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Loan Requirements
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The minimum credit score is the baseline score required to qualify for a loan.
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On this page

  • Compare personal loans in Canada
  • Understanding interest rates
  • Personal loan amounts
  • Personal loan terms
  • Personal loan repayment schedules
  • Secured vs unsecured personal loans
  • Fees and hidden costs
  • APR: the true cost of borrowing
  • Eligibility criteria
  • Processing time
  • Lender reputation
  • Flexibility of early repayment
  • Improving your approval chances
  • Automatic payments
  • Debt consolidation options
  • Insurance and protection add-ons
  • Online account management
  • Understand what you're signing
  • Refinancing options
  • Loan purpose restrictions

Compare personal loans in Canada

Shopping for a personal loan in Canada can feel overwhelming as there are dozens of lenders offering different rates, terms, and features.

As a result, knowing what to look out for when comparing personal loans will make all the difference. In this guide, we break down exactly what you need to compare personal loans effectively and find the best option for your needs.

Understanding interest rates

In Canada, personal loan rates currently average 9.32%, though they can range from about 7% to over 40% depending on your credit profile and the lender.

Fixed rates stay the same throughout your loan term, which makes budgeting easier and protects you from rate increases.

Variable rates, on the other hand, fluctuate with the prime rate set by the Bank of Canada. They might start lower than fixed rates, but they can increase over time.

The type of rate you choose directly impacts your total repayment amount. A fixed rate of 10% on a $10,000 loan over three years costs you about $1,616 in interest.

If you had a variable rate that started at 9% but increased to 11% halfway through, you’d pay slightly more overall. As of January 2025, Canadian regulations cap personal loan APRs at 35%, protecting borrowers from excessive rates.

Personal loan amounts

Every lender sets minimum and maximum loan amounts. Most Canadian banks and credit unions offer personal loans ranging from $1,000 to $50,000, though some lenders extend up to $100,000 for qualified borrowers.

Larger loans often come with lower interest rates because they’re more profitable for lenders. A $25,000 loan might qualify for a rate that’s 1-2% lower than a $3,000 loan, even with the same credit score. However, borrowing more than you need costs you extra interest over time.

When you compare personal loan lenders, check both the minimum and maximum amounts. If you need $2,500 but a lender’s minimum is $5,000, you’ll be forced to borrow more than necessary. Similarly, if you need $40,000 for home renovations but a lender caps out at $30,000, you’ll need to look elsewhere or consider multiple loans.

Personal loan terms

Canadian personal loans usually range from 6 months to 5 years, though some lenders offer terms up to 7 years. A shorter term means higher monthly payments but less total interest paid.

A $15,000 loan at 12% APR paid over 2 years costs $706 monthly with $1,944 in total interest. Stretch that same loan to 5 years, and your monthly payment drops to $334, but you’ll pay $5,040 in interest.

A slightly higher rate on a shorter term often costs less overall than a lower rate stretched over many years. Calculate both the monthly payment and total interest before deciding which term works best for your budget.

Personal loan repayment schedules

The most common available repayment options include weekly, bi-weekly, semi-monthly (twice monthly on specific dates), and monthly payments. Making bi-weekly payments instead of monthly means you make 26 payments per year instead of 12 monthly ones.

This accelerated schedule pays down your principal faster, reducing total interest. On a $20,000 loan at 10% over 4 years, bi-weekly payments could save you approximately $400 in interest compared to monthly payments.

Some lenders also allow you to split payments to align with your paychecks. If you’re paid weekly, weekly loan payments prevent the stress of saving up for one large monthly payment.

When you do a personal loan comparison, ask about payment frequency options and whether there’s any cost difference between them.

Secured vs unsecured personal loans

Unsecured loans don’t require collateral as you’re borrowing based on your creditworthiness alone, while secured loans require you to pledge an asset like your vehicle, savings account, or home equity as collateral.

If you default, the lender can seize that asset to recover their money. The benefits are significantly lower interest rates, which are often 3-5% less than unsecured options. A secured loan might offer 7% while an unsecured loan to the same borrower sits at 12%.

The trade-off is risk, though, as Secured loans put your assets on the line. If you’re confident in your ability to repay and have valuable collateral, a secured loan saves money.

If there’s any uncertainty about your income stability, an unsecured loan provides peace of mind despite the higher cost.

Fees and hidden costs

When you compare personal loan lenders, scrutinize the fee structure. Origination fees, charged upfront to process your loan, usually range from 0.5% to 8% of the loan amount in Canada. On a $10,000 loan, that’s $50 to $800 taken from your funds before you even receive the money.

