unions. Paying down balances and consistently making payments on time will bump up your score.

Yes, you can trade in a vehicle in St. John’s even if you still have an outstanding loan balance. The dealership will appraise your trade value then apply that amount towards paying down the loan. Just be aware that if you end up underwater on the loan, you’ll likely need to either put additional cash down or roll the remaining balance into your next auto loan.

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