Bad Credit Car Loan Rates in Canada
Bad credit car loan rates in Canada range from 14% to nearly 30%. Here's what to expect by credit score and how to get the lowest rate you can.
If you have bad credit, car loan rates in Canada are high — but they're not a life sentence. Understanding what rate to expect helps you avoid overpaying and gives you a target to beat.
What Counts as Bad Credit?
In Canada, credit scores below 650 are generally considered "bad" or subprime:
- 550–649: Subprime — rates of 14%–20%
- Below 550: Deep subprime — rates of 20%–30%
Typical Bad Credit Car Loan Rates
| Credit Score | Expected Rate | Monthly Payment on $25,000/60mo |
|---|---|---|
| 620–649 | 14%–17% | $586–$624 |
| 580–619 | 17%–21% | $624–$676 |
| 500–579 | 21%–26% | $676–$745 |
| Below 500 | 26%–30% | $745–$808 |
These are estimates — actual rates vary by lender, province, and vehicle.
Why Bad Credit Rates Are So High
Lenders charge higher rates to borrowers with bad credit because the risk of default is higher. A borrower with a 520 score is statistically 3–5 times more likely to miss payments than one with a 720 score. The higher rate compensates the lender for that risk.
How to Get the Lowest Bad Credit Rate
- Make a larger down payment — 20%+ down can lower your rate by 2–3 points
- Choose a shorter term — 48 months instead of 84 can save 1–2 points
- Use a co-signer — A co-signer with good credit can get you near-prime rates
- Buy a newer used vehicle — Vehicles under 5 years old qualify for better rates
- Compare lenders — Don't accept the first offer; compare multiple lenders
- Get pre-qualified — See your rate before you shop so you know what's fair
How Much Bad Credit Costs You
On a $25,000 loan over 60 months:
| Rate | Monthly Payment | Total Interest |
|---|---|---|
| 8% (good credit) | $507 | $5,420 |
| 19% (bad credit) | $649 | $13,940 |
| 26% (deep subprime) | $745 | $19,700 |
Bad credit can cost you $8,000–$14,000 extra in interest over the life of the loan.
Can You Refinance Later?
Yes — and this is a key strategy. If you get a high-rate loan now, you can refinance after 12–18 months of on-time payments and a credit score improvement. Refinancing from 22% to 12% on a $20,000 balance saves about $100/month.
The Bottom Line
Bad credit rates are high, but they're not permanent. Get pre-qualified to see your actual rate, choose the shortest term you can afford, and plan to refinance once your credit improves. Use our Credit Score & Rate Tool to see your rate range.
Frequently asked questions
What are typical bad credit car loan rates in Canada? Bad credit car loan rates in Canada generally range from about 14% to nearly 30%, rising as your score falls.
Why are bad credit car loan rates so high? Lenders charge more to offset the higher risk of missed payments. Income stability, a down payment and a less expensive vehicle can all bring the rate down.
Can I lower my rate later? Yes. After a year or so of on-time payments and an improved score, many borrowers refinance at a lower rate.
Affordrive is a Canadian vehicle-shopping and financing-information platform designed to help consumers understand their options before connecting with a dealership.
Affordrive does not guarantee financing approval. Financing decisions, rates, terms and vehicle availability are determined by the applicable lender and dealership.
Information on this page is for educational purposes and should not be considered financial advice. Read how we write and update our guides and how Affordrive makes money.