Everyone has to move around in their daily lives, of course. But having a car makes it so much easier to run errands and commute to work or class. However, poor credit can be an obstacle when trying to finance a car in Canada, particularly through banks. But here’s the good news: these financial institutions are not the only way of getting your own wheels! 

Choosing The Best Used Car For Your Budget

Price is not the only factor to bear in mind when looking for a second-hand vehicle. Knowing which vehicles retain their value for the longest time is also a great way of getting your money’s worth on a major purchase like this. As an example, some vehicles retain about 50% of the value at the four-year mark, while others have already dropped to 30%, based on the Canadian Black Book. 

As a rule of thumb, basic versions and neutral colours keep their value well, with options that most people want: air conditioning, automatic transmission, and leather seats, as well as sunroofs and alloy wheels. No matter how cool they may seem, manual transmissions and dealer-installed extras are not good investments, unless they respond to your specific family needs. 

Getting the Best Financing Deal

When buying a pre-loved vehicle, two major financial aspects must be considered: sticker prices and financing costs.

The sticker price is the cost of the actual vehicle. Remember, a new vehicle loses around a third of its value during the first year; after five years, it’s worth only a third of its original price. Surprisingly, depreciation is the most expensive aspect of vehicle ownership in Canada, costing more than insurance, upkeep, or even gasoline. 

Unfortunately but logically, financing costs are higher for high-risk borrowers. Monthly payments are largely determined by interest rates, which are in turn based on credit scores. Other factors include the age and mileage of the selected vehicle, as well as the duration of the requested loan.

Before signing any paperwork, smart consumers shop around for the best interest rates available for their credit scores. As a rough guide, non-prime borrowers can expect to pay interest ranging from 10% to 20% on their used car loans. 

Hot Tips on Poor Credit Loans

Designed especially for people with low credit scores, here are some inside hints on how to finance a reliable car that feels comfortable and drives safely. 

  • Look for a friendly dealership that understands your needs and is willing to work with you towards your goal, within your unique financial constraints;
  • Choose a vehicle you can really afford, while still meeting your needs, assigning top priority to crucial aspects like fuel consumption and resale value;
  • Save up for a substantial down payment during the months before your planned purchase; home-cooked meals and movie nights curled on the couch soon build up to an impressive amount;
  • Get your loan pre-approved, so you know exactly how much you can spend, and then keep looking for the car of your dreams at a price that won’t cripple your budget for years to come;
  • Build up your credit by paying off your financial commitments promptly as you work towards buying your new-to-you vehicle, as this can lead to easier approval and better financing rates on subsequent loans.


Canada’s used-car market is enormous, with almost three million used vehicles traded each year. This vast pool of pre-loved wheels certainly offers something for everyone. 

For consumers with bad credit, chatting to a sympathetic dealer and explaining their personal needs and preferences is the fastest route to buying their dream car – and on easy terms that build up their credit for future purchases.

What Other Options Do You Have?