The Real Truth About Subprime Auto Financing

The Real Truth About Subprime Auto Financing

April 24, 2024    Budgeting Advice

The process of buying a new vehicle can sometimes be a bittersweet experience. Have you ever dreamt about your perfect car, only to have your budget or credit score snap you back to reality?

That’s where a car loan and financing can help make your vehicle dreams come true, specifically with a subprime lender. Subprime financing refers to auto loans designed for borrowers with low credit scores or limited credit histories – the type of people we help every single day!

You’ve probably heard some common misconceptions about subprime financing. The aim of this blog is to debunk those myths you might be worried about, while also clarifying the positives of choosing this route on your auto loan journey.


Myth #1: I’ve been rejected before, so I’ll be rejected again.

This is probably one of the biggest myths that stops people from seeking further financing options. Subprime lenders can often approve you regardless if you’ve been rejected in the past. The reason for this is that banks and traditional financial institutions have strict requirements when approving loans because they want to guarantee their loan will be returned. Since subprime lenders lend their own money, they’re able to offer alternative options including more flexible payment plans and better interest rates – no matter the reason why you were rejected previously.

Myth #2: I need perfect credit to be approved.

Subprime financing exists to help those with bad credit get into the vehicle of their dreams. In Canada, credit scores range from 300 (less than perfect) to 900 (excellent). If you have a score of 620 or higher, you have average (or better) credit and will likely be approved for a car loan wherever you go. Lower than that likely means you’ll have a harder time getting a car loan from a traditional lender, like a bank. While many subprime lenders do check your credit score, they will normally look beyond it to find a car and financing solution that will fit both your budget and lifestyle.

Myth #3: I don’t have a credit history at all, so I won’t be approved.

Are you new to Canada and haven’t built up a credit history yet? Or maybe you’re a new driver and this is your first ever car loan? Don’t let that stop you from getting your next vehicle. Just like with bad credit scenarios, subprime lenders often have expertise in helping people who haven’t had the chance to build up their credit yet. Securing a car loan will not only help build your credit, but it can potentially improve your credit score as well.

Myth #4: I need a down payment to get a loan.

This is a very misleading myth that stops many people from trying to obtain a vehicle through financing. The purpose of a car loan is to accommodate your financial situation, so subprime lenders are often able to create a payment plan that’s suitable for you without ever requiring a down payment. However, one thing to be mindful of is that without an upfront down payment, your loan amount could end up being higher.

Myth #5: I won’t be able to afford the rates.

Subprime lenders specialize in helping people get a car loan, no matter their financial situation. They help borrowers get into a vehicle with monthly payments that make sense for their lives. Whether you have low income, bad credit, no credit, have filed for bankruptcy or are new to Canada, many subprime lenders have the experience and resources to help out.

Myth #6: I’ll need a co-signer to get financing.

Having a co-signer is not always mandatory for a car loan. Subprime lenders will assess your individual needs and work with your situation to get you into the car you want.


Here at Birchwood Credit, we have the expertise and resources to help with any and all credit situations. Service from our credit experts is always free, fully secure and comes with zero obligation. We offer:

  • ​​Auto loans for cars, trucks and SUVs
  • Competitive rates
  • Quick approvals
  • Affordable payment terms
  • Loans for bad credit or no credit
  • Ample vehicle selection (18+ dealerships)
  • Service from a trusted Manitoba brand

We’ve designed our auto loan process to be as fair and hassle-free as possible. We’ll help you find a loan that works for your budget before you even start looking for a vehicle, so you know exactly what you’re working with.

As the largest auto dealer in Manitoba, we’ll give you the best rates and payment terms based on your financial situation.

Ready to get started? It only takes a few minutes to fill out our online application form.

Rebecca Lake
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