About Personal Loans in Canada
Personal loans are available in two main forms in Canada, which are secured and unsecured personal loans. To obtain secured personal loans, borrowers are required to present collateral, such as a car or landed property, that the lender can claim if the borrower defaults on repayment of the loan.
Since lenders face less risk when offering this loan many lenders provide it at lower interest rates.
On the other hand, unsecured personal loans do not require collateral, making them accessible to more borrowers, but lenders charge unsecured personal loans with higher interest rates because they anticipate higher risks from borrowers who have to submit no collateral for security.
Best
9.6
Est. APR
9.99 - 34.95%
Loan Term
9 - 80 months
Loan Amount
$300 - $35k
9.4
Est. Fees
From $12.32
Loan Term
14 - 62 days
Loan Amount
$100 - $1.5k
9.4
Est. APR
0 - 34.90%
Loan Term
1 - 60 months
Loan Amount
$2 - $15k
What is a personal loan?
A personal loan is a type of loan that enables borrowers to receive funds from lenders with respective interest costs throughout a scheduled payment duration. These loans serve different purposes than the typical loan formats which are restricted to property acquisition.
The versatility of personal loan funds attracts numerous Canadians who need to tackle their various financial responsibilities.
In Canada, personal loans usually range from $1,000 to $50,000, depending on the lender and whether the borrower is creditworthy. The repayment terms can vary from 6 months to 7 years.
The interest rates also vary based on factors like the borrower’s credit score, income level, and the lender’s policies. Personal loan interest rates in Canada usually range from 5% to 30% or more. Borrowers with higher credit scores are likely to qualify for lower rates, while those with poor credit may face higher costs.
Most personal loans are unsecured, meaning they do not require collateral. This makes them accessible to more people but also results in higher interest rates compared to secured loans, which involve collateral like a home or car.
Secured personal loans offer lower rates due to limited risk for lenders. Borrowers usually repay personal loans in fixed monthly installments that include both principal and interest. Some lenders may offer flexible repayment options or allow borrowers to make additional payments without penalties.
9.6
Est. APR
9.99 - 34.95%
Loan Term
9 - 80 months
Loan Amount
$300 - $35k
Spring Financial Best For
Spring Financial is Best For
Spring Financial is a great option for borrowers who value accessible support and flexibility. Spring offers 24/7 live chat online and several kinds of loans for nearly any purpose.
Spring Financial Features
Spring Financial Features
- Loans up to $35,000
- Receive the funds via e-Transfer
- Get approved within hours
- Live chat available 24/7
Spring Financial is Best For
Spring Financial is a great option for borrowers who value accessible support and flexibility. Spring offers 24/7 live chat online and several kinds of loans for nearly any purpose.
Spring Financial Features
- Loans up to $35,000
- Receive the funds via e-Transfer
- Get approved within hours
- Live chat available 24/7
9.4
Est. Fees
From $12.32
Loan Term
14 - 62 days
Loan Amount
$100 - $1.5k
iCash Best For
iCash is Best For
iCash is best for those looking for a quick way to get funds for groceries, bills, car repairs and more. If you are most comfortable banking online, then this brand is a great option because you'll get instant approval and funding online.
iCash Features
iCash Features
- Loans up to $1,500
- Get funds via e-transfer
- Get a decision instantly
- Funds sent in minutes
- 24/7 availability
iCash is Best For
iCash is best for those looking for a quick way to get funds for groceries, bills, car repairs and more. If you are most comfortable banking online, then this brand is a great option because you'll get instant approval and funding online.
iCash Features
- Loans up to $1,500
- Get funds via e-transfer
- Get a decision instantly
- Funds sent in minutes
- 24/7 availability
9.4
Est. APR
0 - 34.90%
Loan Term
1 - 60 months
Loan Amount
$2 - $15k
KOHO Best For
Who it's for
KOHO is best for folks who need reliable, quick financing for relatively small amounts online. If you bank mostly from your phone, KOHO is for you.
KOHO Features
Stand-out features
- Zero interest cash advance
- Guaranteed approval
- Get money quickly
- Only pay interest on what you use
- Managed completely online
- Simple, speedy application
Who it's for
KOHO is best for folks who need reliable, quick financing for relatively small amounts online. If you bank mostly from your phone, KOHO is for you.
Stand-out features
- Zero interest cash advance
- Guaranteed approval
- Get money quickly
- Only pay interest on what you use
- Managed completely online
- Simple, speedy application
9.3
Est. APR
Varies
Loan Term
1 - 60 months
Loan Amount
$5k - $50k
Simplii Financial Best For
Who it's for
Simplii Financial is best for those with good credit as not everyone can get approved. If you have good credit and want to switch to a low interest option for existing debts, this is a good option.
Simplii Financial Features
Stand-out features
- Consolidate high-interest debt
- Competitive rates
- Select fixed or variable rates
- Select term loan or line of credit
- No prepayment penalty
Who it's for
Simplii Financial is best for those with good credit as not everyone can get approved. If you have good credit and want to switch to a low interest option for existing debts, this is a good option.
Stand-out features
- Consolidate high-interest debt
- Competitive rates
- Select fixed or variable rates
- Select term loan or line of credit
- No prepayment penalty
9.1
Est. APR
0%
Loan Term
1 month
Loan Amount
$30 - $250
Nyble Best For
Who it's for
Nyble is best for those who want to borrow a small amount for no interest and while building their credit.
Nyble Features
Stand-out features
- Build your credit
- Borrow up to $250
- Zero interest
- All credit accepted
- Guaranteed approval
- No deposit required
Who it's for
Nyble is best for those who want to borrow a small amount for no interest and while building their credit.
Stand-out features
- Build your credit
- Borrow up to $250
- Zero interest
- All credit accepted
- Guaranteed approval
- No deposit required
7.1
Est. APR
29.99 - 46.96%
Loan Term
4 - 24 months
Loan Amount
$100 - $5k
Friendly Lender Best For
Friendly Lender is Best For
Friendly Lender is great for customers with poor or no credit because their application process doesn't involve a credit check. If you're not finding a loan from the bank you can consider this brand for a more accessible solution.
