5 Best Car Loans Ontario Reviews in 2021 | Buy a Vehicle Regardless of Your Credit Score

July 13, 2021 | Editorial Team

The average price of a new car in Canada is now higher than $40,000! After your home, a car is usually the most expensive thing you will purchase. This explains why more and more Canadians are choosing to buy a car using a car loan. In Ontario, the application process for a car loan is simpler than ever. If you get approved for a car loan, you will often receive the finance in just a few short days. You will then be responsible for making your monthly payments on time until the end of your finance term.

You can choose to arrange your car loan through your car dealership or by finding your own lender. This is becoming an increasingly popular option as you can compare interest rates and monthly payment amounts. It may also be beneficial to use car loan calculators to look at all of your financing options. Talking of options, we provide insight into the whole car loan process in other parts of Canada, as well – namely in Edmonton, Ottawa, Calgary, Toronto, and British Columbia, to boot.

Car Loans in Ontario Reviews

1. Loans Connect

LoansConnect is the largest search engine in Canada for personal loans. They aim to be Canada’s premier online loan search and approval center. In the last two years, Loans Connect has processed more than $500 million in loan applications.

They partner with multiple lenders across Canada. This gives customers quick and easy access to competitive rates on car loans. LoansConnect also offers instant approval on credit.

Input all of your personal information and your required loan amount. The website will then inform you which loan type or loan provider is likely to lend you the finances you require. Loans Connect can ‘connect’ you with Ontario car loan providers and help you find the best lender for you.

LoansConnect’s superior technology and lender network allow you to search multiple lenders at once. Customers will be given a list of credit options. You can then choose the loan term and monthly repayment option that best suits you. All lenders are fully vetted and completed verified. This offers customers the peace of mind that they are getting a loan from a company they can trust.

If you qualify for a vehicle loan, your interest rate will be lower (usually between 0%-36%). Having a low interest on your car loan will lower your monthly payments. However, if you default on your repayments, your vehicle can be seized as collateral. The other option they may recommend to you is an unsecured personal loan. The interest rate on these usually varies from 3% to 55%. If you default on an unsecured loan, the lender cannot repossess your vehicle.

You are only likely to be accepted for a loan with a low interest rate if your credit score is high (above 650). If you have bad credit, you are more likely to be offered a loan with a very high interest rate. This will result in a higher repayment amount. If you already have a lot of debt, for example, on credit cards, this could affect your application process.

In this situation, LoansConnect also offers bad credit loans. They partner with multiple lenders across Canada who offer bad credit loans. A bad credit loan is usually aimed at those with a credit score between 550-660. The lower your credit score, the more interest you should expect to pay.

LoansConnect can pre-approve you for a car loan of up to $50,000 in less than five minutes. The loan application is quick and secure, and you can receive your money in less than 24 hours. Applying for a loan with LoansConnect will not affect your credit score, even if your application is rejected.

2. Canada Drives

Canada Drives is one of the most popular car loan providers. They supply car loans to every province and territory in Canada and boast more than 1 million completed loan applications. They also partner with more than 350 car dealerships to help you find the best car loans.

They aim to simplify the car shopping experience by pre-approving you for finance before you begin shopping for your car. They focus on security, efficiency and the needs of the customer. Canada Drives offers a 24-hour help center. They were the 2020 winners of the Canada Enterprise Fast 15.

Canada Drives provide vehicle loans, regardless of your credit score. They boast a quick, convenient application process where they can show your finance options within minutes. Canada Drives are partnered with car dealerships through Ontario. This makes your application process even easier. Typical loan terms range from 36-72 months, although they can go as high as 96 months if you choose.

Before beginning the application process, you can opt to use their car loan calculator. This will give you an estimate of your options, your estimated interest rates and your potential lenders. Using their car loan calculator is an excellent way to see your loan options and is something we definitely recommend.

To begin your application, you need to provide Canada Drives with some of your personal information. This includes your employment information, address and whether you are able to provide a down payment.

Canada drives can then connect you with dealerships who are likely to accept you for a car loan, even if you currently have bad credit. In order to see your loan options, you need to select what type of car you are looking to purchase. The dealership can then contact you directly to discuss the type of vehicle you wish to purchase and your credit options.

Search through Canada Drive’s car inventory and choose the perfect car for you. You can apply for the loan, sign the contract, and make any payments 100% online. Canada Drives will then deliver your dream car directly to your door. All cars complete a 150-point inspection and come with a 7-day money-back guarantee and a 30 day/ 1,500 km warranty.

3. Car Loans Canada

Car Loans Canada is the oldest online car loan provider in Canada. They pride themselves on being easy to use, safe and secure. They approve nearly 12,000 car loans every month and have helped 1.6 million Canadians buy their dream car.

