Best Car Loans in Canada | Affordable Rates to Cover a Wide Variety of Damages

August 3, 2021 | Editorial Team

Buying a car is a significant purchase for many Canadians. Other than buying a house, it may be one of the biggest purchases you make in your lifetime. Many people in Canada struggle to buy a car outright. They are expensive, constantly need maintenance, and often depreciate in value over time. But in today’s society, they are often a necessity.

So, if you don’t have the funds to pay for a new car all at once, you will likely need a car loan. A car loan is a type of personal loan, usually provided by financial institutions like banks or credit unions. Or, car dealerships themselves will offer you a car loan.

Just as your house serves as collateral if you don’t pay your mortgage, your new car will be collateral if you don’t pay your loan. This means if you don’t pay off your car loan, your vehicle can be taken away.

There is one big problem that many people in Canada have when taking out a car loan or any type of loan for that matter. They either have bad credit or no credit. While having bad credit or no credit can negatively impact your ability to get a loan, it’s not impossible.

There are many lenders in Canada that have bad credit car loans for Canadians struggling to get a conventional loan. Bad credit loans are not bad; they just often have a higher rate of interest. Whatever your credit history, when looking to get a car loan, here are some things you should consider.

Table of Contents

  1. Best Car Loans
  2. Loan Connect
  3. Canada Drives
  4. Car Loans Canada
  5. Ferratum Loans
  6. Car Leasing Versus Financing
  7. Car Leasing
  8. Car Financing
  9. Car Loan Application Checklist
  10. What to Know Before Buying a Previously Leased Car
  11. The Bottom Line

Best Car Loans

When you are thinking of getting a new car, the first thing you should do is create a budget. A good rule of thumb is to aim to save a 20% down payment towards your new vehicle. You can then use the car loan to pay for the rest of the car’s price. If 20% is not in your budget, your loan will need to be higher, and you will spend more time paying it off. You also should be prepared to pay higher interest rates.

When looking for a car loan, there are several things to consider. You need to think about what rate of interest you can afford to pay first. Then, how long and how often can you pay it. Most car loans can typically last between 12 months to 96 months. This depends on how much your payments are either weekly, bi-weekly, or monthly.

As there are so many car loan companies in Canada, our financial experts have reviewed as many as possible. From national banks to institutions specializing in no credit/ bad credit car loans.

We picked the top four best loan companies in Canada and outlined them below for you. So, if you are looking for a car loan, you are in exactly the right place.


LoanConnect is a Toronto-based company that helps Canadians from all across Canada find the perfect car loans for their customers. They do this by providing a loan search engine that customers can use to find lenders around Canada. LoanConnect was launched in 2016. They have built up quite a following and are now Canada’s premier personal bad credit/ no credit car loan search engine.

LoanConnect has such a wide range of loan types. From bad credit car loans, debt consolidation, student loans, and more. LoanConnect can help Canadians apply for bad credit loans up to $50,000.

Even if you have bad credit, you are likely to get approved for a car loan with LoanConnect. This is because they work with so many lenders while a bank can only offer you their own car loan. So, bad credit or not, you are likely to find a lender willing to approve your car loans on LoanConnect.

Applying for a car loan with LoanConnect is also easy, and everything can be done online. Simply click on the ‘Apply Now’ button on LoanConnect’s website to get started.

The application process consists of three steps. The first step is where you need to input what amount you want your loan to be. Then what type of loan. It could be a bad credit car loan or no credit car loan, and your personal contact information.

Then, you need to describe what your financial situation is by detailing your credit score. As well as what your expenses are such as your mortgage, bills, debt, etc. You also need to state if you are employed or not, and if you are, how much you make a year. Finally, you need to include your social insurance number and citizenship status.

This is because only Canadian citizens or permanent residents are eligible for a car loan, or any type of loan, from LoanConnect.

The last step of your application is simply to accept LoanConnect’s terms and conditions. Once you do, you will be able to see a list of lenders that match your needs. From there, you choose a lender and submit an application to them. Once you get approved for your car loan, you can often get your money within 12 hours!

Car Loans Canada

If you’re looking for Canada’s oldest online car loan approval service, look no further than Car Loans Canada. Although Car Loans Canada is an online good and bad credit car loan company, they only operate in nine provinces. Ontario, Manitoba, Alberta, Nova Scotia, New Brunswick, Saskatchewan, British Columbia, Prince Edward Island, and Newfoundland and Labrador. As far as other parts of Canada are concerned (see Ottawa, Edmonton, and Calgary), you will have to look for a car loan elsewhere.