Not all Canadian lenders charge penalties for early repayment, but some impose fees equivalent to three months of interest if you repay before the term ends. On the flip side, many lenders reward early repayment with no penalties, allowing you to save on interest by paying more when you can.

Late payment fees usually range from $25 to $50 per missed payment. Some lenders also charge administrative fees for services like paper statements or payment changes. A loan that appears cheaper might cost more once you factor in these charges. Always request a complete fee schedule before committing.

APR: the true cost of borrowing

Unlike the basic interest rate, the Annual Percentage Rate (APR) includes both the interest and most fees, giving you the total annual cost of the loan expressed as a percentage.

A loan advertising 9% interest might have an APR of 11% once origination fees and other charges are factored in. Another lender might advertise 10% interest but have an APR of only 10.5% due to minimal fees. The second option costs less despite the higher stated interest rate.

As of now, Canadian law caps personal loan APRs at 35%. When you compare personal loan rates, always compare APRs rather than interest rates alone. This ensures you’re seeing the complete financial picture and can make an informed decision about which loan truly costs less.

Eligibility criteria

Traditional banks often require a minimum credit score of 660 to 700, while credit unions might accept scores as low as 600. Alternative lenders may approve borrowers with scores below 600, though at much higher interest rates, sometimes 25% to 40% APR.

You are also required to earn at least $20,000 to $30,000 annually, though this varies. Lenders verify employment history, preferring borrowers with stable jobs held for at least six months to a year.

Your monthly debt payments divided by your monthly income should stay below 40%, though some lenders accept up to 43%. Meeting these criteria doesn’t guarantee approval, but it improves your chances.

Processing time

Many online lenders offer instant pre-approval, same-day approval decisions, and funding within 24 to 48 hours. Traditional banks take 3 to 7 business days from application to funding. Credit unions fall somewhere in the middle at 2 to 5 business days.

In-branch applications generally take longer than online ones due to scheduling appointments and manual paperwork processing. However, in-person applications can be beneficial for complex situations where you need to explain specific circumstances to a loan officer.

Lender reputation

Check each lender’s standing with the Financial Consumer Agency of Canada (FCAC) and their provincial regulatory body. Look for customer service ratings on independent platforms, not just testimonials on the lender’s website.

Review complaint histories with the Better Business Bureau and read recent customer feedback about application processes, customer service responsiveness, and transparency.

Financial stability matters too. You want a lender who’ll be around for the life of your loan and can handle your account professionally. Established banks and credit unions offer stability, while newer fintech lenders might provide better rates and technology but have shorter track records.

Flexibility of early repayment

The ability to make extra payments or increase regular payments can save thousands in interest. A $15,000 loan at 11% over 4 years costs $3,662 in interest with standard payments. Pay an extra $100 monthly, and you’ll pay it off in 2.6 years while spending only $2,133 in interest and saving $1,529.

Some lenders allow unlimited extra payments with no restrictions. Others permit only one or two extra payments per year or limit additional payments to a percentage of your original loan amount.

When you compare personal loans, ask specifically about prepayment flexibility and any associated restrictions or penalties.

Improving your approval chances

If your credit isn’t strong enough to qualify alone or you want better rates, a co-signer can help. A co-signer with good credit vouches for you, agreeing to repay the loan if you don’t.

Not all lenders allow co-signers, so this is an important comparison point. Those that do usually require the co-signer to meet their standard credit and income requirements.

Adding a co-signer with excellent credit could reduce your interest rate by 3-5% or help you qualify for a loan you’d otherwise be denied. But your co-signer takes on real financial risk.

Late payments affect their credit too, and they’re legally obligated to repay the loan if you default. Only pursue this option if you’re confident in your repayment ability and have a willing co-signer who understands the commitment.

Automatic payments

Automatic payments, or autopay, debit your bank account on your payment due date. Most Canadian lenders offer this feature, and many provide incentives for using it.

The benefit is convenience, as you never miss a payment, protecting your credit score and avoiding late fees. Some lenders offer interest rate discounts of 0.25% to 0.50% for enrolling in autopay.

The risk is overdrawing your account if you don’t maintain sufficient funds. Most lenders allow you to schedule autopay for a specific date each month, so choose a date shortly after you get paid.

Debt consolidation options

Many Canadians use personal loans to combine multiple high-interest debts into one lower-rate payment. Not all lenders support this use, though most allow it.