Car Loans Canada offers a helpful car loan calculator that allows you to see an estimate of your payment options. Their website also gives you the opportunity to see your credit score and potential insurance quotes. They also provide you with detailed information about factors that may affect your vehicle loan application. This is to help give you the best chance of approval and is highly recommended.

Car Loans Canada starts by determining your financial eligibility. They will then find the perfect loan for you, taking into consideration your ideal loan term and your monthly budget. The next step is to find the perfect vehicle for you and your family. You can then visit your local dealership and test drive the car. You will then complete your loan application, knowing you have already been pre-approved.

It is recommended to complete the fast and simple application on the Car Loans Canada website before shopping for your vehicle. Although they do not provide you with the loan themselves, Car Loans Canada will connect you with a lender for no fee. They partner with some of the best names in the automotive and finance industry to provide the best loans for their customers.

They will search through their database. They will match you with the organization that can best help you to get your dream vehicle at the lowest monthly cost. They will look at your credit score and the amount you are able to pay per month to find the best result for you. You can choose a finance term up to 8 years and choose whether to make payments monthly, semi-monthly, weekly or bi-weekly.

You can also choose how much you want to offer as a down payment. It is even possible to set your down payment amount to $0. A great advantage of Car Loans Canada is that they allow you to make a lump-sum payment or pay off the amount you owe in full, with no penalty.

Visit their website to learn more or to see your car loan estimate.

4. Scotiabank

Scotiabank claims to be the number one choice for vehicle financing in Canada. Scotiabank financing is available at more than 4,000 dealerships across Canada. They offer up to $200,000 in car financing. Up to 90% of the car’s value will be offered in financing.

You can use Scotiabank financing to buy a brand-new vehicle or an older car that is up to 7 years old. Before visiting the dealership, we recommend using the car loan calculator on Scotiabank’s website. This allows you to calculate your maximum loan amount and your repayment options.

The car loan calculator allows you to input your down payment amount. You can also input the desired duration of the loan and how much you expect to pay in interest, based on your credit rating. The calculator will then show your repayment options.

You can choose the loan term that best suits you. Scotiabank offers loan terms up to 96 months/ 8 years. They also offer flexible payment options. You can choose a weekly, bi-weekly or monthly payment plan.

You also have the option to change how much you pay, how often you pay or your chosen payment date without incurring any financial penalties. Scotiabank also offers you the opportunity to pre-pay or pay off your loan at any time, for no additional fee. Customers also have the opportunity to take one payment break per year. This is a huge advantage to many consumers. In order to apply for a car loan through Scotiabank, you will need to provide two pieces of identification. You will also need a utility bill, your payslips and confirmation of any existing loans or assets

5. Canada Auto Finance

Canada Auto Finance is one of the leading providers of car loans. They provide loans for those with good credit, poor credit, no credit history or even those who have filed for bankruptcy. They boast of a 100% approval rate, no matter what your credit history is, as long as you fulfil certain criteria.

Canada Auto Finance offers vehicle loans across Canada, at the lowest possible rates. You can even choose whether to buy a new or a used car. You can choose your down payment options, which $0 down payment available with no co-signer required.

They have a huge directory of lenders and dealers across Canada.

Canada Auto Finance offers the most comprehensive credit application in the industry. This allows them to evaluate your credit profile quickly and accurately. This increases the chances of your application being accepted.

It is completely free to get a quote and you are under no obligation to commit. Apply for a car loan between $5,00 and $45,000 and be approved in 30 seconds! Once you have completed an application, you will be contacted by one of Canada Auto Finance’s trusted dealerships. The dealership will then create the perfect car loan for your requirements.

They offer a range of APRs, from 4.90% to 29.95%. To be approved, you must be a Canadian resident above the age of 18. You must also have no bankruptcies or repossessions in the last 12 months.

Types of Car Loans

There are two main types of car loans available in Ontario, leasing and financing. Deciding which one is best for you can be difficult. There are several factors to consider, including your monthly budget, your credit score and how often you want to update your car.

Car Leasing

A car lease allows you to borrow a car for a fixed duration. You will pay an agreed monthly rate which grants you use of the car, rather than ownership.

Leases usually require you to pay a down payment, plus your monthly payments. The monthly payment comprises rental charges, interest, tax, and the depreciation costs of the car over the time you are renting it. Typical leases range from 24-60 months.

You can lease a car through a dealership or a specialized leasing company. Once the lease term is completed, you can choose to give the car back, purchase the vehicle or lease a new car.

Although the car is in your possession, you will not own it. This means you are likely to have multiple rules and restrictions that you must adhere to. Restrictions may include an annual mileage cap. This is usually 25,000 km per year.