Friendly Lender Features
Friendly Lender Features
- Loans up to $5,000
- Funds in as little as 24 hours
- Get funds via e-transfer or direct deposit
- No credit checks
- No documents required
- Fast online application
Friendly Lender is Best For
Friendly Lender is great for customers with poor or no credit because their application process doesn't involve a credit check. If you're not finding a loan from the bank you can consider this brand for a more accessible solution.
Friendly Lender Features
- Loans up to $5,000
- Funds in as little as 24 hours
- Get funds via e-transfer or direct deposit
- No credit checks
- No documents required
- Fast online application
7.1
Est. APR
6.99 - 34.95%
Loan Term
1 - 60 months
Loan Amount
$500 - $50k
Smarter Loans
Overview:
Best personal loan for flexible payment terms. Smarter Loans is an independent loan search website where you can compare loans from dozens of lenders. It's quick and easy to get pre-approved for loans through their convenient, online application.
Smarter Loans Best For
Smarter Loans is Best For
Smarter Loans is best for the savvy shopper who wants to see options before scoring the best deal. They are a loan comparison option for Canadians from any province.
Smarter Loans Features
Smarter Loans Features
- Instant loan recommendations
- Browse 60+ lenders
- Apply in minutes
- Access low rates & flexible terms
Smarter Loans is Best For
Smarter Loans is best for the savvy shopper who wants to see options before scoring the best deal. They are a loan comparison option for Canadians from any province.
Smarter Loans Features
- Instant loan recommendations
- Browse 60+ lenders
- Apply in minutes
- Access low rates & flexible terms
8.4
Est. APR
0%
Loan Term
1 month
Loan Amount
$20 - $750
Bree Best For
Who it's for
Bree is best for those who want a short-term solution to bridge a gap of $750 or less to avoid overdraft fees.
Bree Features
Stand-out features
- Get up to $750
- Zero interest
- No fees
- Flexible repayment
- No risk to your credit
- Avoid overdraft penalty
Who it's for
Bree is best for those who want a short-term solution to bridge a gap of $750 or less to avoid overdraft fees.
Stand-out features
- Get up to $750
- Zero interest
- No fees
- Flexible repayment
- No risk to your credit
- Avoid overdraft penalty
7.1
Est. APR
9.99 - 34.95%
Loan Term
3 - 60 months
Loan Amount
$500 - $50k
Loans Canada
Overview:
Best personal loan for competitive rates. Loans Canada is a trusted loan introducer for one of the largest lender networks in Canada. They have been in business for over 10 years and have helped thousands of Canadians find loans.
Loans Canada Best For
Loans Canada is Best For
Loans Canada is a good option for those who can't get approved for bank loans due to poor credit. It's also a great option if you want to get multiple loans options and compare for yourself.
Loans Canada Features
Loans Canada Features
- Get same-day approval
- Get your funds the next day
- Apply once, get multiple options
- Loans up to $50,000
Loans Canada is Best For
Loans Canada is a good option for those who can't get approved for bank loans due to poor credit. It's also a great option if you want to get multiple loans options and compare for yourself.
Loans Canada Features
- Get same-day approval
- Get your funds the next day
- Apply once, get multiple options
- Loans up to $50,000
7.0
Est. APR
8.00 - 34.95%
Loan Term
6 - 60 months
Loan Amount
$500 - $50k
LoanConnect
Overview:
Best personal loan for comparing rates. LoanConnect is a loan search platform that allows you to get multiple offers by filling out just one application. They also have a secure portal to keep track of your applications.
LoanConnect Best For
LoanConnect is Best For
LoanConnect is great for borrowers who want to get multiple offers without affecting their credit score. It's also a great option if you need a larger amount as you can get pre-approved for up to $50,000.
LoanConnect Features
LoanConnect Features
- No impact to your credit to apply
- Loan search engine
- Offers in as little as 60 seconds
- Safe and secure system
LoanConnect is Best For
LoanConnect is great for borrowers who want to get multiple offers without affecting their credit score. It's also a great option if you need a larger amount as you can get pre-approved for up to $50,000.
LoanConnect Features
- No impact to your credit to apply
- Loan search engine
- Offers in as little as 60 seconds
- Safe and secure system
8.1
Est. APR
34.37%
Loan Term
1 - 60 months
Loan Amount
$300 - $35k
Mogo Best For
Who it's for
Mogo's personal line of credit service is best suited for Canadians who are digitally savvy, seeking a straightforward and flexible borrowing experience. It caters to individuals who value transparency and convenience.
Mogo Features
Stand-out features
- Same day funding available
- Flexible terms
- No early repayment penalty
- Get credit limit increases
- Pre-approval in 3 mins
- No risk to credit score to apply
Who it's for
Mogo's personal line of credit service is best suited for Canadians who are digitally savvy, seeking a straightforward and flexible borrowing experience. It caters to individuals who value transparency and convenience.
Stand-out features
- Same day funding available
- Flexible terms
- No early repayment penalty
- Get credit limit increases
- Pre-approval in 3 mins
- No risk to credit score to apply
7.4
Est. APR
9.99 - 34.95%
Loan Term
6 - 60 months
Loan Amount
$5k - $50k
Consolidated Credit
Overview:
Best personal loan for debt consolidation. A non-profit credit counselling organization that has been helping Canadians live their best life for almost 15 years. From debt management to insolvency, Consolidated Credit Canada offers custom plans and an abundance of resources to support your financial journey.
Consolidated Credit Best For
Who it's for
Best for Canadians who want to make just one payment each month, and distribute the funds to your creditors on your behalf. You could be out of debt in as little as 36 months.
Consolidated Credit Features
Stand-out features
- 500,000 Canadians counselled
- 17+ years experience
- $500 Million in debt eliminated
- 300+ hours of financial education provided each year
- Free service
- Get out of debt faster
Who it's for
Best for Canadians who want to make just one payment each month, and distribute the funds to your creditors on your behalf. You could be out of debt in as little as 36 months.