Despite their name, Car Loans Canada does not provide the car loan themselves. They are a loan connector. This means they will help you find a lender that can work within your budget and credit score. Their service is free for you to use and is super easy as it is completely online.

To be eligible to apply with Car Loans Canada, you must be a resident of one of the aforementioned provinces. You must also have a minimum income of $1,800 per month and be over 18. Even if you have a bad credit score, Car Loans Canada will still be able to find a lender for you. If you’re eligible, you can use one of the car loan calculators available to see what your monthly payment would be.

Car Loans Canada offers some of the lowest interest rates. Their fixed interest rates range from 0.00%–29.95%. In contrast, their variable interest rates range from 3.95%–8.95%. Though the rate varies a lot, Car Loans Canada offers a great deal!

Once you’re ready to apply, click the ‘Get Started’ button on Car Loans Canada’s website. The application process should only take five minutes. You will need to input information such as your credit rating, driver’s license and your banking information. Next, you’ll need your social insurance number and proof of income. You will also need information about the new vehicle you want, such as the make and model.

After you apply, Car Loans Canada should reach out quickly. They are known to help most Canadians get approved for a loan, even if they have bad credit or a low or no credit score. Car Loans Canada will connect you with a lender who will then take over the bad credit car loan payments process. You can often get your car within 48 hours after that. Applying for a good or bad credit car loan with Car Loans Canada is the best way to get credit car loans. It is extremely easy to get a car loan as everything is done online, and it is super-efficient as well!

Ferratum Loans

Next on our list of the best car loan services in Canada is Ferratum Loans. Ferratum Loans is actually an international company that was founded in 2005. They operate in 25 countries, Canada being one of them.

Ferratum Loans can offer Canadians a car loan between $500 to $15,000. You can also pick a term from as low as 6 months to 60 months. This is a bit low as many car loan companies offer terms of up to 96 months to make payments. Ferratum Loans also has tighter eligibility monthly requirements, making it harder to get approved for a bad credit car loan.If that’s what you need.

For example, if you do not have a good credit score (minimum of 600), you may not get approved. So, if you have a bad credit score, Ferratum Loans may not be the company for you.

In addition to a good credit rating, you also need a monthly income of $2,000 with an active bank account and steady income. Your age also needs to be over 20 years old to get a car loan with Ferratum Loans. In Canada, Ferratum Loans only operates in Alberta, British Columbia, New Brunswick, Newfoundland, Nova Scotia, and Ontario.

If you are eligible and the car loan that Ferratum Loans offers is of interest to you, their application should only take ten minutes. It can all be done online by inputting your personal information. If you want to see what your monthly payment would be, first, use one of the available car loan calculators. This will help you see what your payments will potentially be to see if you can afford them.

Once you are approved, your money will be automatically deposited into your account within an hour or at most the next business day. So, Ferratum Loans is a quick and efficient car loan company. Their eligibility requirements are a bit more strict than other car loans providers. If you have bad credit or no credit, they won’t be able to help.

Canada Drives

Last on our list is Canada Drives, aptly named as they focus on car loan financing. Canada Drives is based out of British Columbia, Canada. Even though they are based in British Columbia, they offer bad credit, no credit, and conventional car loans to Canadians from any province or territory. They opened their doors in 2010. Since then, they have provided over 1 million conventional and bad credit car loans to Canadians.

When people are looking for a car loan, they often turn to their bank first. But, banks are not only limited in what they can offer, they also make it hard for the average Canadian to get approved for a car loan. If you have a bad credit score, you are likely to not get a car loan from the bank.

Canada Drives, however, can help those with a bad credit score still get approved for their car loan. To get a bad credit car loan through Canada Drives, start by picking your vehicle type on their website. They will then look through their dealership partners to find a dealership that has your vehicle in stock.

Then, to officially start the application process, you have to fill in the application form with your personal information. This includes your social insurance number and employment history. This step will help Canada Drives determine what your budget is, and thus, what monthly payment you can afford to make.

Finally, Canada Drives will match you with a certified dealership partner who can offer you a car loan. The dealership will then reach out to you directly to talk about your vehicle options and monthly loan payment plan. Finally, you can get your good or bad credit loan and be in a new car in less than 48 hours!

