Minimum Requirements to Get a Car Loan (With Any Credit Score)

Many car shoppers don't want to apply for auto finance if they think they might get declined. Without the certainty of approval, they don't want to waste their time with tedious paperwork if it's just going to end in disappointment. Fortunately, car finance is more accessible today than it's ever been.

Car loans are generally available from a financial institution (bank, credit union, etc.) or a car dealership. Canadians with less-than-perfect credit usually don't get approved for an auto loan through a major financial institution like a bank because banks don’t typically work with subprime car buyers (borrowers with a credit score below 650.)

Thankfully, some dealerships and retailers (like Canada Drives) are partnered with specialized lenders to make car finance accessible to all Canadians. It’s never been easier to get approved for a car loan (even if you have bad credit).

Minimum car loan requirements

• Income requirement: $1,800 per month. We discuss more on income requirements below.
• Credit score: The better your score the easier it will be to access loan products with lower interest rates. However, these days, a good credit score is not essential to get approved.
• Driver’s license: You must hold a valid driver’s license. In some instances, this can be a learner’s license.
• Age requirement: The minimum age is either 18 or 19 depending on your province.

Apply with Canada Drives today and we'll connect you with the best car deals in your area! 

What is the minimum income needed for a car loan?

In order to approve you for a car loan, some lenders will look at other factors besides your credit score, like your income. Typically, the minimum income for a person to qualify for an auto loan with low credit is $1,800 every month before taxes or deductions (i.e. CPP, EI, etc.).

To put your income requirements into perspective, here’s the breakdown:

Hourly Income:	At least $10.50 per hour for 40 hours per week, or equivalent
Weekly Income:	At least $420 per week (before deductions)
Bi-weekly Income:	At least $845 every two weeks (before deductions)
Twice per month:	At least $900 twice per month (before deductions)
Monthly Income:	At least $1800 per month (before deductions)

Credit score requirements

Thanks to the rise of specialized lenders, there is no minimum credit score to get a car loan. Banks may favour customers with good credit scores (670 and above), but a lender that specializes in subprime finance will look at your income and other factors alongside your credit report to determine your loan eligibility and rates.

But while your credit score may not be as important as it used to be for getting approved, the higher your 3-digit score is, the lower the cost of borrowing will be for you. Checking your credit report will give you an idea of what loan products and interest rates are available to you. Furthermore, regular monitoring will help you ensure there aren't any costly errors on your file. You can get your check your credit score for free with Borrowell.

If you meet the income requirements mentioned above, visit Canada Drives to get pre-approved for free and see what great deals you're eligible for! 

What if I don't meet the income requirements?

If you're struggling to get approved, don't forget to include government assistance (ODSP, AISH, etc.) in your application as it qualifies as income and can help you meet the the minimum income threshold.

Document requirements

When you begin your car-buying journey, it's important that you have all of the documents ready to send to your dealer or bring with you to the dealership, including:

• Proof of income & employment history
• Driver's license
• Proof of insurance
• Vehicle documents for the trade-in (if you plan to trade in your existing vehicle)

If you’re applying for auto financing with no credit history, documents like bank statements, employment history and proof of paid bills such as phone statements or utility bills will show lenders that you’re responsible with your finances.

If you have a history of collections, bankruptcy, or a consumer proposal on your credit file, make sure you offer any paperwork associated with these to show lenders that you’re working on clearing the debt and paying back creditors.