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📅 Last Updated: June 7, 2024
✏️ Written By Bryan Daly
🕵️ Fact-Checked by Caitlin Wood

As a student, getting to school, work, and home can be very time-consuming. Time, that could be put to better use like studying. If you’re thinking about getting a reliable car to get back and forth from school, you may be wondering if there are car loans for students.

Since some vehicles are pricey, it can be beneficial to finance yours with a car loan. Luckily, there are plenty of lenders that offer special car loans for students in Canada.

Car Loans For Students: Can You Get One?

As a student, you might be wondering, can I get a car loan? The short answer is yes, but you will need to have good credit and a steady income. Without these two things, it can be a challenge to get approved. However, with a few extra steps, there are ways to increase your chances of getting a car loan as a student.

Can You Get A Car Loan As An International Student?

Depending on how you’ve entered Canada, qualifying for a car loan as an international student can be hard. That’s because most lenders require you to be a Canadian citizen or permanent resident. They may also impose different documentation and credit restrictions that can make it even more difficult to get a car loan as an international student.

Don’t worry, there are select lenders that offer car loans for international students in Canada. You can find them if you do enough research and know what you’re looking for. 

Where Can You Get A Car Loan As A Student?

AmountInterestTerm (Months)
Loans Canada Logo - Bad Credit Loans Canada$500 - $50,000Up to 46.96%12 - 84Learn more
ClutchVaries8.49% +24 - 96Learn more
Canada Drives$500 - $35,00029.99% - 46.96%9 - 60Learn more
SkyCap Financial$500 - $10,00012.99% - 39.99%9 - 36Learn more
Carloans411$5,000 - $40,000Varies12 - 72Learn more
Canada Auto Finance$5,000 - $45,0004.90 % - 29.95%36 - 72Learn more
Eden ParkVaries11.9% +12 - 84Learn more
Splash Auto Finance by RifcoUp to $50,000Varies12 - 84Learn more

How To Get Car Loans For Students? 

Car loans for students aren’t too complicated to get. Just follow the steps below:  

Step 1. Find Out How Much You Can Afford

Start by creating a budget for your car by adding up all your expenses such as your books, school supplies, and meals. If you’re an international or out-of-province student, you may also have housing costs to consider. 

Then, go online and get pre-approved. A pre-approval will give you a basic idea of what loan terms and interest rates you can qualify for. It’ll also help you understand how much you can borrow based on your current financial situation. 

Step 2. Choose Your Car

Once you’ve done some research and been pre-approved by a number of lenders or dealerships, you should also have a better idea about: 

Although the cost of your loan is important, don’t forget to consider the long-term costs of driving and maintaining your particular make and model. Only choose a car that’s in good condition and truly fits your budget.  

Step 3. Apply For The Loan

Next, pick a lender or dealer and check their eligibility criteria. You can apply for a car loan as a student online or at the dealership in person. 

Most will require you to be a Canadian resident and at least the age of majority in your home province or territory (18 or 19) to apply. Depending on where you apply, you’ll also usually need a reliable source of income and employment too. Once you have all your documents, you can submit your application.     

Step 4. Get Approved And Finance Your Car 

Some lenders will respond within the same day, while others may take a few business days to review your application and give you an offer. If you go directly to a dealership, they may even approve you on the spot. 

Always read your contract and loan conditions carefully before signing. Once signed, a lender may pay the lender or private seller for you or send you the funds by direct deposit or Interac e-Transfer so you can buy a car on your own.  

Car Loans For Students: Documents Required 

When you apply for a student car loan, you’ll need to submit a variety of personal and financial documents to the lender or dealer, which may include:

  • 1 or more pieces of valid government photo ID (driver’s license, passport, etc.) 
  • Your most recent pay stubs and bank statements
  • Information regarding your employment 
  • Information regarding your expenses, and debts
  • How much of a down payment you’ll offer (if applicable)

If you’re an international student, you’ll also need a Social Insurance Number (SIN) to apply for a car loan, which you can obtain by visiting a Service Canada Office.  

Car Information Required For Student Car Loans  

If you apply for a car loan with a lender, you’ll need to provide details about the car you’d like to finance, such as its:

How Do Car Loans For Students Work?

When you obtain a car loan, you are extended the amount of money you need to purchase the car you want. Once the purchase is finalized, you start making payments toward the loan which include both principal and interest payments. 

Car loans are also a secured form of financing. In other words, your car is used as collateral for the loan. This means that in the event that you default on the loan the lender can seize your car and sell it to cover the outstanding amount of your loan. 

How To Increase Your Odds Of Qualifying For Car Loans For Students

When applying for a car loan, your credit and income are definitely going to be assessed by the lender. Many students are beginning their journey to financial independence, as a result, being strong in these two categories can be a challenge. 

That being said, here are a few things to help you increase your odds of qualifying for car loans for students: 

Improve Your Credit 

Your credit scores are a common factor used by lenders when assessing creditworthiness. Unfortunately, as a student, your credit history might be non-existent, as you may not have used credit in the past.