Stand-out features
- 500,000 Canadians counselled
- 17+ years experience
- $500 Million in debt eliminated
- 300+ hours of financial education provided each year
- Free service
- Get out of debt faster
Who is eligible for a personal loan in Canada?
There are specific eligibility criteria set by lenders, that borrowers need to meet in order to qualify for personal loans. The following are the most common factors lenders consider:
- Age: You must be 18 or 19 years and above.
- Residency: You need to be a Canadian citizen or permanent resident with proof of residence.
- Income: Proof of a stable income, such as pay stubs, tax returns, or bank statements, to ensure you can repay the loan.
- Credit History: A good credit score increases your chances of approval and helps you secure lower personal loan interest rates. However, options like bad credit personal loans may be available for those with lower scores.
- Bank Account: An active Canadian bank account is required for loan disbursement and repayment purposes.
- Debt-to-Income Ratio: Lenders may assess your existing debts compared to your income to determine whether you can manage additional payments.
How to compare personal loans
Here are some factors to consider when comparing personal loans:
- Interest Rates: Look for the annual percentage rate (APR), which includes both the interest rate and any associated fees. A lower APR can reduce the overall cost of the loan.
- Loan Amounts: Different lenders may offer varying loan amounts. Ensure that the loan amount you need is available from the lender you are considering.
- Repayment Terms: Compare the length of time you have to repay the loan. Shorter terms generally mean higher monthly payments but less interest paid over time, while longer terms may lower monthly payments but higher overall interest costs.
- Fees and Charges: Be aware of any additional fees, such as origination fees, late payment fees, or prepayment penalties. These can add to the total cost of borrowing.
- Lender Reputation: Research the lender’s reputation by reading customer reviews and checking ratings on platforms like the Better Business Bureau (BBB) or Trustpilot. A reputable lender will be transparent about their terms and provide good customer service.
- Approval Process: Consider how long it takes for a lender to approve a loan. Some lenders offer quick online applications and approvals, while others may take longer.
- Flexibility: Check if the lender offers flexible repayment options, such as the ability to defer payments in case of financial hardship or make extra payments without penalties.
What can you use a personal loan for
Personal loans are incredibly versatile financial products that can be used for many different purposes. Here are some common uses for personal loans:
- Home Improvements: Personal loans can provide the necessary funds for renovations, repairs, or upgrades to your home. Whether it’s a kitchen remodel, a new roof, or energy-efficient windows, a personal loan can help you finance these projects without tapping into your savings.
- Debt Consolidation: Many Canadians use personal loans to consolidate high-interest debts into a single, more manageable payment. By obtaining a personal loan with a lower interest rate than existing debts, borrowers can save money on interest and simplify their monthly payments.
- Emergency Expenses: Unexpected expenses, such as medical bills or urgent car repairs, can arise at any time. A personal loan can help cover these costs when you don’t have enough savings to handle them immediately.
- Trips: Whether it’s a long-awaited vacation or a family gathering across the country, personal loans can help finance travel expenses. This allows you to enjoy your trip now and pay for it over time.
- Big Purchases: Personal loans are often used for significant purchases that may not be feasible to pay for upfront. This could include buying new appliances, furniture, or electronics, essentially anything that enhances your lifestyle but requires a larger upfront investment.
- Wedding Costs: Fund wedding expenses, including venue rentals, catering, and other associated costs to create your dream celebration.
- Travel Expenses: Finance a vacation or travel experience, allowing you to enjoy your trip now and pay for it over time.
- Education Costs: Cover tuition fees, books, or other educational expenses for yourself or a family member.
Before applying for a personal loan
There are many situations where a personal loan might be appropriate, you have to evaluate your financial situation carefully before deciding whether to apply:
- Interest Rates: Ensure that the interest rate on the personal loan is lower than the rates on existing debts if you are consolidating debt. This will help you save money in the long run.
- Impact on Credit Score: Using a personal loan responsibly can help improve your credit score by diversifying your credit mix and demonstrating good repayment behaviour. However, missing payments can negatively impact your score.
- Long-Term Financial Goals: Consider how taking out a personal loan fits into your overall financial strategy. Make sure that it aligns with your long-term goals and does not lead to further financial strain.
- Assess Your Budget: Ensure that you have room in your budget for fixed monthly payments over the loan term. A personal loan is only advisable if you can comfortably afford the repayments without straining your finances.
- Evaluate Your Credit Score: A strong credit score is crucial for securing favourable personal loan interest rates. If your credit score is low, it may be worthwhile to improve it before applying for a personal loan.
- Understand the Terms: Different lenders offer various terms and conditions. Make sure you fully understand the interest rates, fees, and repayment terms before committing to any loan.
- Consider Alternatives: If you don’t need immediate funds or if your income is unstable, consider alternatives such as saving for the expense instead of taking on debt. Also, if you have access to lower-interest credit options, those may be preferable.
When to get a personal loan
Here are some scenarios where obtaining a personal loan may be beneficial:
- You Have High-Interest Debt: If you are struggling with high-interest credit card debt, consolidating that debt into a personal loan can be a smart move. Personal loan interest rates are lower compared to credit cards, which can save you money in interest payments and help you pay off your debt faster.
- You Need to Cover Emergency Expenses: Unexpected financial emergencies, such as medical bills or urgent home repairs, can arise at any time. A personal loan can provide quick access to funds, allowing you to address these critical expenses without delay.
- You Want to Make a Big Purchase: Whether it’s financing a wedding, buying new appliances, or taking a much-deserved vacation, personal loans can help you manage these significant expenses. By spreading the cost over several months or years, you can avoid depleting your savings.
- You Have a Steady Income: Personal loans require regular monthly payments. If you have a stable job and a reliable income, this is an ideal time to consider taking out a personal loan, as it ensures you can meet your repayment obligations.
- You Are Planning Home Renovation: If you want to renovate your home or make necessary repairs, a personal loan can provide the funds needed to enhance your living space. This investment can also increase the value of your property.
