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Personal loan interest rates in Canada
Compare the latest personal loan rates from a range of lenders.
The interest rates of personal loans in Canada vary based on many factors such as your credit score, income, current debts, type of lender, loan amount, loan term and collateral. Find out what interest rates a borrower may encounter based on these factors and compare personal loans from multiple lenders in Canada.
What is the average personal loan rate in Canada?
The average personal loan rate is 9.32%, according to Statistics Canada. The personal loan rate you’ll be offered will depend on your financial situation.
The maximum personal loan rate lenders are allowed to charge you is the equivalent of 47% APR. However, there are plans by the federal government to lower this to 35% APR on January 1, 2025. Learn more in our updates below.
Latest personal loan interest rates in Canada
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Updates: Maximum personal loan interest rate
Below is an outline of key events related to the government’s aim to lower the criminal rate in Canada.
May 2024: The government announces that the criminal rate will be lowered to 35% on January 1, 2025.
October 2023 to January 2024: The government runs a consultation for all interested members of the public to give their input on further lowering the maximum rate, adding more revisions to the payday loan exemption, access to low-cost small loans and protecting Canadians from unfair marketing tactics and high fees.
March 2023: The federal government publishes its 2023 budget, its annual plan to develop Canada’s economy. In this plan it announces its intention to make changes to the Criminal Code to lower the criminal rate of interest from 47% APR to 35% APR. It also announces its intention to lower the maximum fee for payday loans to $14 for every $100 borrowed.
Average personal loan rates in Canada
There was a steep increase in the average personal loan interest rate in the years immediately following the pandemic. The Bank of Canada increased its benchmark rate seven times in 2022 and three times in 2023, which resulted in lenders also increasing the personal loan rates they charge their borrowers.
In the first part of 2024, the Bank of Canada (BoC) held its target for the overnight rate steady. However, the BoC has recently lowered the rate, which will eventually result in lower personal loan rates across the Canadian market.
What are the current personal loan rates in Canada?
Current personal loan rates in Canada are 6.99% to 46.96%. Personal loan rates depend on your credit score, collateral and other factors.
What are the banks’ personal loan interest rates?
Most banks do not disclose their personal loan rates, but you can expect to see rates from 5.45% to 20%. Below is a sample of loan interest rates from example banks in Canada:
- ATB personal loan rates: 7.20% - 14.20%
- Laurentian Bank personal loan rates: 8.70% (variable base rate)
Personal loan interest rates in 2023 and 2024
The first Bank of Canada rate announcement of 2023 occurred on January 25. The central bank raised its benchmark interest rate by one-quarter of a percentage point, bringing it to 4.5%. That was the eighth rate hike in less than 12 months.
After the rate hike on January 25, the BoC announced it would pause rate hikes conditionally to assess the impact of its increases on the economy. In the rate announcements that followed on March 8 and April 12, the central bank held steady, but on June 7 and July 12, the bank raised the rate by a quarter percentage point each, bringing the rate to 5%. On September 6, 2023, the bank held steady but stated it could increase the rate further as needed. On October 25 and December 6, it held steady.
Throughout the first few months of 2024, the BoC held the rate at 5%, citing inflation as a concern. However, during the June, July and September rate announcements, the BoC lowered the rate by 0.25% percentage points. The current rate is 3.25%.
What does that mean for personal loan rates?
If you get a variable-rate personal loan, your interest rate will go up, down or stay the same depending on what the Bank of Canada does.
For example, if the BoC raises its prime rate, your rate goes up and your monthly payment will generally stay the same, but more will go towards paying the interest vs principal. It may also take you longer to pay off your loan.
If you get a fixed-rate personal loan, your interest rate will stay the same throughout the life of the loan regardless of how the BoC rate changes.
The Bank of Canada’s rate also influences the personal loan interest rates that lenders charge their customers.
How do I find the best personal loan rates in Canada?
You can find the lowest personal loan rates in Canada by ensuring your finances are in great shape before you apply and comparing offers from multiple lenders. You’ll need a good to excellent credit score, a solid history of on-time payments and your monthly debt payments should be less than 40% of your gross monthly income.
Banks, credit unions and select online lenders offer the best personal loan rates in Canada. To compare offers, get personal loan pre-approval from your top choices.
