Top Car Loan Scams To Avoid + Legit Lenders in Canada

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Written by Enoch Omololu

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If you don’t have the means to purchase a new car with cash, a car loan can come in handy. A car loan helps you finance your vehicle purchases if you don’t have enough cash upfront. 

However, you need to be cautious of potential scams out there like Yo-yo financing, cosigner scams, title washing, and more. 

In this article, we’ll take a look at the various car loan scams you should avoid, how you can avoid them, legit car loan lenders, and more. 

Car Loan Scams to Avoid in Canada

Here are car loan scams in Canada you need to avoid: 

Yo-Yo Financing – This happens when a dealer allows you to take a car home and then later tells you that your financing fell through, forcing you to pay a higher rate. 

Upfront Fees – This is when the lender makes you pay a fee even before providing any service. Once you pay, you won’t hear from them again. 

100% Guaranteed Approval Loans – Lenders who claim to guarantee loans regardless of credit history may do so, but at super high-interest rates or with hidden fees. 

Payments Focused on the Monthly Amount – This is when a lender focuses solely on the monthly payments, making the borrower ignore the overall cost, high-interest rate, or loan duration.

Cosigner Scam – This is when a lender convinces you that a cosigner is needed, but then only includes the cosigner on the loan. 

Loan Modifications – This usually occurs when a buyer has a hard time paying the car loan and seeks help from a third party to modify the existing loan with the lender for a fee. Once you pay the fee, you may never hear from them again.

Title Washing – This happens when information on a vehicle is removed illegally, especially information that can reduce its value. 

Packed Payments – This is when a lender places unnecessary add-ons to your loan, and the cost of this adds up over time.

How to Avoid Car Loan Scams

Now that we know the car loan scams we need to avoid, let’s talk about how to avoid them in the first place:

Know your credit score – The amount a lender will be willing to loan you, and the interest rate is influenced by your credit score. Make sure to know your credit score to avoid being offered a bad loan. 

Arrange your financing – Make sure your financing is in order before visiting a dealership. This gives you more negotiating power. 

Compare offers for different lenders – Don’t be satisfied with an offer from one lender; take the time to see what other offers are available in the market and pick the best one. 

Be knowledgeable on common scams – The best way to avoid scams is to know when you’re being scammed. 

Car Loan Requirements in Canada

Car loan requirements in Canada will vary slightly per lender, but here are the requirements you can expect from every lender:

  • Proof of income – The minimum income requirement will vary depending on the lender, some require a minimum monthly income of $1,200, while others require up to $2,000.
  • Credit rating check – This will be requested from most lenders. Generally, to get approved for a car loan with good rates, you will need a minimum credit score of around 650. 
  • Proof of residency – Provide your proof of residency or address in Canada. 
  • Government-issued I.D. – Provide a Government-issued I.D., preferably a driver’s license.
  • Be the age of majority in your province or territory – The age required is usually 18 years old, but some provinces require you to be 19.

Legit Car Loan Lenders in Canada


CarsFast is a Canadian auto financing network that has helped over 15,000 car buyers afford their perfect vehicle. The company offers auto financing to anyone, regardless of credit score, because it believes every Canadian deserves access to reliable transportation.

Loan amount: $75,000

Loan term: 12 to 96 months

Interest rates: 4.90% to 29.90%

Eligibility requirements: Canadians with a minimum income of $2,000 per month and the ability to prove three months of steady employment


On CarsFast’s website

  • Simple online application that takes just two minutes with no account required
  • Get competitive rates by browsing what different lenders can offer you
  • Complete your car-buying process all in one place as CarsFast also has a vehicle marketplace with access to over 350 dealers
  • Fast approval and financing process – you should get your money in a matter of days
  • Auto financing for everyone, regardless of credit score
  • Rates as low as 4.90%, and loan terms ranging from one year to eight years

Large lender network to offer competitive rates

Quick, easy-to-use online application process

No additional fees through CarsFast

Only offers auto loans, not personal loans

High-interest rates with poor credit (up to 29.90%)

Some lenders may charge origination fees

CarsFast offers an easy-to-use online comparison platform so that you can explore options with different lenders for your next auto loan. No matter what your credit score is, CarsFast has access to a large network of lenders, so you’re sure to find competitive rates. If you have a higher credit score, you will almost certainly get better rates from CarsFast.

1. Carsfast

With Carsfast you can get your car financing approved in minutes through their network of dealers across Canada. The online application only takes a few minutes. 

Their auto finance network specializes in helping borrowers with all types of credit secure financing. They have had over 350,000 approved customers.

As per its website, Carsfast believes that anyone deserves reliable transportation regardless of their credit history.

Here are the car loan features at Carsfast:

  • Amount of Loan – $500 to $75,000
  • Interest Rate – 4.90% to 29.90%
  • Loan Duration – 12 to 96 months
  • Eligibility – Minimum income of $2,000 and three months of employment 

2. Loans Canada

Loans Canada is like a broker that connects you with lenders. It is considered the biggest lender network in Canada, where you can compare the products of different lenders before sending in your application. 

Once you complete the application, you’ll be matched with a list of lenders that pre-approved you for financing. 

The available services on Loans Canada are personal loans, debt relief, auto loans, business loans, credit score checking, credit building, credit cards, home equity loans, and insurance. 

Here are the features focusing specifically on car loans on Loans Canada:

  • Amount of Loan – $500 to $35,000
  • Interest Rate – 2.99% to 46.96%
  • Loan Duration – 3 to 60 months
  • Eligibility – Minimum income of $1,800, three months of employment, and a credit score of at least 300. 

3. ZoomCarLoans

ZoomCarLoans is a platform where you can access different lenders across Canada. All you have to do is fill out the application form, which takes a few minutes to do, to get connected with lenders. 