Pros and cons of personal loans
Let’s weigh in on the advantages and disadvantages of personal loans to see if they align with your financial goals:
Pros of personal loans
- Flexibility in Use: Personal loans can be used for a variety of purposes, from consolidating debt to financing home improvements or covering unexpected expenses.
- Fixed Monthly Payments: Most personal loans come with fixed interest rates, which means your monthly payments remain consistent throughout the loan term. This predictability makes budgeting easier.
- Quick Access to Funds: Personal loans can often be approved quickly, allowing you to access funds in a matter of days. This is particularly beneficial for emergencies or time-sensitive purchases.
- Potential for Lower Interest Rates: Compared to credit cards and some other forms of borrowing, personal loans may offer lower interest rates, especially for borrowers with good credit. This can lead to significant savings over time.
- Improving Credit Score: Responsible borrowing and timely repayments can positively impact your credit score, helping you build a better credit history.
Cons of personal loans
- Interest Costs: While personal loans may have lower interest rates than credit cards, they can still lead to substantial interest costs over time, especially if you choose a longer repayment term.
- Fees and Charges: Some lenders charge origination fees, late payment fees, or prepayment penalties. These additional costs can increase the overall expense of borrowing.
- Impact on Credit Score: Applying for multiple personal loans in a short period can negatively affect your credit score due to hard inquiries. Additionally, if you miss payments, it can severely damage your credit rating.
- Risk of Over-Borrowing: The ease of obtaining a personal loan may lead some borrowers to take on more debt than they can manage, resulting in financial strain.
- Secured vs. Unsecured Risks: While most personal loans are unsecured (not requiring collateral), this means that the lender may charge higher interest rates compared to secured loans. If you opt for a secured loan, you risk losing the collateral if you default on payments.
Four types of personal loans
There are different types of personal loans, each serves its own purposes and comes with its own set of features. Below is a comparison table that highlights the important characteristics of four common types of personal loans:
| Loan type | Secured/unsecured | Interest rate | Collateral required | Best for |
|---|---|---|---|---|
| Unsecured Personal Loans | Unsecured | Higher (5% – 30%) | No | General use, emergencies |
| Secured Personal Loans | Secured | Lower (3% – 15%) | Yes (asset needed) | Large expenses, lower rates |
| Personal Lines of Credit | Unsecured | Variable (5% – 20%) | No | Ongoing expenses, flexibility |
| Debt Consolidation Loans | Unsecured/Secured | Varies (5% – 25%) | Sometimes | Combining debts into one payment |
Unsecured personal loans
Unsecured personal loans are loans that do not require collateral. This means that borrowers do not have to put up any assets, such as a car or home, to secure the loan.
Because they are unsecured, these loans come with higher interest rates compared to secured loans. They are ideal for people who need funds for general purposes, such as covering unexpected expenses, financing a vacation, or making a big purchase without risking their assets.
Approval for unsecured personal loans depends on the borrower’s creditworthiness and income.
Secured personal loans
Secured personal loans require collateral, which can be an asset like a vehicle or property. Because the lender has a claim on the collateral in case of default, these loans usually come with lower interest rates than unsecured loans.
This type of loan is suitable for larger expenses, such as home renovations or significant purchases, where borrowers may want to take advantage of lower interest costs. However, it’s important to be cautious because failure to repay a secured loan can result in losing the asset used as collateral.
Personal lines of credit
A personal line of credit is a flexible borrowing option that allows individuals to withdraw funds up to a certain limit as needed. Unlike traditional loans that provide a lump sum upfront, a line of credit gives borrowers access to funds on an ongoing basis.
Interest is only charged on the amount borrowed, making it an excellent choice for managing ongoing expenses or unexpected costs. Personal lines of credit usually have variable interest rates and do not require collateral, but they may come with fees and require good credit for approval.
Debt consolidation loans
Debt consolidation loans are designed to combine multiple debts into a single loan with one monthly payment. These can be either secured or unsecured and can help simplify finances by reducing the number of payments owed each month.
By consolidating high-interest debts such as credit card balances into a single loan with a potentially lower interest rate, borrowers can save money on interest and pay off their debts more efficiently. It’s important to carefully evaluate the terms and ensure that the new loan offers better conditions than existing debts.
How to get a personal loan
Obtaining a personal loan can be a straightforward process if you follow the right steps:
- Assess Your Financial Needs: Determine how much money you need to borrow and the purpose of the loan. This will help you choose the right type of personal loan and lender.
- Check Your Credit Score: Before applying, check your credit score to understand where you stand. A higher credit score often leads to better interest rates and terms. If your score is lower than desired, take the necessary steps to improve it before applying.
- Research Lenders: Explore different lenders, including banks, credit unions, and online lenders. Compare their interest rates, fees, loan terms, and customer reviews to find the one that best fits your needs.
- Gather Necessary Documentation: Prepare the documents required for your loan application. Commonly needed documents include proof of identity (e.g., driver’s license or passport), proof of income (e.g., pay stubs or tax returns), employment verification, information about existing debts and monthly expenses.
- Pre-Qualify for Loans: Many lenders offer pre-qualification processes that allow you to see potential loan offers without affecting your credit score. This can help you gauge what terms you might qualify for.
- Submit Your Application: Once you’ve chosen a lender, fill out the loan application form. Make sure you provide accurate information to avoid delays in processing.
- Review Loan Offers: After submitting your application, the lender will review your information and may present you with one or more loan offers. Carefully review the terms, including interest rates, repayment periods, and any fees associated with the loan.
- Accept the Loan Terms: If you find an offer that meets your needs, accept the loan terms as outlined by the lender. You may need to sign a contract or agreement that details all aspects of the loan.
- Receive Your Funds: Once you’ve accepted the loan offer, the lender will disburse the funds to you. Depending on the lender and your chosen method (e.g., direct deposit or check), this can happen really quickly, often within a few days.
- Manage Your Loan Responsibly: After receiving your personal loan, it’s crucial to manage it responsibly by making timely payments according to the agreed-upon schedule. Setting up automatic payments can help ensure you never miss a due date.
How long does it take to get a personal loan?