Related: Best personal loans
What is a good interest rate on a personal loan?
If you have an excellent credit score, a good interest rate on a personal loan could be as low as 6.99%. If you have a poor credit score, you may qualify for rates as low as 18% and as high as 46.96%. What is considered a good personal loan interest rate for you will depend heavily on your credit score.
Which bank has the lowest interest rate on a personal loan in Canada?
All banks in Canada tend to offer the lowest interest rate personal loans to borrowers with excellent credit scores of 760 or above. You may also have a better chance of getting offered lower rates on a personal loan if you have a long-standing relationship with your bank, including having several other banking products in good standing.
Who will get approved for bank loan interest rates?
You’re eligible for bank loan interest rates if you can demonstrate to banks that you’re a low risk borrower who can manage the loan payments. Banks look at many factors when deciding on what personal loan rates to offer you, such as credit score, income and debt-to-income ratio (DTI). We break down those factors below.
What factors affect personal loan interest rates?
Personal loan interest rates in Canada will depend on many factors, including:
- Credit score. You need good to excellent credit to qualify for the best personal loan interest rates in Canada because a solid credit score indicates to lenders that you have a long history of properly managing different types of debt.
- Debt load. Lenders want to see a debt-to-income ratio (DTI) under 40%, but the lowest personal loan rates go to borrowers with a DTI below 20%.
- Income. Lenders will check if you have enough regular income coming in to afford your monthly repayments.
- Collateral. Securing your loan lowers the risk for the lender, which gets you lower rates.
- Loan amount and term. Lenders will offer different personal loan rates depending on how much you want to borrow and how long you need to repay.
- Type of interest rate. Banks, credit unions and online lenders offer fixed personal loan interest rates. Credit unions and banks are the main providers of variable rates.
Bad credit vs good credit: How does it impact my rate?
Your credit score has a direct influence on the personal loan interest rate you qualify for. Good credit scores of 660 or higher usually mean you’ll get lower personal loan rates. Bad credit scores below 660 usually come with higher loan interest rates.
Personal loan interest rates by credit score
Consult the table below to get an idea of personal loan rates in Canada you may qualify for based on your credit score. You can also see example loan costs for a $5,000 loan paid back over a 5 year loan term (assuming the upper-limit interest rate for each credit score range).
| Credit score tier | Credit score range | Interest rate | Total loan cost |
|---|---|---|---|
| Excellent | 760 – 900 | 6.99% – 11% | $6,523 |
| Very good | 725 – 759 | 7.5% – 15% | $7,137 |
| Good | 660 – 724 | 8% – 20% | $7,948 |
| Fair | 560 – 659 | 15% – 35% | $10,647 |
| Poor | 300 – 559 | 18% – 47% | $13,052 |
Keep in mind these rates are for illustrative purposes only, and your personal loan rate will depend on other factors besides your credit score.
Personal loan calculator
Use this calculator to find out how much a personal loan may cost in Canada based on key factors like the loan term, interest rate and how much you want to borrow.
Personal loan monthly payment calculator
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How does the type of lender affect personal loan interest rates in Canada?
Generally, credit unions, banks and select online lenders offer the most competitive interest rates if you have a good to excellent credit score.
| Type of lender | Interest rates |
|---|---|
| Big banks | Personal loan interest rates are competitive if you have good to excellent credit. You will have difficulty getting approved with bad credit. |
| Credit unions | Personal loan rates are competitive if you have good to excellent credit. Rates are better than or equal to bank personal loan rates. You will have difficulty getting approved with bad credit. |
| Online lenders | Interest rates vary widely depending on the lender. Online lenders typically have higher personal loan interest rates than banks and credit unions. Some online lenders offer reasonable rates starting below 10% for good credit while others charge much more. It’s easier to qualify with bad credit if you’re willing to pay higher rates. |
| Peer-to-peer lenders | Personal loan interest rates from P2P lenders can be competitive if you have good to excellent credit. P2P lenders don’t have physical stores and can therefore pass on those savings to the borrower. With this method, you borrow from other Canadians through a platform rather than a financial institution. A P2P platform like goPeer will require a minimum credit score of 700 to apply, but you’ll need a much higher credit score to get the lowest rates. |
How does loan term affect personal loan rates?