Car Leasing Versus Financing

If you have been thinking about getting a new vehicle, you have likely been creating a budget to see if you can afford a monthly payment or down payment. Or, you may be checking your credit rating to see if you would get approved to lease or finance a car. If you’re not sure what the difference between them is, can help explain!

Car leasing is a type of vehicle financing where you are essentially renting a car from a dealership. The rental term can last anywhere from a few months to 96 months or more. You make monthly lease payments to the dealership to have use of the car. At the end of your agreed-upon term, you can buy out the lease to keep the car or return the car to the dealership.

Financing, on the other hand, is a type of car loan that a dealership will offer its customers. Dealerships offer this type of loan, so they can close the deal quickly. Dealer finance tends to offer a lower interest rate compared to the standard car loan. This is because you typically have to make a lump sum payment called a balloon payment at the end of your term. Whether its 6 months or 96 months, the lump sum payment at the end makes monthly payments lower.

So, if you’re still not sure whether you should lease a car or go with dealership financing, here are some pros and cons of each.

Car Leasing


One of the main pros of leasing a car is that your monthly loan payment/ interest rate will be lower than car finance. This is because the dealer will base your loan payment on the fact that the value of the car will depreciate with time. When you finance a car, on the other hand, your monthly payment/ interest rate is based on the full value of the vehicle.

Another pro for leasing a car is that your car will likely be under warranty for your full lease period. This means you will not be responsible for any of the maintenance needed to upkeep the car.

You can also pick a vehicle that may have been out of your budget otherwise. You can lease the car for a few years and when your term is up, simply upgrade to a newer one.

How long you want to lease the car for is up to you. The dealer will likely be willing to negotiate different lease terms. A short term lease can be 12 to 24 months. A long term lease can be from 36 to 60 months. If you want something longer, such as 96 months, it may be better to finance instead.


Making consistent monthly payments to the dealership throughout your car loan term means you must have a stable income. So, if you don’t have proof of this and/or you have a bad credit rating, it will be hard to lease a car.

Some leasing terms are based on miles rather than time. This means you may have the car until you reach a certain number of miles. If you drive a lot, you may use up the miles faster than the time you thought you would have the car. If you go over the miles, you will be charged per mile.

Although leasing a car may seem cheaper up front, you will likely end up paying more than you would if you bought the car in the long run. So, you will typically have to make a down payment at the beginning, and monthly payments at an agreed-upon interest rate. Then, you may have to pay a variety of penalties at the end. Such as payments for going over your miles or returning the vehicle late.

You will also not own anything in the end. You will make monthly payments to rent the car, and then at the end, you will simply have to give it back to the dealership. That is unless the dealer lets you buyout the lease.

Car Financing


The main pro of financing a car rather than leasing it is that the car will eventually be yours. This means that even though you are paying monthly payments with interest rates, it may be worth it in the end. You’ll just have to wait until the end of your term, whether its 12 months or 96 months.

Since the car will be yours, you can make modifications to it. So, if you want to wrap it or lower it, for example, you can. Owning the car eventually means you can also sell it when you finish paying the dealership. If you leased, you would simply have to return the car to the dealership.

You are not limited to any amount of miles when you finance a car. This means you can drive the car as much or as little as you want.

There are also fewer hidden fees or penalties from the dealer if you finance the car. Similarly, once you finish paying the dealer for the car, those payments can be put into savings instead. Ultimately, you save money in the long run if you finance a vehicle.


Once you are finished paying the dealer for your car, it will likely no longer be under warranty. This means that any repair or maintenance work needed will have to come from you. Maintenance such as oil changes or new tires is no longer the dealerships’ responsibility.

Interest rates are typically higher when you finance a car rather than lease it. This is because depreciation of the car is not taken into consideration when you finance it. The down payment to finance a car may also be higher.

Similarly, depending on how high your monthly payments are, you could be paying off your car for a long time. You could even be paying the dealer for at least 96 months. This means you will be losing a lot of money to paying off the interest rate as well.

Lastly, if you do want to sell your vehicle when you finish paying the dealer, you will likely not make as much money. This is because the worth of vehicles depreciates over time. New vehicle models are constantly being released, so your vehicle will be worth less each year. So, if you want to sell the vehicle, don’t expect to receive the same amount that you paid for it.

Car Loan Application Checklist

If you’ve never applied for a car loan before, whether it was with a dealer or not, you may be overwhelmed. Here is more information about the process and a checklist of all the things you need to have to apply for a car loan.

