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How to compare personal loans in Canada

Look out for these factors when comparing personal loans in Canada:

• Interest rates. Rates can be fixed or variable and tend to fall between 6.99% and 35%. Learn more about personal loan rates.
• Loan amounts. Borrow as little as $500 and as much as $50,000. Don’t borrow more than you need even if the lender approves you for more.
• Loan terms. Loan terms often range from 3 – 60 months. Aim for the shortest term you can afford to keep your interest costs low.
• Fees. Lenders may charge administration/origination fees, late fees and non-sufficient funds (NSF) fees on your loan. Read the fine print to make sure you don’t end up with hidden charges.
• Turnaround time. Traditional personal loans take a few days to a few weeks to fund. If you need same-day turnaround, check out same-day loans in Canada you can apply for.

Must read: Best personal loans in Canada

How to apply for a personal loan

Follow these steps for how to apply for a personal loan to qualify for the loan you want.

How to use this personal loan payment calculator

1. Enter the amount you want to borrow under Loan amount.more info button
2. Write the loan term in years (not months) under Loan terms.more info button
3. If there are no fees, enter the loan’s interest rate under Interest rate.more info button Otherwise, write the annual percentage rate (APR), which includes interest and fees.
4. Hit Calculate.
5. Review your results.

In addition to the monthly payment, our personal loan repayment calculator also tells you how much of the principal you’ll pay back and the total interest you’ll pay. This total interest includes fees if you use your loan’s APR instead of the interest rate.

Interest rates vs APR: What’s the difference?

The key difference between interest rates and APR boils down to the fees you have to pay for your loan.

• Interest rates. Interest rates represent the percent of your loan you need to pay back on top of the principal amount borrowed (as a cost of doing business). This number doesn’t include any origination or brokerage fees you may need to pay for your loan.
• Annual percentage rate (APR). Your APR is your interest rate plus the cost of fees or other charges baked into your loan. The APR is often used to show the true cost of your loan and will typically be higher than your interest rates alone unless there are no fees.

4 main types of personal loans

Unsecured personal loan

These loans are issued based on how good your credit score is.

• How it works: Submit to a credit check to get approved for financing with no need for collateral. Just be aware that your score will go down if you fail to make your repayments.
• How much can I borrow? You can typically borrow between $500 and $50,000.
• What will it cost? Expect to pay higher interest rates for unsecured loans than you do for secured loans.
• Who’s it best for? Best for borrowers with good to excellent credit.

Secured personal loan

These loans let you borrow money using an asset like your home or vehicle as collateral.

• How it works. Sign over a valuable asset to secure your loan. Just keep in mind that this asset can be repossessed by your lender if you fail to make repayments.
• How much can I borrow? You may be able to borrow as much as the equity in your asset is worth—which can be hundreds of thousands of dollars, in some cases.
• What will it cost? Interest rates will usually be lower on secured loans than unsecured loans, starting at around 4.95%.
• Who’s it best for? Best for borrowers who want to secure lower interest rates with an asset and/or increase their chances of approval.

Fixed-rate personal loan

These loans can be secured or unsecured and come with a fixed interest rate.

• How it works. Before signing up for a loan, you’ll agree to the interest rate charged every month, so your monthly payments will be consistent and you can budget ahead.
• How much can I borrow? The amount you can borrow with a fixed-rate loan will depend on whether you choose a secured or unsecured loan.
• What will it cost? Interest rates on fixed-rate loans will depend on factors like your credit score and whether you secure your loan with an asset.
• Who’s it best for? Borrowers who want predictable monthly payments.

Variable-rate personal loan

These loans can be secured or unsecured and come with a fluctuating interest rate.

• How it works. These rates go up and down in line with the Bank of Canada’s prime rate.
• How much can I borrow? The amount you can borrow with variable-rate personal loans will depend on whether you choose a secured or unsecured loan.
• What will it cost? Interest rates on variable-rate personal loans fluctuate over time, so you may save money or pay higher interest rates, depending on the month.
• Who’s it best for? Borrowers who want to potentially save on interest when rates go down.

What can I use my personal loan for?

You can use your personal loan to pay for a number of different expenses, depending on what your lender allows:

• Debt consolidation. Apply for a debt consolidation loan to consolidate all your outstanding debts into one easy monthly payment. Learn more about the best debt consolidation loans.
• Home improvement. Use your loan to pay for property renovations if you want to increase the resale value of your home.
• Post-secondary education. Lock in personal loans to cover the costs of schooling if you can’t take out a government student loan.
• Large one-off purchases. Take out a loan to pay for a large, one-off purchase like a new vehicle, mattress or mobile phone.
• Daily expenses. Tap into personal loans to cover your everyday expenses or check out a revolving line of credit to cover ongoing costs if a loan doesn’t make sense.

Where can I get a personal loan?