Your loan term can also influence how much interest you pay over time.
- Longer terms. You’ll pay more towards interest for longer term loans since you’re paying it over a longer timeframe. Learn more about long term loans.
- Shorter terms. You’ll pay a lower amount towards interest over the duration of your loan with shorter terms (though your actual interest rate may be higher). Learn more about short term loans.
Example loan term costs
Let’s say you have an excellent credit score and want to get a $10,000 personal loan. Here are example personal loan costs based on reasonable interest rates for both a shorter and longer loan term.
In this example with a $10,000 loan, the longer term loan has a lower interest rate upfront, but the shorter loan term (which has a higher upfront rate) will cost less in interest over time.
| 3 year loan term | 5 year loan term | |
|---|---|---|
| Interest rate | 8.2% | 7.3% |
| Fees | 2% origination fee ($200) | 2% origination fee ($200) |
| Monthly payment | $314.29 | $199.43 |
| Total interest paid | $1,314 | $1,966 |
| Total amount paid | $11,514 | $12,166 |
Finder survey: Are men or women more likely to rate interest rate as an important factor when applying for a personal loan?
| Response | Female | Male |
|---|---|---|
| Interest rate | 68.05% | 61.34% |
Source: Finder survey by Pollfish of 1001 Canadians, January 2024
Fixed vs variable personal loan interest rates
Lenders offer personal loan interest rates that are either variable or fixed:
Variable rate personal loan
A variable rate on a personal loan will change based on your bank or credit union’s prime rate. That means that your monthly payment will increase or decrease from time to time as the Bank of Canada raises or lowers its policy interest rate (which could change up to eight times a year).
The amount you pay for a variable rate loan could end up costing more or less than you might with a fixed rate loan as the rate fluctuates over time.
Fixed rate personal loan
The fixed rate you receive on a personal loan will be decided by your lender based on your application and remain the same throughout the entire loan term. That means that your monthly payment will stay the same every month.
The advantage of a fixed rate loan is that you don’t have to worry about your loan payment increasing as it might with a variable rate loan, but you might also end up paying more if the Bank of Canada lowers its policy rate after you take out your loan.
Secured vs unsecured personal loan interest rates
Your personal loan interest rates can be impacted based on whether you take out a secured or unsecured loan:
- Secured loan. Secured personal loans let you use valuable assets such as your home or vehicle as collateral to secure lower interest rates.
- Unsecured loan. Unsecured personal loans rely on your credit score, income and debts to determine your eligibility to borrow money. They often come with higher interest rates than secured loans, especially if your credit score is below 660.
Personal loan fees to consider beyond rates
Interest rates may not be the only cost that impacts how much you pay for a personal loan. Some lenders will charge loan fees on top of the interest rate. Keep an eye out for the following fees when applying for a personal loan:
- Origination fee. You may encounter an origination fee of 0% to 5% of your loan amount. This is a fee to process your loan, and it is usually deducted from your loan amount.
- Late fee. Lenders may charge charge a late fee that’s a percentage of the outstanding payment or a fixed dollar amount.
- Non-sufficient funds fee (NSF). You’ll pay this common fee if a payment bounces. This is in addition to the fee your bank will charge for insufficient funds. Lenders typically charge $25 to $50.
- Prepayment fee. This is a fee to pay off your loan early. It’s not common for unsecured personal loans but common for loans secured by real estate.
- Surety or broker fee. You may encounter this if you apply for a short-term installment loan. It’s added to your loan payments and can be in the hundreds.
Personal loan interest rates vs APR: What’s the difference?
The key difference between interest rate and APR boils down to the fees you get charged.
- Interest rates. Your interest rate represents the amount you pay to borrow money from your lender. This amount doesn’t include any fees you’ll need to pay to get your loan.
- Annual percentage rate (APR). Your APR is your interest rate plus any fees you must pay to take out the loan. APR is often used to show the true cost of your loan and may be higher than your interest rates alone. The maximum APR you can be charged for a personal loan in Canada is 60% (effective annual interest), which works out to 47% APR.
Bottom line
Personal loan interest rates vary widely based on factors such as your lender, loan amount, term length and personal financial situation. Compare a range of lenders to get the best rate for you.
Dive deeper: Have time? Compare 35+ personal loans
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