How to Qualify For a Car Loan in Canada: 7 Must-Know Steps

If you're thinking about buying a car from a dealership in Ontario, one of the most common questions is how to qualify for a car loan.

 

The good news is that qualifying for a car loan is not as hard as many people think.

 

This article will walk you through the basics — in simple terms — so you know what to expect when you apply at a dealership.

 

 

1. Know Your Credit Score

The first step in learning how to qualify for a car loan is understanding your credit score. In Canada, credit scores typically range from 300 to 900. The higher your score, the better your chances of getting approved and receiving a lower interest rate.

 

A score above 650 is considered good, but even if your score is lower, there are still lenders who may work with you — especially at dealerships that help with all credit types.

 

You can check your credit score for free through services like Equifax or TransUnion. It’s a good idea to know where you stand before you apply.

 

2. Have Steady Income

When lenders decide how to qualify for a car loan, your income plays a big role. You’ll need to show that you have a steady source of income so you can make your car payments on time.

 

Pay stubs, bank statements, or tax documents are often used to prove your income.

 

You don’t need to have a high-paying job to get approved, but the income must be enough to cover the monthly payment, insurance, and other expenses.

 

3. Proof of Employment or Financial Support

Most lenders want to see that you’ve been employed for at least three months or more, or that you have reliable financial support (such as pension income, self-employment income, or government assistance).

 

When dealerships work with lenders, they will ask you to provide recent documents to show this.

 

Remember: it’s the lender, not the dealership, who verifies your income. The dealership helps gather your documents and submits them to lenders on your behalf.

 

4. Have a Down Payment (If Possible)

A down payment isn’t always required, but it can help when you’re figuring out how to qualify for a car loan. A larger down payment means you’ll borrow less money, which can make it easier to get approved and reduce your monthly payments.

 

Even a small down payment can make a difference. In Ontario, some dealerships offer $0 down options, but putting money down may improve your chances.

 

5. Bring Identification and Documents

To apply for a car loan at a dealership, you’ll need to bring:

 

• A valid driver’s license
• Proof of income
• Proof of address (such as a utility bill)
• A void cheque or direct deposit form (for setting up payments)

 

Having these ready helps speed up the process.

 

6. Consider a Co-Signer if Needed

If you have low or no credit, one way how to qualify for a car loan is with a co-signer. A co-signer is someone with good credit who agrees to take responsibility for the loan if you can’t pay.

 

This can improve your chances of approval and may get you a better interest rate.

 

7. Let the Dealership Help

Dealerships in Ontario work with many lenders, including banks, credit unions, and special lenders for people with credit challenges.

 

If you're unsure how to qualify for a car loan, the finance team at the dealership can walk you through it step-by-step, answer your questions, and help find the best option for your situation.

 

When it comes to how to qualify for a car loan, it all comes down to a few simple things: your credit score, income, and ability to make payments.

 

Don’t worry if you’ve had credit challenges — many dealerships in Ontario specialize in helping people with all kinds of credit histories.

 

Just be honest about your situation, bring the right documents, and let the dealership guide you through the process. Getting a car loan is possible, and with the right help, it can be simple and stress-free.

If you're ready for a car loan, we'd love to help with that! simply fill in the form below to get started.