Prepare your credit report.

One of the first things lenders will check is your credit score. You can preemptively prepare a credit report to show them. Many people are hesitant to do this as they either have bad credit or no credit, but it is a necessary step. If you have bad credit or no credit, there will still be lenders willing to work with you. Typically, you will just have to pay higher interest.

If you do not have bad credit or no credit, getting approved for a car loan from dealerships or lenders will be easier.

Get pre-qualified and pre-approval for a car loan.

Before you go to any dealerships, you can get pre-qualified for a car loan. This will show the dealerships that you will be able to get a car loan, so you don’t need theirs. Dealerships may offer you better interest rates in this case.

To get pre-qualified, then pre-approval for a car loan, you need the following.

  • Social insurance number to show that you are insured to drive vehicles.
  • Proof of income to show that you will be able to pay off the loan.
  • Proof of employment for the same reason.
  • Information on the vehicle or vehicles so the dealerships or lenders can see if they have vehicles to suit your needs.
  • Personal information, such as your address, budget, and credit rating.

Once you have all of this, you can easily apply for a car loan. Many dealerships and lenders want to set you up with a car loan right away. This means you can receive a car loan within hours sometimes, so you can get the vehicle you want right away.

What to Know Before Buying a Previously Leased Car

You may be wondering what will happen to vehicles that have been leased and then returned to the dealerships at the end of their term. Dealerships will likely try to either sell the car to the person who leased it or sell it to a new owner. As the dealerships will typically lower the price a lot, you may be wondering if buying a previously leased vehicle is a good idea.

The short answer is that buying a previously leased vehicle can be a good idea, but here are some things you should know before doing so.

A vehicle that has been previously leased will typically have extensive service records. This is so dealerships can keep track of the car’s history. In Canada, the dealer will have to show you the service records. If there’s something off about them, the dealer may be trying to hide something, and that is a vehicle you should avoid.

You are allowed to ask questions when you are buying a new vehicle, don’t shy away from them. Ask the dealer as many questions as you want about the car and the previous owner. This is the only way you will learn what you’re getting yourself into if you purchase the dealerships’ vehicles.

Check if the vehicles the dealer is looking to sell are still under warranty. Many previously-leased vehicles will not be under warranty anymore, but if they are, that’s a huge benefit to you. It means that the dealership will be responsible for the cars’ maintenance.

Ultimately, buying previously-leased vehicles is a great option. Previous leasers will often take care of their vehicles because they don’t want to be charged any penalties. Similarly, dealerships will take care of the vehicles to ensure they can sell the car down the line. So, you are essentially getting a well-taken care of, relatively new car for a lower price than you would get anywhere else in Canada.

Just make sure that you thoroughly inspect the car or get an expert (who doesn’t work for the dealership) to do it for you. If something is wrong, dealers may try to hide it, so get an outside opinion before committing to the car.

If you need a car loan to buy a previously-leased car, it’s possible! The lenders we discussed earlier can help you find previously-leased cars within your budget. They can also get you a car loan with a rate of interest that you can comfortably pay.

The Bottom Line

You are not tied to this vehicle at this stage; you are just helping Canada Drives create a unique monthly payment plan for you. If you prefer, you can use their loan details with a car calculator to see what you can afford to pay monthly. Perhaps you look at a new card or adjust to several years old car. Car loan calculators come in very handy at this stage.

The bottom line here is that even if you have a bad credit rating or no credit, it is still possible to take out bad credit car loans. We’ve discussed a few of the best car loan companies in Canada, so you should have no problem finding the perfect car loan for you. Even easier if you have excellent credit.

Before applying for bad credit car loans, here are some things to take into consideration. What does your bad credit or no credit limit you to? What rate of interest are you comfortable paying? What vehicles would you like to drive? Would you prefer weekly, bi-weekly, or monthly payments? Is a loan payment a viable option with your budget?

After that, you can apply for a car loan with a lender that we discussed, and you can typically get your car loan within hours or a few days at most. If you want more info about a lender, look for the ‘call us’ section on their website. Or, visit a branch in Canada if possible.

If you found this guide to taking out a car loan even with bad credit or no credit helpful, we’ve got good news! is committed to helping people across Canada to become financially literate. We do this by working with expert financial writers and researchers to provide similar guides for you. We cover topics such as credit cards, insurance products, bank accounts, business tips, and more.