Here’s a breakdown of the timeline involved in obtaining a personal loan:
- Application Submission: Completing the loan application is usually a quick process that can take just a few minutes, especially if done online.
- Loan Approval Time: Many online lenders approve loans very quickly, often within the same business day. If you provide all required documents accurately, you could receive approval in as little as 24 hours. Traditional Banks and Credit Unions have longer approval times, ranging from 3 to 7 business days.
- Funding Time: Once your loan is approved, funding can happen very quickly. Some lenders even offer same-day or next-day funding, while others may take up to 3 business days to disburse the funds. Choosing direct deposit is usually the fastest method for receiving your loan amount.
Factors that affect approval time
Several factors can influence how long it takes to get a personal loan:
- Type of Lender: Online lenders usually have quicker turnaround times compared to traditional banks due to their streamlined processes and automated underwriting systems.
- Completeness of Application: Submitting an incomplete or inaccurate application can lead to delays. Ensure that all required documents are provided upfront, including proof of income, identification, and any other necessary information.
- Credit Score and History: A strong credit score can expedite the approval process. Conversely, if your credit history requires more scrutiny, lenders may take additional time to evaluate your application.
- Documentation Verification: The time it takes for lenders to verify your identity and financial information can also impact approval time. If any discrepancies arise during this verification process, it could lead to further delays.
Where can I get a personal loan in Canada
In Canada, there are several options for obtaining a personal loan, each with its own characteristics, interest rates, and application processes. Below is a summary table comparing different types of lenders available in the Canadian market:
| Type | How it works | Interest rate | Examples |
|---|---|---|---|
| Banks | Traditional financial institutions offer various loans. | 5% – 20% | RBC, TD Canada Trust, Scotiabank |
| Credit Unions | Member-owned institutions that provide loans to their members. | 6% – 18% | Vancity, Meridian Credit Union |
| Private Lenders | Non-traditional lenders may offer loans to those with bad credit. | 10% – 30% | Fairstone, EasyFinancial |
| Peer-to-Peer Lenders | Platforms connecting borrowers directly with individual investors. | 6% – 25% | Lending Loop, Fund Through |
Banks
Banks are the most common source of personal loans in Canada. Bank loans like the RBC personal loan and TD personal loan provide both secured and unsecured personal loans.
Borrowers can choose between fixed or variable interest rates and have access to various repayment options. The application process can be done online or in person, and approval times usually range from a few days to a week.
Credit unions
Credit unions are member-owned financial institutions that often provide more personalized loans than traditional banks. They offer lower interest rates and more flexible lending criteria, making them an attractive option for borrowers with varying credit profiles.
Examples include Vancity and Meridian Credit Union. Credit unions may also provide unique loan products tailored to the needs of their members.
Private lenders
Private lenders are non-traditional financial institutions that often cater to individuals with less-than-perfect credit scores or those who may not qualify for loans from banks or credit unions.
They tend to charge higher interest rates due to the increased risk involved in lending to these borrowers. Companies like Fairstone and EasyFinancial provide quick access to funds but may come with stricter repayment terms.
Peer-to-peer lenders
Peer-to-peer (P2P) lending platforms connect borrowers directly with individual investors willing to fund their loans. This model allows for potentially lower interest rates compared to traditional lenders, as the process cuts out the middleman.
P2P lending platforms like Lending Loop and FundThrough enable borrowers to apply online and receive funding quickly, within a few days.
What are the best personal loans in Canada
Below are the best personal loan providers in Canada:
| Provider | Interest | Amount | Term | Min. credit score |
|---|---|---|---|---|
| iCash | Fees: $12.32 – $14 | $100 – $1,500 | 14 – 62 days | 300 |
| Friendly Lender | 10% – 30% | $1,000 – $35,000 | 6 – 48 months | 600 |
| Spring Financial | 12% – 29.99% | $500 – $50,000 | 6 – 60 months | 580 |
| Smarter Loans | 8.99% – 25% | $1,000 – $50,000 | Varies | 650 |
| Fig Financial | 10% – 35% | $1,500 – $50,000 | 3 – 60 months | 600 |
| Loans Canada | 9.9% – 35% | $300 – $50,000 | 4 – 60 months | 300 |
| Loan Connect | 8.99% – 30% | $1,000 – $50,000 | Varies | 600 |
9.4
Est. Fees
From $12.32
Loan Term
14 - 62 days
Loan Amount
$100 - $1.5k
iCash Best For
iCash is Best For
iCash is best for those looking for a quick way to get funds for groceries, bills, car repairs and more. If you are most comfortable banking online, then this brand is a great option because you'll get instant approval and funding online.
iCash Features
iCash Features
- Loans up to $1,500
- Get funds via e-transfer
- Get a decision instantly
- Funds sent in minutes
- 24/7 availability
iCash is Best For
iCash is best for those looking for a quick way to get funds for groceries, bills, car repairs and more. If you are most comfortable banking online, then this brand is a great option because you'll get instant approval and funding online.
iCash Features
- Loans up to $1,500
- Get funds via e-transfer
- Get a decision instantly
- Funds sent in minutes
- 24/7 availability
iCash
iCash offers personal loans with fees ranging from $12.32 to $14 per $100 borrowed, depending on how much cashback you qualify for. They provide loans from $100 to $1,500 with terms ranging from 14 to 62 days. A minimum credit score of 300 is required for approval.
7.1
Est. APR
29.99 - 46.96%
Loan Term
4 - 24 months
Loan Amount
$100 - $5k
Friendly Lender Best For
Friendly Lender is Best For
Friendly Lender is great for customers with poor or no credit because their application process doesn't involve a credit check. If you're not finding a loan from the bank you can consider this brand for a more accessible solution.
Friendly Lender Features
Friendly Lender Features
- Loans up to $5,000
- Funds in as little as 24 hours
- Get funds via e-transfer or direct deposit
- No credit checks
- No documents required
- Fast online application
Friendly Lender is Best For
Friendly Lender is great for customers with poor or no credit because their application process doesn't involve a credit check. If you're not finding a loan from the bank you can consider this brand for a more accessible solution.