There are a number of different providers that will let you borrow personal loans in Canada. These are summarized in the table below:

Provider	How it works	Typical interest rates	Examples of providers
Banks	Bank personal loans are provided by Canada’s Big Five Banks and other major financial institutions. These loans often come with higher interest rates and have strict repayment requirements.	Anywhere from 4.95% to 15% with good credit. You may have difficulty getting approved with bad credit.	Providers include BMO, TD Bank, RBC, CIBC, Scotiabank, Canadian Western Bank and National Bank.
Credit unions	Credit unions usually provide smaller loans that are a little bit more flexible than big bank loans. To qualify, you’ll typically need to be signed up with the credit union you want to borrow from.	Starting from 4.95% with excellent credit. If you have a low credit score, you may be able to get a personal loan from a credit union if you have a good history with them.	Providers include Meridian, Servus, Vancity, Connect First, Conexus, First West, Steinbach, Alterna Savings and Coast Capital Savings.
Private lenders	Private personal loans are typically offered by online and alternative providers. They tend to come with less strict eligibility criteria than bank loans and you may be able to qualify with bad credit. The downside is that they’re often riskier to take out, since you could sign up with a predatory or untrustworthy lender.	Varies depending on the lender. Some private lenders offer reasonable rates starting below 12% for good credit, while others charge up to 35% for bad credit.	Providers include Spring, easyfinancial, SkyCap and Mogo.
Peer-to-peer lenders	P2P loans are usually offered through an online platform. This platform connects you to other Canadians who want to give you financing and collect interest on the money you borrow.	Personal loan interest rates for P2Ps start from 8.99% and up, depending on your credit score.	Providers include goPeer and the r/borrow subreddit (but r/borrow is not regulated in Canada).

Compare personal loans from online lenders now

What factors affect my personal loan rates?

Personal loan interest rates in Canada typically range from 6.99% to 35%. The rate you get will depend on the following factors:

• Credit score. Most lenders will give you decent interest rates if your credit score is over 660. You’ll usually pay much higher interest if your score is below 660.
• Debts. You’ll typically get better rates if your debt-to-income ratio (DTI) is below 20%. If you have a low income and a high debt load, you’ll pay higher rates.
• Collateral. Your loan will usually cost less if you secure it with collateral. You’ll pay higher rates if you take out an unsecured loan, especially if you have bad credit.
• Loan amount and term. Some lenders may offer higher or lower rates, depending on how much you want to borrow and how long you need to repay the loan.
• Type of lender. The type of lender you choose will usually affect your personal loan interest rates in Canada (with credit unions and P2P lenders offering the lowest rates).

What do I need to apply for personal loans in Canada?

Eligibility criteria

You may need to meet the following eligibility criteria to qualify for personal loans in Canada:

• Be at least 18 years old or the age of majority in your province or territory
• Be a Canadian citizen or a permanent resident with a valid Canadian address
• Be employed and have a steady income
• Meet credit score and income requirements

Required documents

To apply for personal loans in Canada, you’ll usually need to provide the following documents:

• Identity documents. Personal identification like your passport or driver’s licence.
• Proof of income. Pay stubs, employment records, tax records, proof of government benefits (such as EI) or other documents.
• Debt-to-asset ratio. Lists of assets and debts to make sure you can qualify for funding.
• Credit score. Consent for your lender to run a credit check.

Can I get a personal loan with bad credit?

There are plenty of lenders offering bad credit personal loans in Canada if you’re struggling to get approved. Just be aware that you’ll usually have to pay much higher interest rates (often over 20%). To improve your chance of getting approved for a bad credit loan, you may want to get a cosigner for your loan, secure your loan with an asset or build up your credit score before applying.

Must read: Best bad credit loans in Canada

Bottom line

Personal loans in Canada are easy to apply for and can help you cover a number of expenses. There are many types of personal loans you can choose from based on the type of interest you want to pay (fixed or variable) and whether you want to secure your loan with an asset. Compare online lenders now to find the best personal loan for you and apply today.

Frequently asked questions

• What's the most common type of personal loan?

  The most common type of personal loan is an unsecured, fixed-rate personal loan. This type of loan doesn't require collateral, and you'll get consistent monthly payments for the duration of your loan.

• What's considered a low interest rate on a loan?

  Low-interest personal loans start at 6.99% (with excellent credit). Just be aware that whatever's considered a low rate is cyclical and depends on factors like inflation and the prime rate in Canada.

• How can I avoid personal loan scams?

  You can avoid personal loan scams by staying away from lenders who aren't registered in your province. You should also avoid lenders who want you to pay upfront fees for your loan.

• Can I get a personal loan with no credit check?

  There are lenders in Canada who provide no credit check personal loans, but they charge high interest rates. Learn more about no credit check loans.

• What can I use a personal loan for?

  You can use a personal loan for any legitimate purpose, such as home improvement, medical bills like dental work or cosmetic work, debt consolidation and car repairs.