There are two main types of auto lenders in Canada, prime and sub-prime lenders. Although they fall under only two umbrellas, they all have different types of customer profiles that they prefer to approve.
Prime lenders are geared towards credit worthiness and work on a sliding scale of approval versus credit worthiness. For instance, the stronger the credit, the higher the dollar amount they will advance. Also, they offer low rates and longer repayment terms for a very flexible payment. Generally, they will base their risk factor on credit score or some alteration of it.
Sub-prime lenders recognize that credit may be challenged or non existent. Because they expect more defaults on their loans, they charge higher rates. These rates vary greatly depending on what credit challenges are present. Also, all of these banks view credit differently so credit decisions will be vastly different from one lender to another.
It is because of the typically higher rate that these banks can afford to offer financing. The idea is that even though they experience higher defaults rates, the other loans that do not default allow them to continue doing business and offer people a chance to obtain their loans and rebuild their credit worthiness.