Friendly Lender Features
- Loans up to $5,000
- Funds in as little as 24 hours
- Get funds via e-transfer or direct deposit
- No credit checks
- No documents required
- Fast online application
Friendly Lender
Friendly Lender specializes in personal loans with interest rates between 10% and 30%. They offer loan amounts from $1,000 to $35,000, with terms of 6 to 48 months. Borrowers need a minimum credit score of 600 to qualify.
9.6
Est. APR
9.99 - 34.95%
Loan Term
9 - 80 months
Loan Amount
$300 - $35k
Spring Financial Best For
Spring Financial is Best For
Spring Financial is a great option for borrowers who value accessible support and flexibility. Spring offers 24/7 live chat online and several kinds of loans for nearly any purpose.
Spring Financial Features
Spring Financial Features
- Loans up to $35,000
- Receive the funds via e-Transfer
- Get approved within hours
- Live chat available 24/7
Spring Financial is Best For
Spring Financial is a great option for borrowers who value accessible support and flexibility. Spring offers 24/7 live chat online and several kinds of loans for nearly any purpose.
Spring Financial Features
- Loans up to $35,000
- Receive the funds via e-Transfer
- Get approved within hours
- Live chat available 24/7
Spring Financial
Spring Financial provides personal loans with APRs from 12% to 29.99% and loan amounts between $500 and $50,000. Their terms range from 6 to 60 months, requiring a minimum credit score of 580 for eligibility.
7.1
Est. APR
6.99 - 34.95%
Loan Term
1 - 60 months
Loan Amount
$500 - $50k
Smarter Loans
Overview:
Best personal loan for flexible payment terms. Smarter Loans is an independent loan search website where you can compare loans from dozens of lenders. It's quick and easy to get pre-approved for loans through their convenient, online application.
Smarter Loans Best For
Smarter Loans is Best For
Smarter Loans is best for the savvy shopper who wants to see options before scoring the best deal. They are a loan comparison option for Canadians from any province.
Smarter Loans Features
Smarter Loans Features
- Instant loan recommendations
- Browse 60+ lenders
- Apply in minutes
- Access low rates & flexible terms
Smarter Loans is Best For
Smarter Loans is best for the savvy shopper who wants to see options before scoring the best deal. They are a loan comparison option for Canadians from any province.
Smarter Loans Features
- Instant loan recommendations
- Browse 60+ lenders
- Apply in minutes
- Access low rates & flexible terms
Smarter Loans
Smarter Loans connects borrowers with various lenders offering personal loans at interest rates from 8.99% to 25%. Loan amounts range from $1,000 to $50,000, and terms vary based on the lender’s offerings. A minimum credit score of 650 is required.
7.3
Est. APR
8.99 - 29.49%
Loan Term
24 - 60 months
Loan Amount
$2k - $30k
Fig Financial
Overview:
Fig Financial is a relatively new lender in the Canadian market but they are backed by lenders with over 100 years of experience. Borrowers like this brand because of their low rates.
Fig Financial Best For
Fig Financial is Best For
Fig Financial is a great lender to switch to if you're looking to consolidate debt. 45%+ of their customers have used their Fig loan to consolidate debt to a lower rate.
Fig Financial Features
Fig Financial Features
- Borrow up to $35,000
- No early repayment fees
- Checking offer doesn't affect credit
- Rate as low as 8.99%
- Complete the entire process in 10 minutes
- Funding in as little as 1 business day
Fig Financial is Best For
Fig Financial is a great lender to switch to if you're looking to consolidate debt. 45%+ of their customers have used their Fig loan to consolidate debt to a lower rate.
Fig Financial Features
- Borrow up to $35,000
- No early repayment fees
- Checking offer doesn't affect credit
- Rate as low as 8.99%
- Complete the entire process in 10 minutes
- Funding in as little as 1 business day
Fig Financial
Fig Financial offers personal loans with interest rates between 10% and 35%, allowing borrowers to take out amounts from $1,500 to $50,000 over terms of 3 to 60 months. A minimum credit score of 600 is necessary for approval.
7.1
Est. APR
9.99 - 34.95%
Loan Term
3 - 60 months
Loan Amount
$500 - $50k
Loans Canada
Overview:
Best personal loan for competitive rates. Loans Canada is a trusted loan introducer for one of the largest lender networks in Canada. They have been in business for over 10 years and have helped thousands of Canadians find loans.
Loans Canada Best For
Loans Canada is Best For
Loans Canada is a good option for those who can't get approved for bank loans due to poor credit. It's also a great option if you want to get multiple loans options and compare for yourself.
Loans Canada Features
Loans Canada Features
- Get same-day approval
- Get your funds the next day
- Apply once, get multiple options
- Loans up to $50,000
Loans Canada is Best For
Loans Canada is a good option for those who can't get approved for bank loans due to poor credit. It's also a great option if you want to get multiple loans options and compare for yourself.
Loans Canada Features
- Get same-day approval
- Get your funds the next day
- Apply once, get multiple options
- Loans up to $50,000
Loans Canada
Loans Canada serves as a loan search platform that connects borrowers with multiple lenders. They provide loans with APRs from 9.9% to 35%, covering amounts between $300 and $50,000, with terms ranging from 4 to 60 months and a minimum credit score of 300.
7.0
Est. APR
8.00 - 34.95%
Loan Term
6 - 60 months
Loan Amount
$500 - $50k
LoanConnect
Overview:
Best personal loan for comparing rates. LoanConnect is a loan search platform that allows you to get multiple offers by filling out just one application. They also have a secure portal to keep track of your applications.
LoanConnect Best For
LoanConnect is Best For
LoanConnect is great for borrowers who want to get multiple offers without affecting their credit score. It's also a great option if you need a larger amount as you can get pre-approved for up to $50,000.
LoanConnect Features
LoanConnect Features
- No impact to your credit to apply
- Loan search engine
- Offers in as little as 60 seconds
- Safe and secure system
LoanConnect is Best For
LoanConnect is great for borrowers who want to get multiple offers without affecting their credit score. It's also a great option if you need a larger amount as you can get pre-approved for up to $50,000.