If you’re carrying $12,000 across three credit cards at 19.99% APR, making minimum payments, you’ll spend years paying it off and thousands in interest.

Consolidate that into a personal loan at 11% APR with fixed payments over 3 years, and you’ll save approximately $3,000 in interest while getting debt-free faster.

When you compare personal loan lenders for debt consolidation, some offer direct payment to your creditors, ensuring the loan proceeds go straight to paying off your debts. This guarantees you use the money as intended and simplifies the process. Verify this option if debt consolidation is your goal.

Insurance and protection add-ons

Payment protection insurance (PPI) makes your loan payments if you become disabled, lose your job, or face other covered circumstances, while credit insurance pays off your loan balance if you die. These products cost around 0.5% to 2% of your loan amount monthly.

On a $15,000 loan, that’s $75 to $300 per month added to your payment. Before adding insurance, check whether you already have coverage through employer benefits, life insurance policies, or disability insurance.

In many cases, standalone insurance policies offer better coverage for lower premiums than lender-provided options.

Online account management

Most lenders now offer online portals and mobile apps where you can view your balance, make payments, download statements, and adjust autopay settings.

Some provide account management with payment histories, amortization schedules, and the ability to make instant extra payments. Others offer only basic balance viewing and require you to call for any changes.

User experience matters when you’ll be managing this loan for years. When you compare personal loans, test the lender’s online platform if possible. Download their app, read recent user reviews, and ensure their digital tools meet your expectations for functionality and ease of use.

Understand what you’re signing

Before signing, you should clearly understand your interest rate, APR, payment amount, payment frequency, loan term, total interest cost, all fees, prepayment penalties, if any, and what happens if you miss payments.

If anything is unclear, ask for clarification. If a lender can’t or won’t explain their terms simply, consider it a red flag.

The Financial Consumer Agency of Canada requires lenders to disclose all costs before you sign. When you compare personal loan lenders, transparency is a key indicator of trustworthiness. Lenders who hide fees in fine print or use confusing language often aren’t acting in your best interest.

Refinancing options

Not all lenders offer refinancing, and those that do have varying policies. Some allow refinancing after you’ve made six months of payments and your credit has improved. Others don’t refinance their own loans but will refinance loans from other lenders.

Refinancing makes sense when interest rates drop or your credit score increases significantly. If you took out a loan at 14% with fair credit and your score improves to good or excellent, refinancing to 9% could save hundreds or thousands.

Loan purpose restrictions

Most Canadian personal loans are “unsecured installment loans” with no restrictions on how you use the money. You can fund home renovations, consolidate debt, cover medical expenses, pay for a wedding, or anything else.

However, some lenders impose restrictions. They might only approve loans for specific purposes like debt consolidation or home improvements, requiring documentation of how you spent the funds. Others prohibit using loan proceeds for certain purposes like gambling, business investments, or education costs.

Always verify whether the lender restricts loan use. Ensure the lender offers true general-purpose personal loans. If you have a specific purpose and can document it, a purpose-specific loan might offer better rates than a general loan.

FAQs about how to compare personal loans

What credit score do I need to get a personal loan in Canada?

Most Canadian banks require a credit score of at least 660, though credit unions may accept scores as low as 600. Lenders view scores of 700 and above most favourably and offer the best interest rates to borrowers in the excellent range (750+). If your score is below 600, you can still get approved through alternative lenders, but expect significantly higher interest rates, potentially between 25% and the 35% legal maximum.

How much can I borrow with a personal loan in Canada?

Personal loan amounts in Canada typically range from $1,000 to $50,000, depending on the lender and your financial profile. Some lenders extend up to $100,000 for highly qualified borrowers. Your actual borrowing limit depends on your income, credit score, employment history, existing debts, and debt-to-income ratio. As a general rule, most lenders won't approve a loan where your total monthly debt payments exceed 40-43% of your gross monthly income. If you need more than $50,000, you might need to consider a secured loan using your home equity or vehicle as collateral.

What's the difference between a personal loan and a line of credit?

A personal loan provides a lump sum upfront that you repay in fixed installments over a set term, with a fixed interest rate that never changes. A line of credit gives you access to funds up to a certain limit that you can draw from as needed, similar to a credit card but typically with lower interest rates. You only pay interest on what you actually borrow from a line of credit, and minimum payments vary based on your balance. Personal loans work best for one-time expenses with predictable costs, while lines of credit suit ongoing or unpredictable expenses. When you compare personal loans to lines of credit, consider whether you need all the money at once or prefer flexibility.

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