You have several leasing options to choose from, including:

  1. Standard leases – Once the lease expires, you return the car and can choose a newer car.
  2. Leasing to own – This gives you the option to purchase the vehicle once the lease expires. By initially choosing this option, the monthly payments you make will amass equity.
  3. Lease takeovers – This allows you to take over another person’s lease. The monthly fees will be lower, and the leaser may offer a cash incentive.
  4. Used car leases – This option is less common and may only be offered by selective dealerships. Monthly payments will be lower as the value of the car will be less.

Pros

  • Leasing generally offers lower monthly payments, compared to financing. Monthly lease payments can be up to 60% lower than monthly financing payments.
  • You can choose a new car every few years – As soon as your lease term is completed, you can trade your car for a new one. This allows you to upgrade your car to a newer model, reducing the likelihood of encountering mechanical issues.
  • Your car is likely to be covered under the manufacturer’s warranty. This means you do not have to finance any maintenance needed.
  • Leasing allows you to choose a car that may previously have been out of your budget.
  • The length of the lease is negotiable. You can choose a short-term or long-term lease. Most leasers will offer contracts between 12-96 months.

Cons

  • If you plan to lease long-term, this can become very expensive. Long-term leasers will pay significantly more overall, compared to taking a traditional car loan.
  • You are less likely to be accepted for a lease if you have a bad credit rating.
  • Leasing does not give you any equity. Once the lease term is completed, you will give the car back and have to start again.
  • You will be charged a penalty if you break any of the restrictions in your contract.
  • If you want to end the contract early, you will have to pay the full amount that you owe.
  • You will be charged if you cause any damage to the car.

Car Financing

This involves taking out a loan that covers the full value of the car. A lender will offer credit that is equal to the value of the car. You will then pay off the car loan over a pre-agreed amount of time, at a pre-agreed cost per month. Your monthly cost will also include interest on the amount you have borrowed.

The car may be used as collateral. This means if you default on the payments, the loan provider can repossess your car and use the value to cover the debt.

Once you have completed the loan term and finished making payments, the car will belong to you. Typical lenders may include banks, credit unions, car dealerships or private lenders. Different lenders will offer different rates of interest, so it is important to shop around to ensure you always get the best deal.

Pros

  • Financing allows you to build equity – The car will belong to you, and you can choose to sell it or trade it in for its market value.
  • You will completely own the car – Unlike leasing, financing means you will have complete ownership of the vehicle.
  • You will not be limited by rules and restrictions in the contract – This means you do not need to worry about incurring high penalties if you go over the annual mileage or cause damage to the vehicle.
  • You can make modifications to the car – Even though you purchased the car using a loan, it still belongs to you. This means you can make any changes or modifications you choose.
  • Financing is cheaper over a longer period of time – Although leasing has lower monthly payments, financing gives you equity and you will only owe payments for the length of the contract. If you compared the cost of leasing and financing over five years or longer, financing would be less expensive.

Cons

  • The manufacturer’s warranty will expire – Once you have had the car for a couple of years, you will no longer be covered under the warranty. This means that you will be financially responsible for any mechanical issues.
  • Monthly payments will likely be significantly higher – Your monthly payment must encompass the value of the car and the rate of interest.
  • The value of a car depreciates over time – Even though you will own the car, the value will be much lower. In five years, a car loses approximately 60% of its value.

How To Get a Car Loan with Bad Credit

In Canada, your credit rating is a score between 300 and 900. A score lower than 660 means that it will be more challenging for you to qualify for a car loan. Traditional lenders, such as banks and credit unions, are likely to refuse your application. Even specific car loan providers may be reluctant to provide you with a loan.

In this situation, you may have to obtain a loan from a non-traditional lender. Luckily, several of the loan providers we have looked at today offer loans to people with a poor credit rating.

However, this type of loan is likely to come with a higher interest rate. This means your monthly repayments will be higher and you will pay more overall.

If you have a poor credit rating, there are several things you can do to increase the likelihood of your loan application being accepted.

  1. Pay a down payment – The higher your down payment, the more favourably you will be viewed by lenders. It will also result in lower monthly payments and less interest overall.
  2. Make sure all your paperwork is accurate – The more information and evidence you provide, the more likely you are to be accepted. You should provide several months of financial statements, a detailed employment history, paycheques from your job, information about other loans and proof of investments.
  3. Choose a less expensive car – The higher the loan amount, the more likely you are to be rejected. Take a lower loan this time and make sure you make all your monthly payments on time. This will help to raise your credit rating, allowing you to take a larger loan next time.
  4. Shop around – Use loan calculators to find the best rates. Visit several different websites to see who offers the best rates for those with bad credit.

The Bottom Line

With so many dealerships and credit providers available in Ontario, choosing the best vehicle loan can be confusing. Research your options carefully and use an independent website to help you find the best loan option for you. Consider using a car loan calculator to look at your financial options before committing to an application.

You could be driving around Ontario in your dream vehicle within a few days! Whether you are looking for a new car or one that is several years old, a car loan may be the best option for you.