On this platform, you can secure a car loan even if you have bad credit. 

Here are the car loan features of ZoomCarLoans:

  • Amount of Loan – Borrow up to $50,000
  • Interest Rate – 2.00% – 46.96%
  • Loan Duration – 24 to 84 months 
  • Eligibility – Minimum income of $2,000, three months of employment, Canadian Citizen or Permanent Resident. 

4. LoanConnect

On LoanConnect you can access a network of lenders to find the best loans with competitive rates that suit your needs. 

Once you fill out the application form, you will be matched with a list of lenders willing to provide you with a loan. The application process takes a few minutes, and you can borrow up to $50,000 at one time. 

With a single application, you can compare the offers of different lenders. You also don’t need collateral to secure financing. 

Here are the car loan features of LoansConnect:

  • Amount of Loan – $500 to $50,000
  • Interest Rate – 8.99% to 46.96%
  • Loan Duration – 72 to 84 months
  • Eligibility – At least 18 years old, a Canadian citizen, with a credit score of at least 550.

5. Clutch

Clutch is an online platform where you can buy or sell cars online. Clutch owns their inventory; they don’t connect you with another dealer that has the car you’re looking to buy. 

In terms of financing, once you pick a car to buy on their platform, all you have to do is select ‘Financing’ during checkout to get competitive rates from their partners. 

Here are the car loan features of Clutch: 

  • Amount of Loan – Minimum of $7,500 (no maximum)
  • Interest Rate – Varies
  • Loan Duration – 12 to 96 months
  • Eligibility – Three months of employment, Max 1 bankruptcy, from Ontario or Nova Scotia, a credit score of at least 580. 

6. CarDoor

CarDoor is a platform similar to Clutch, where you can shop for a car and apply for financing online. They are partnered with multiple lenders to help you find the best rates and get approved fast.

Once you’ve chosen a car, all you have to do is fill out a form, and it will be submitted to CarDoor’s partners to determine what loan you qualify for. 

Here are the car loan features of CarDoor

  • Amount of Loan – Varies
  • Interest Rate – Varies 
  • Loan Duration – 24 to 84 months

7. Canada Car Loans

Canada Car Loans is an online platform that connects you with various lenders. These loans can be used at any of the platform’s partnered dealerships. 

Once you finish their online application, a representative will contact you to show your options and help you find the best loan that suits your needs. 

Here are the car loan features of Canada Car Loans:

  • Amount of Loan – Minimum of $7,500 (no maximum)
  • Interest Rate – Up to 34.99%
  • Loan Duration – 12 to 96 months
  • Eligibility – Minimum income of $1,900, three months of employment, and a credit score of at least 300. 

8. Canada Auto Finance

Canada Auto Finance is a good option for those who may not have the best credit score but are still looking to purchase a car. 

Simply fill out their application form, which only takes a few minutes, and then you will be contacted by a local lender who will pre-approve you for a loan if you qualify. 

Here are the car loan features of Canada Auto Finance: 

  • Amount of Loan – $500 to $45,000
  • Interest Rate – 3 to 96 months
  • Loan Duration – 4.90% to 29.95%
  • Eligibility – Minimum income of $1,300, three months of employment, and a credit score of at least 300. 

9. Carloans411

Carloans411 is an online car financing platform that connects you with local dealers where you can shop for both a vehicle and a car loan. 

The platform is partnered with hundreds of dealers in Canada and helps Canadians find the right car loan regardless of their credit situation. 

Here are the car loan features of Carloans411

  • Amount of Loan – $500 to $50,000
  • Interest Rate – Up to 120 months
  • Loan Duration – 6.99% – 46.96% 
  • Eligibility – Minimum income of $1,600, three months of employment, and a credit score of at least 300. 

10. Canada Drives

With Canada Drives, all you have to do is complete their online application to get matched with car loan offers. This is open to those with bad credit as well. 

Afterward, the platform will connect you with a local dealer who will show you an array of vehicles that fit your budget.

Here are the car loan features of Canada Drives:

  • Amount of Loan – Varies
  • Interest Rate – Varies
  • Loan Duration – Varies 
  • Eligibility – Minimum income of $1,800, have a valid driver’s license, have a Canadian address and active bank account, be of the age of majority in your province, and be a Canadian resident. 

What Are the Average Car Loan Canada Rates?

The interest rates on car loans will vary depending on your credit score. 

According to Statistics Canada, the average car loan interest rate in Canada is around 7.69%. 

This is why it’s important to keep a good credit score to get the best interest rate possible on different types of loans. 


Have more questions? Let us answer them for you:

How do you deal with a loan scammer? 

The first thing you should do is file a police report for fraud with all the necessary details and supporting documents.

Can a scammer take out a loan in your name?

If you may have given a scammer sensitive information like your bank account numbers and social security numbers, then they can apply for a loan in your name. 

Do banks refund scammed money?

Banks have a responsibility to refund scammed money to their clients. However, you can’t always get a refund if you get scammed. May it be due to human error or lack of evidence.

What happens if you don’t pay a car loan in Canada? 

If you miss multiple payments in a row, there is a good chance that your car will be repossessed. 

Related: Car Loan Interest Rates in Canada

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Enoch Omololu

Enoch Omololu is a personal finance expert. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. Enoch is passionate about helping others win with their finances and has written about money matters for over a decade. He has been featured or quoted in The Globe and Mail, CBC News, Yahoo Finance, GO Banking Rates, Financial Post, Bankrate, Forbes, Toronto Star, CTV News, and other personal finance publications. He founded Savvy New Canadians, one of Canada’s top financial education platforms.

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