As such, it’s in your best interest to build your credit prior to applying for a car loan as a student. Thankfully, there are plenty of ways to help you build your credit as a student, including: 

  • Being an authorized user on someone else’s account – As an authorized user, even if you don’t use the account, the account will still show on your credit report. Keep in mind that the cardholder you reach out to should be responsible with their credit. If they aren’t, their poor financial habits will reflect on your credit report which won’t get you where you want to be. It’s best to ask someone you trust and know well, such as a friend or family member.
  • Student-friendly credit cards – Many banks and financial institutions offer credit cards that are specifically designed for students. These credit cards can be used to help you start building credit.

What Credit Score Do You Need To Qualify For Car Loans For Students?

Every lender and auto dealer has different standards when it comes to the credit scores of their loan applicants. Some lenders are lenient and will accept credit scores of 560 to 650, which qualifies as fair credit.  

However, some lenders are more strict and will only approve scores in the 660 to 900 range, which qualifies as good to excellent credit. This is especially true with places that finance newer or pricier cars. 

Not sure what your credit score is? Check out your credit score for free using Compare Hub

Are Car Loans For Students Available If You Have Bad Credit?

If your credit score is 300 to 560, it means you have bad credit, which can be a result of multiple missed payments, lack of credit history or other related factors. Either way, it can be tough to qualify for a car loan with bad credit as a student.

That said, there are alternative lenders and dealers that approve car loans for students with bad credit scores, as long as their incomes are enough to cover their payments. If you have a low income, you can also try offering a large down payment (at least 20% of the car’s purchase price) or asking a stronger candidate to co-sign your loan.

Just keep in mind that bad credit lenders often charge higher interest rates and fees.       

Increase Your Low Income

As previously mentioned,  lenders will want to ensure that you have enough income to make payments. As such,  securing a steady income source is a great way to better your odds of approval. 

Naturally, as a student, your focus is on school, not work, as it should be. However, there are a few ways you can earn extra money and earn income passively

Increase Your Car Loan Down Payment

The more you put down on a car, the less you will need to borrow. Not only will it be easier to secure financing, but your payments will also be lower because you’re financing less. As a benchmark, 10% to 25% is a reasonable down payment for most students. Furthermore, some car loan lenders require this down payment range when working with a student. 

Use Your GPA To Score Lower Interest Rates

As we saw above, students are not always the most ideal candidates for car loans because of their low income and lack of credit history.  As such, students are considered to be riskier borrowers so lenders tend to charge higher interest rates. 

The good news is that some lenders offer discounts for students, some of which are based on GPAs. These discounts could help you save on the cost of the loan and interest. 

Avoid Applying For Multiple Student Car Loans

The more car loans you apply for as a student, the more hard credit checks you’ll have. Every time you apply for a car loan, the lender will pull your credit report which may negatively impact your credit scores. That being said, it is wise to obtain a couple of financing offers before picking one to ensure you get the best deal. 

Consider getting pre-approved for a car loan instead as those usually only require a soft credit check. 

Use A Cosigner

A cosigner agrees to repay a loan in the event that the primary borrower defaults. Because of this, lenders are more likely to approve you with a cosigner

While this is advantageous to you, the cosigner is incurring some risk. Choosing the right cosigner is important. Typically, you’ll want to choose a family member or trust friend.

Get Pre-Approved

Before committing to a certain car, it is a good idea to get pre-approved for a car loan. When you’re pre-approved, you will know exactly how much you can afford. This will also alleviate some stress around purchasing a car because you’ll know that you’re already pre-approved for financing.

Alternatives To Car Loans For Students

Here are some alternative financing options you can look into if you don’t want or can’t qualify for a student car loan in Canada:  

  • Unsecured Personal Loan – If you need a loan that’s larger than the cost of a car or you want to buy a car that’s over 10 years old, an unsecured personal loan may be a better option. However, since there’s no collateral with an unsecured loan, lenders may charge higher rates and want you to have a better credit score. 
  • Public Transport – Since some car loans for students are pretty expensive, it might be much more affordable to take public transit whenever possible. Plus, taking the bus, train or subway can allow you more time to study. Just make sure that your monthly pass or daily fees would fit into your budget without issue.    

Car Loans For Students FAQs

Will my grades affect my ability to get a car loan?

Believe it or not, some lenders and auto dealers offer special promotions and discounts to domestic and international students with high grade point averages (GPA).

Can I refinance my car loan as a student?

If you want to refinance your car loan to get a lower payment or interest rate, you’ll need to improve your credit and/or your finances in general. You may even want to ask your parents to cosign your new loan to qualify for better terms.

Should I get a long or short Student car loan term?

A longer loan term is favourable if you want lower monthly payments, but you will end up paying more interest. A shorter loan term is favourable if you can afford higher payments and want to avoid hefty interest. 

Final Thoughts On Car Loans For Students

If you’re a student and looking to purchase a car to help make your life a little easier, you have options. You might just have to work a little harder and smarter to ensure you get approved. And the great news is, once you start paying off your car loan, it will help you build your credit further, so long as you manage the debt responsibly. Thus, giving you a kick start on your financial future.

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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