What Credit Score Do You Need to Buy a Car in Ontario?
Updated June 2025 · 6 min read
There is no minimum credit score required to buy a car in Ontario if you work with a specialized subprime lender. While traditional banks typically require 650 or higher, alternative lenders ignore credit scores entirely and will approve you as long as you can prove a stable monthly income of at least $1,800.
Credit Score Ranges: Who Approves You and at What Rate
The table below maps every credit tier to realistic approval outcomes and interest rate ranges you can expect from Ontario lenders in 2025.
| Score | Tier | Major Bank | Alt Lender | Typical Rate |
|---|---|---|---|---|
| 760–900 | Excellent | ✓ Yes | ✓ Yes | 6–9% |
| 700–759 | Good | ✓ Yes | ✓ Yes | 9–14% |
| 650–699 | Fair | ~ Maybe | ✓ Yes | 14–19% |
| 600–649 | Poor | ✗ No | ✓ Yes | 19–24% |
| 300–599 | Bad / No File | ✗ No | ✓ Yes | 24–29.99% |
Why Banks Decline at 649 But Not 650
Major banks (TD, RBC, Scotiabank, BMO, CIBC) run auto loan applications through automated underwriting systems. These systems use hard credit score thresholds — typically 650 — as a binary gate. Your application never reaches a human underwriter. A 649 is auto-declined the same as a 500. There is no partial credit for being "close."
Credit unions are slightly more flexible and sometimes work with scores in the 620–650 range, but they still weight credit score heavily and have slower approval timelines.
How Subprime Auto Lenders Actually Approve You
Lenders like Rifco, Scotia Dealer Advantage's subprime arm, CarFinco, and Westlake Financial build their business on borrowers that banks reject. Their underwriting model is fundamentally different: they care about your current ability to repay, not your past mistakes.
Income
$1,800+ net monthly income. Pay stubs, bank statements, or NOA accepted.
Stability
3+ months at your current employer. Self-employed? 2 years NOA required.
Residency
Utility bill or lease in your name proving Ontario address.
These lenders price risk into the interest rate rather than blocking access entirely. A borrower with a 520 score and steady $3,200/month income is a lower default risk to them than an unemployed borrower with a 680 score — and their models reflect that.
Using a Car Loan to Rebuild Your Credit Score
One of the most underused credit-building tools in Canada is the subprime auto loan. Here's why:
- →Installment loans diversify your credit mix, which Equifax and TransUnion reward in their scoring models.
- →Monthly on-time payments are reported to both bureaus — 12 months of clean payments can lift a 550 score to 650+.
- →Once your score recovers, you can refinance at a lower rate. Many borrowers refinance after 18–24 months and cut their payment significantly.
- →Unlike credit cards, the loan amount is fixed and doesn't tempt overspending.
What Actually Affects Your Interest Rate With Bad Credit
Beyond income, subprime lenders use several factors to set your rate within the 19–29.99% band:
Loan-to-Value Ratio
The lower the vehicle price relative to what you're borrowing, the better your rate. A $5,000 down payment on a $15,000 car will get you a materially better offer than zero down.
Vehicle Age & Mileage
Lenders cap loans on high-mileage vehicles (usually 150k+ km). Newer vehicles qualify for better tiers.
Employment Type
Full-time salaried employees get the best offers. Part-time, casual, and seasonal workers qualify but may face slightly higher rates or larger down payment requirements.
Existing Subprime Trade Lines
If you already have an active subprime auto loan in good standing, some lenders will use that as a positive reference point.
4 Bad Credit Car Loan Myths — Debunked
MYTH
"You need to fix your credit before you can buy a car."
TRUTH
The car loan itself is one of the fastest ways to rebuild credit. Subprime auto loans report monthly to Equifax and TransUnion — 12–18 months of on-time payments can lift your score 80–120 points.
MYTH
"Applying for a car loan will destroy your credit."
TRUTH
A single hard inquiry drops your score by roughly 5–10 points temporarily. That small dip is erased within 3 months of on-time payments.
MYTH
"You need a 20% down payment with bad credit."
TRUTH
Most subprime lenders want $1,000–$2,000 down on lower-value vehicles, or sometimes zero down if income is strong. The deposit requirement is about managing lender risk, not a penalty on you.
MYTH
"A co-signer will always get you a lower rate."
TRUTH
A co-signer helps with approval odds but rarely changes the interest rate tier once a lender has categorized you as subprime. Build your own credit history instead.
Frequently Asked Questions
What is the minimum credit score to finance a car in Ontario?+
Will getting a car loan help my credit score in Ontario?+
What interest rate should I expect with bad credit in Ontario?+
How long does it take to get approved for a bad credit car loan?+
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