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Getting a car loan with bad credit has never been easier! LendingArch works to get you into the car you deserve.
Shopping for your next new or used car can be exciting, but not when a bad credit history gets in the way of purchasing that new ride. Fortunately, LendingArch gives you many choices and strategies for getting approved for a car loan in Canada. Here’s what you need to know to get a car that suits your needs and lifestyle, even with bad credit.
When applying for a car loan, there are specific steps you’ll need to take. We’ll guide you through the process, whether you have a spotless credit history or bad credit.
We’ll begin by getting some of your basic personal and financial information. You may also need to submit other documentation, including:
Most lenders will typically perform a credit check, focusing on your credit score. LendingArch looks past your credit score to see your whole financial picture in its entirety. This helps us connect you to lenders who are suited for your unique situation and share our philosophy.
Once your loan is approved, the process of receiving the loan is simple. If your financing is with a bank or financial institution, you’ll receive the loan as a lump sum, which you’ll then use to purchase the vehicle from the dealership. You pay back the debt like any other loan or line of credit. If your loan is with the dealership, you’ll receive the vehicle from them, and they will require that you make regular payments, usually monthly, that are withdrawn from your bank account via preauthorized payment.
Loan term specifics can vary substantially. One of the most important considerations is the length of the loan. A short-term loan will mean higher payment installments, but the loan will be paid off sooner. A longer term will mean smaller payments extended over a longer loan life.
The loan payment is most often a fixed amount (i.e., it remains the same over the life of the loan). Part of each payment goes toward the principal, while the remainder is interest. When you sign up for the loan, the total cost of borrowing, including all simple and compound interest, is given as an annual percentage rate (APR). This gives you a clearer sense of the actual cost of your loan beyond just the vehicle’s sticker price.
Regardless of your loan term, it’s essential you meet your obligations in full and on time to keep your credit in decent standing and avoid any blemishes on your financial history. Keep making those payments!
Shopping for a new car can be a thrill. Testing out the shiny latest models at a dealership is fun and exciting. At the same time, looking at a used car can be a much more financially sound option. However, there are drawbacks and benefits in buying both new and used cars, and they directly affect your chances of being approved for a loan.
Buying a brand new car typically means paying more on the overall retail price. New cars also depreciate significantly the moment you cruise off the lot; if the car’s resale value is important to you, be aware that what you just paid is not what you’ll get when it’s time to sell.
A new car generally means lower costs on maintenance or repairs. Most new cars come with extensive warranty protection, which offers precious peace of mind. A used car is certainly more of a gamble as far as required maintenance, and the warranty can be expired or non-existent.
For many buyers, especially those in tight financial situations, purchasing a used vehicle makes more financial sense. First, the overall price is going to be lower. This means a more affordable down payment or even, if you can manage it, paying for it outright in cash, which can save hundreds, if not thousands, in interest over time. However, most of us don’t have that kind of cash on hand, and instead look for financing options.
If you do need financing, the choice between new and used gets a bit trickier. Shopping for a new car could mean landing special dealer financing options, even 0% financing on some models. These dealer incentives can often be great deals, resulting in the interest rate on a new car being lower than that of a used car. In this case, even if the new car’s overall advertised price is higher, the savings over time could potentially make it a better deal than a used car.
Had a great experience with LendingArch. It was faster than expected and I love my new car! ~ Chris A.
It’s also wise to factor insurance costs into your decision. Insuring a new car is most often pricier than insuring a used car, increasing the overall amount you’ll pay on the vehicle over the life of ownership.
When you work with LendingArch, we link you to dealers offering both new and used vehicles to find you financing options that make sense. Within minutes, we’ll guide you to financing options that suit your budget without sacrificing the thrill of new wheels.
Once you have a clearer sense of the vehicle you’re looking for, it’s time to apply for the loan. If you have bad credit, this can often prove stressful and disappointing. LendingArch does things differently, streamlining the application process so even buyers with bad credit, no credit, and previous bankruptcy can find a lender easily and hassle free.
Shopping for a car when burdened with bad credit presents some specific challenges. With most lenders, having bad credit will almost certainly affect your interest rate. The amount of debt you carry, your history of repayment on existing or past debt, your personal income, and, perhaps, most critically, your current credit score, are all factors lenders take into account.
Financing your vehicle with bad credit might be a pain, but it’s far from impossible. That’s where LendingArch comes in. Our intelligent matching engine will provide dealer recommendations tailored for your individual needs, helping you locate a great car for a price that works for you, even with bad credit.
Getting a car loan with bad credit is easier than you think. Here’s a few starting points.
Preparation is Key. The best measure you can take when shopping for a car loan with bad credit is to do your research. Understand how car loans work and compare dealer incentives. Take a tough look at what you actually need from a vehicle, and review the prices offered. Dealers often vary widely in their offers, so don’t take the first price you see as definitive.
Clean Up Your Finances. Your financial situation tells a story about what kind of consumer you are and what kind of potential borrower you might be. Car loan lenders will determine the terms of your financing based on your perceived ability to pay. If you can pay off existing debts, do so right away. Calculate what you can actually afford, both for a down payment and as a month-to-month bill. Don’t overextend yourself, or you may fall behind on payments.
Know Your Credit Score. Along with your loan history, income, employment status, and other factors, lenders look at your credit history to determine whether you pose a risk of default. This history is encapsulated in your credit score, ranging from 300 to 850.
Checking your score before shopping for a car loan helps you know ahead of time how trustworthy you appear to lenders. In Canada, you can obtain your credit file from the major credit reporting bureaus, TransUnion and Equifax. If you have a good credit score (usually 740 or higher), you’ll enjoy the best rates on your car loan. On the other hand, a low credit score (below 580) could mean rates as high as 20% to 30%.
Consider a Higher Down Payment. When you purchase a vehicle with credit that’s less than stellar, it’s normal for a dealer to require a down payment upon purchase. The payment can typically be between 10% and 20% of the vehicle’s value.
Making a large down payment might make the initial purchase more difficult, but it can actually serve you well if you have bad credit. Since bad credit usually results in larger interest rates, any way to reduce your monthly payments is in your best interest, saving substantially over the life of the loan. Starting out by knocking down the total amount owed as much as you can reasonably manage is an easy way to do this. Having a down payment on hand can also improve your chances of having your vehicle financing application approved.
Consider an Online Bad Credit Car Loans Lender. If you’ve followed all the usual steps and bad credit is still creating a hurdle in affording the car you want, don’t despair! At LendingArch, we’re dedicated to working with bad credit buyers and designing plans based on real financial situations.
Just picked up my Ford Escape and couldn’t be happier! The salesperson was friendly and the process was very easy! I have already referred my sister. Thanks so much! ~ Vihaan W
Our expertise is in helping all buyers find vehicles with terms that work for their needs, whether they have bad credit, no credit, or even have past bankruptcies. LendingArch makes the application process effortless, connecting borrowers with local lenders to find the best rates on the right vehicles.
Choose the Bad Credit Car Loan for Your Situation. Every lender or bank will see your credit situation differently and will offer all kinds of deals. Often the sheer abundance of options can be overwhelming.
When you apply for a loan through LendingArch, we don’t look at bad credit as a non-starter. We consider your financial history as a whole, pairing you with reputable dealerships and lenders that share our approach. We’ll provide you with pre-approval almost instantly, using our sophisticated matching engine to locate dealerships and lenders that suit your needs. We’ll help you through the process painlessly and, most importantly, get you behind the wheel in no time.