LoanConnect Features
- No impact to your credit to apply
- Loan search engine
- Offers in as little as 60 seconds
- Safe and secure system
Loan Connect
Loan Connect offers personal loans at interest rates between 8.99% and 30%, with loan amounts ranging from $1,000 to $50,000. The terms can vary by lender, and borrowers generally need a minimum credit score of 600.
What affects personal loan rates?
When applying for a personal loan, several factors can influence the interest rates offered by lenders. Here’s a breakdown of the key elements that affect personal loan rates:
Credit score
- Definition: Your credit score is a numerical representation of your creditworthiness, ranging from 300 to 900 in Canada. It is calculated based on your credit history, including payment history, credit utilization, and the length of your credit accounts.
- Impact on Rates: A higher credit score indicates to lenders that you are a responsible borrower, which can lead to lower interest rates. Conversely, a lower credit score may result in higher rates or even loan denial, as lenders view you as a higher risk.
Income
- Definition: Your income includes all sources of earnings, such as salary, bonuses, and any additional income streams. Lenders often assess your ability to repay the loan based on your income level.
- Impact on Rates: A stable and sufficient income can enhance your chances of receiving a lower interest rate. Lenders prefer borrowers who can demonstrate that they have the financial means to make timely payments. If your income is low relative to the amount you wish to borrow, lenders may charge higher rates to mitigate their risk.
Employment
- Definition: Employment stability refers to how long you have been employed and whether you work in a stable industry. Lenders often consider your job status when evaluating your loan application.
- Impact on Rates: Having a steady job with a reliable income can positively influence your loan application. If you have been employed for an extended period in a stable position, lenders may view you as less risky and offer more favourable interest rates. Conversely, frequent job changes or being in a volatile industry may lead to higher rates.
Credit history in Canada
- Definition: Your credit history encompasses all your past borrowing activities, including loans, credit cards, and payment records. It reflects how you have managed credit over time.
- Impact on Rates: A positive credit history characterized by timely payments and low debt levels can help secure lower interest rates. On the other hand, a history marked by late payments, defaults, or bankruptcies can lead to higher rates or difficulty obtaining a loan altogether. Lenders will review your entire credit report to assess your borrowing behaviour and determine risk.
What do you need to get a personal loan?
Here’s a breakdown of the requirements you need to meet when applying for a personal loan:
Identification
- Government-Issued ID: You will need to provide a valid form of identification, such as a driver’s license or passport. This helps verify your identity and ensures that you are legally eligible to borrow money.
- Proof of Residency: Lenders may also require proof of your current address, which can be shown through utility bills, bank statements, or lease agreements.
Financial information
- Proof of Income: Lenders will want to see evidence of your income to determine your ability to repay the loan. This can include recent pay stubs (from the last two or three months), tax returns (usually for the past two years), and bank statements showing regular deposits
- Employment Verification: Some lenders may require confirmation of your employment status. This could involve providing contact information for your employer or submitting an employment letter.
Credit information
- Credit Score: While you may not need to provide your credit score directly, lenders will pull your credit report as part of the application process. Your credit score is a critical factor in determining your eligibility and interest rates.
- Credit History: Be prepared for lenders to review your credit history, which includes details about past loans, credit cards, payment history, and any defaults or bankruptcies.
Loan details
- Loan Amount: Clearly define how much money you wish to borrow. Be realistic about the amount based on your financial needs and repayment capacity.
- Purpose of the Loan: Some lenders may ask for information on how you plan to use the funds. Whether it’s for debt consolidation, home improvements, or other expenses, being transparent about the purpose can help in the approval process.
Additional documentation
- Debt-to-Income Ratio: Lenders may calculate your debt-to-income (DTI) ratio, which compares your monthly debt payments to your gross monthly income. A lower DTI ratio indicates better financial health and can improve your chances of approval.
- Co-Signer Information (if applicable): If you have a low credit score or insufficient income, you might consider having a co-signer who will agree to take responsibility for the loan if you default. If applicable, be prepared to provide their financial information and credit details as well.
How to use a personal loan calculator
A personal loan calculator is a valuable tool that helps you estimate your monthly payments, total interest costs, and the overall cost of a loan. Here’s a guide on how to effectively use a personal loan calculator:
- Input the Loan Amount: Start by entering the total amount of money you wish to borrow. This should reflect your financial needs. Be realistic about the amount based on your budget and repayment capability.
- Select the Interest Rate: Enter the interest rate offered by the lender. If you’re unsure of the exact rate, you can use an estimated average rate based on your credit score and market conditions.
- Choose the Loan Term: Specify the duration over which you plan to repay the loan. Common terms for personal loans range from 6 months to 7 years. Keep in mind that shorter terms usually result in higher monthly payments but less interest paid over time, while longer terms may lower monthly payments but increase total interest costs.
- Calculate Monthly Payments: Once you’ve entered all the necessary information, click on the “Calculate” button (or equivalent) to generate your results. The calculator will provide an estimate of your monthly payment based on the inputs you provided.
- Review Total Interest and Cost: In addition to monthly payments, the calculator will display the total interest paid over the life of the loan and the overall cost of borrowing (total principal plus interest). This information will help you understand how much you will pay for the loan.
- Adjust Variables as Needed: If the results are not what you expected or if they exceed your budget, feel free to adjust any of the variables. You can lower the loan amount as you seek a better interest rate, or choose a different loan term to see how these changes affect your monthly payments and total costs.
- Compare Different Scenarios: Use the calculator to compare multiple loan scenarios by changing one variable at a time. For example, try varying the loan amounts or terms to see how they impact your financial situation. This can help you identify which option best fits your budget and financial goals.
What happens after you get a personal loan?
Once you have successfully secured a personal loan, Here’s what to expect:
- Loan Disbursement: After approval, the lender will disburse the loan amount to your bank account. Many lenders provide funds within a few days, while some may offer same-day transfers.
