Understanding the Difference Between “Bad Credit” and “Subprime” Auto Loans

When you’re looking for a car loan with a low credit score, there are two things you should look for: bad credit and subprime auto loans. These two types of auto loans are different if you look at them from a credit rating point of view. Understanding the difference can help you make an informed decision, so you won’t regret it after completing your new vehicle purchase.

Bad credit loans refer to any type of loan when the borrower has a low credit score. Put simply, bad credit loans are for people with limited or damaged credit histories who are seeking financing. Because lenders see them as a higher risk, borrowers with bad credit can expect higher interest rates and fees from their lenders compared to those who have good credit.

Subprime loans, on the other hand, refer to auto loans specifically for borrowers with low credit ratings. These lenders offer higher interest rates and fees than those of traditional lenders, but they also provide more flexible terms. So while you may end up paying more in interest overall, subprime lenders may be able to accommodate your budget better than traditional lenders.

Do you need clarification about a bad credit auto loan vs. a subprime auto loan? Once you get your head around each type of loan, it’ll all make sense. Let’s analyze both terms and see where they come from.

What Type of Borrower Are You According to the Credit Score System?


In Canada, the credit score system ranges from 300 to 850. A less-than-perfect credit score means you don’t have the best rating to qualify for the best auto loan at prime interest. Good credit depends on the scoring system. For instance, Equifax uses the following model:

  • Poor credit score (risky): 300 – 579
  • Fair credit score (subprime): 580 – 669
  • Good (acceptable): 670 – 739
  • Very good (positive credit behavior): 740 – 799
  • Excellent (low-risk): 800 – 850

The range Good – Excellent is considered a prime credit score. Anything below it is subprime. While it seems like a no-go-zone, subprime car loan Calgary is surprisingly popular in Calgary. Private and B lenders offer both bad credit and subprime auto loans to cross the discrepancy left by A lenders or traditional banks.

Subprime Auto Loans


From the above algorithm, we can deduce that subprime auto loans are common with borrowers with fair credit scores (between 580 and 669). Simply put, any car financing offered to a buyer with a credit score below the good credit range is a subprime loan. A subprime auto loan is more likely to default than a prime auto loan. As such, Canadian subprime auto loans are characterized by less favorable terms and higher interest rates than prime car loans.

Bad Credit Auto Loans

Canadian banks, private lenders, and other financing institutions consider bad credit to be anything below 575. Such a low rating shows that you are less responsible when repaying your debts. In this case, you qualify for a bad credit auto loan.

When your credit score doesn’t give a good impression, there are two ways auto lenders approach your situation:

  1. They can reject your loan application
  2. They can charge you higher interest than a subprime and prime loan

Higher interest is a safety precaution for auto financing companies if you fail to pay back the loan.

There are many ways to get everyone approved car loans Calgary. Some have more stringent requirements than others. Finding the right terms may be difficult if you are looking for a subprime or bad credit auto loan. Understanding the difference between bad credit and subprime auto loans can help you find the best deal possible.

Subprime and bad credit auto loans help customers with less-than-stellar credit ratings because lenders know that your financial capability can be more than just what the credit system dictates. So, regardless of your credit score, feel free to call a provider today if you need a car.

Frequently asked questions

1. How do I qualify for a subprime auto loan?

You must have a credit score between 580 and 669 to qualify for a subprime auto loan.

2. What is the difference between bad credit and subprime auto loans?

Bad credit auto loans are offered to borrowers with a credit score lower than 575, while subprime auto loans are offered to borrowers with a credit score of between 580 and 669.

3. What is the best way to get car financing with bad credit?

The best way to get car financing with bad credit is to look for lenders that specialize in subprime or bad credit auto loans. This may include private lenders, banks, and other financing institutions.

4. Are there any other alternatives for car financing?

Of course! If you have a good credit score, you may be able to get a prime auto loan with more favorable terms than a subprime or bad credit auto loan. Alternatively, you may also want to consider used cars Calgary and car dealerships that offer special financing options for customers with bad credit.

5. Is it worth getting a subprime or bad credit auto loan?

It depends on your financial situation and what kind of terms the lender is offering. Typically, subprime and bad credit auto loans may have higher interest rates than prime car loans, so you should compare different lenders to find the best possible deal for your particular situation. With the right lender, you may be able to get a car loan with reasonable terms that fit your budget.

No matter what your credit score is, Stampede Auto can help you get the car you need. We offer flexible financing options for all types of credit scores, making it easy to find an ideal auto loan solution. Our team of experienced finance professionals will work with you to find the best loan for your circumstances.


Getting car financing with bad credit can be difficult, but it is possible. Look for lenders that specialize in subprime and bad credit auto loans, compare different options to find the best deal, and contact Stampede Auto today to get the car loan you need. We are here to help you find a car loan solution that fits your budget and your lifestyle. Good luck and happy car shopping!

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