What credit score is required for a car loan in Canada?

The specific credit score required for a car loan in Canada can vary among lenders and depend on several factors, including the lender’s policies, the type of loan, and the borrower’s overall financial profile. However, in general terms, a higher credit score increases the likelihood of qualifying for more favorable loan terms, such as lower interest rates.

Here’s a broad guideline for credit score ranges and their potential impact on car loan eligibility in Canada:

Excellent Credit (720 and above)

• Borrowers with excellent credit scores often qualify for the best loan terms, including lower interest rates. Lenders may be more willing to offer competitive financing options to individuals with excellent credit, making it more cost-effective to finance a vehicle.

Good Credit (660 – 719)

• A good credit score still positions borrowers well for car loan approval, although interest rates might be slightly higher compared to those with excellent credit. Borrowers in this range are generally considered low credit risk.

Fair Credit (620 – 659)

• Individuals with fair credit may still qualify for car loans, but the interest rates offered might be higher. Some lenders specialize in working with borrowers in this credit range, but it’s important to carefully review terms and compare offers.

Subprime Credit (580 – 619) and Poor Credit (579 and below)

• Borrowers with subprime or poor credit may face more challenges in securing favorable loan terms. While there are lenders that specialize in providing loans to individuals with lower credit scores, interest rates may be significantly higher, and the terms less favorable.

It’s crucial to note that credit score requirements can vary not only between lenders but also based on the type of vehicle being financed and the specific loan product. Additionally, other factors such as income, employment history, and debt-to-income ratio are considered during the loan approval process.

Before applying for a car loan, it’s advisable to check your credit report and understand your credit score.

The benefits of applying here at Canada Auto is that we have access to multiple lenders that can get you approved regardless of your credit. Just apply via our safe and secured 3 minute hassle-free online application.