- Confirmation of Terms: You will receive documentation outlining the loan terms, including the interest rate, repayment schedule, and any associated fees. It’s crucial to review this information carefully to ensure you understand your obligations.
- Setting Up Payments: Most lenders offer options for automatic payments through bank transfers or online banking. Setting up auto-debit can help ensure that you never miss a payment and avoid late fees.
- Understanding Repayment: Your loan will require monthly payments, known as Equated Monthly Installments (EMIs), which include both principal and interest components. Familiarize yourself with the repayment schedule provided by your lender.
- Part-Payment and Foreclosure: Many lenders offer options for part-prepayment or full repayment (foreclosure) of the loan before the end of the term. If you find yourself with extra funds, consider making additional payments to reduce your principal balance and save on interest costs.
- Understanding Fees: Be aware that some lenders may charge fees for early repayment or part-prepayment, so it’s essential to review your loan agreement for any applicable charges.
- Late Fees: Missing a payment can result in late fees, which add to the total cost of borrowing. Additionally, consistent missed payments can negatively impact your credit score.
- Impact on Credit Score: Lenders report payment history to credit bureaus, so timely payments will help build your credit profile positively, while missed payments can lead to significant damage to your credit score.
- Stay Informed: If you encounter financial difficulties that may affect your ability to make payments, communicate with your lender as soon as possible. Many lenders are willing to discuss options such as restructuring the loan or offering temporary relief.
- Reviewing Statements: Regularly review your loan statements for accuracy and ensure that all charges align with what was agreed upon in the loan contract.
How to manage a personal loan
Here are several strategies to help you stay on top of your loan and avoid potential pitfalls:
- Create a Budget: Start by evaluating your monthly income and expenses. This will help you determine how much you can allocate toward your loan payments without compromising other essential expenses. Also, incorporate your monthly loan payment into your budget. Treat it as a fixed expense, similar to rent or utilities, to ensure you prioritize it each month.
- Set Up Automatic Payments: Many lenders offer the option to set up automatic payments from your bank account. This ensures that your payments are made on time, reducing the risk of late fees and negative impacts on your credit score. If possible, schedule your payment date shortly after you receive your paycheck. This can help ensure that you have sufficient funds in your account when the payment is due.
- Monitor Your Loan Balance: Regularly review your loan statements to track how much principal and interest you have paid off. Understanding the breakdown of your payments can help you see progress and motivate you to stay on track. Many lenders provide online portals where you can view your loan balance, payment history, and upcoming payment due dates. Take advantage of these tools to stay informed.
- Communicate with Your Lender: If you encounter any financial difficulties or anticipate trouble making a payment, contact your lender immediately. Many lenders are willing to work with borrowers to find solutions, such as restructuring the loan or providing temporary relief. Don’t hesitate to reach out to your lender with questions about your loan terms, fees, or repayment options. Clear communication can prevent misunderstandings and help you make informed decisions.
- Consider Additional Payments: If your budget allows, consider making extra payments toward the principal balance. This can reduce the overall interest paid over the life of the loan and help you pay off the loan faster. Before making extra payments or paying off the loan early, check if your lender imposes any prepayment penalties. Knowing this information can help you make strategic decisions about repayment.
- Maintain a Good Credit Score: Consistently making on-time payments is one of the best ways to maintain or improve your credit score. A higher credit score can lead to better borrowing terms in the future. Avoid taking on new debt while managing your personal loan, especially high-interest debt like credit cards. This will help keep your debt-to-income ratio in check and maintain financial stability.
- Review Your Financial Situation Regularly: At least once a year, review your financial situation, including income changes, expenses, and overall debt levels. This will allow you to adjust your budget and repayment strategy as needed. Consider how managing this personal loan fits into your long-term financial goals, such as saving for retirement or purchasing a home. Adjusting your strategy now can have significant benefits later.
How to refinance a personal loan
Here’s how to effectively refinance your personal loan:
- Assess Your Current Loan: Start by reviewing the terms of your existing loan, including the interest rate, remaining balance, monthly payments, and any fees associated with early repayment. This information will serve as a benchmark for evaluating refinancing options. Some lenders charge fees for paying off a loan early. Determine if your current lender imposes any prepayment penalties, as these can affect the overall cost of refinancing.
- Determine Your Goals: Clearly define what you hope to achieve by refinancing. Common goals include lowering monthly payments, reducing the interest rate, or shortening the loan term. Having specific objectives will guide your search for refinancing options.
- Check Your Credit Score: Before applying for refinancing, check your credit score and report to gauge your eligibility for better rates. A higher credit score can help you secure more favourable terms. If you find errors on your credit report, dispute them promptly to improve your score before applying for a new loan.
- Compare Lenders and Rates: Shop around and compare rates and terms from various lenders. Look for lenders that offer competitive interest rates and favourable repayment terms. Pay attention to any fees associated with the new loan, such as origination fees or closing costs. These can impact the overall cost of borrowing and should be factored into your decision.
- Apply for Refinancing: Once you’ve identified a lender that meets your needs, submit an application for refinancing. This process usually requires providing personal and financial information similar to what you provided when obtaining your original loan. Be prepared to submit documents such as proof of income, employment verification, and identification. Some lenders may also require a hard credit check during the application process.
- Use New Funds to Pay Off Existing Loan: If approved, the funds from your new loan will be disbursed directly into your bank account or sent to your current lender to pay off the existing loan. Ensure that the old loan is fully paid off and request confirmation from your previous lender that the debt has been settled.
- Start Making Payments on Your New Loan: Once you begin repayment on the new loan, familiarize yourself with the payment schedule and ensure that you make timely payments to maintain good standing. To avoid missing payments, consider setting up automatic payments from your bank account for the new loan.
Spring Financial
Est. APR
9.99 - 34.95%
Loan Term
9 - 80 months
iCash
Est. Fees
From $12.32
Loan Term
14 - 62 days
KOHO
Est. APR
0 - 34.90%
Loan Term
1 - 60 months
Simplii Financial
Est. APR
Varies
Loan Term
1 - 60 months
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