There’s no single minimum credit score for a car loan in Canada. Each lender sets its own criteria and few publish a cut-off, and lenders weigh income, existing debts and the down payment alongside the score. What the score mostly decides is which kind of lender will approve you and at what rate. This page covers the types of lender, how the score affects the price of the loan, and the options when your score is low. It is one of our credit score guides; what each score band generally means to a lender is in credit score ranges.
The types of car lender
| Lender | How the score tends to matter |
|---|---|
| Banks | Generally look for an established file in good standing, and price the loan by your credit profile |
| Credit unions | Similar, and may weigh your membership and banking history alongside the score |
| Manufacturers’ finance arms | Run promotional rates on some models, usually reserved for strong credit |
| Dealer-arranged financing | The dealer arranges the loan with a manufacturer’s financing division, a bank or credit union, or an independent finance company (FCAC), which can include lenders that approve weaker files at higher rates |
| High-cost and subprime lenders | Approve low scores and thin files, at the highest rates |
Current rates, and how they vary with credit, are compared in car loans in Canada. The financing process itself, from pre-approval to the dealer’s finance office, is covered in how to finance a car.
The score mostly sets the price
A lower score usually means a higher rate rather than a refusal, and on a five-year loan the rate makes a large difference to what the car costs in total. Getting a pre-approval from your bank or credit union before shopping shows the rate you qualify for and gives a figure for the dealer to beat. FCAC points out that “A dealer doesn’t have to offer you the lowest interest rate when showing you different financing options,” and that you “may be able to get a lower interest rate directly with a financial institution or different dealership.”
When shopping for rates, the Financial Consumer Agency of Canada advises getting “quotes from different lenders within a 2-week period. Credit bureaus treat these as 1 inquiry.” Applications spread over several weeks can each count as a separate inquiry; soft vs hard credit checks explains which checks affect your score.
If your score is low
- Waiting and improving the score first. Paying card balances down and adding a few months of on-time payments can move you into a better rate tier; how to improve your credit score ranks the actions by speed, and what a missed payment does explains why a recent late payment weighs on a score.
- A larger down payment, which lowers the amount the lender is risking and the interest you pay.
- A co-signer, who becomes equally responsible for the loan and whose own credit is affected by any late payment; co-signing risks explains what the co-signer takes on.
- A cheaper vehicle with a smaller loan, which is easier to approve and to repay.
After a bankruptcy or consumer proposal, lenders’ waiting periods and terms vary; rebuilding credit after bankruptcy covers the steps before and after. Whether the car loan itself then helps your credit is covered in does a car loan help your credit score, and the score needed for a mortgage is in the credit score needed for a mortgage.