You can apply for any standard personal loan as long as you can meet the eligibility requirements. If you can’t meet the requirements, you can also apply for a cosigner loan, which allows you to apply with another person who may have stronger qualifications.
Depending on your lender, you may be required to put up collateral as security for your loan.
First, review the eligibility criteria of the lender to make sure that you’ll be able to provide the documents and show proof of a regular income — this is very important. Lenders usually require any or all of the following documents for self-employed loans in Canada:
Not necessarily. The rates and terms your ultimately offered will depend on the lender you apply with, their underwriting criteria and your qualifications including credit score, income and debt-to-income ratio (DTI).
Lenders may view your application as more risky if your income fluctuates a lot and in turn offer you a loan at a higher interest rate to mitigate that risk. Keep in mind that if you don’t qualify on your own, you could apply for a cosigner loan with someone who’s willing to be responsible for the loan should you be unable to make payments.
The cost of personal loans for the self-employed primarily depends on the loan term you opt for and the interest rate you’re charged, which can range between 6.99% and 46.96%.
Here’s a breakdown of how much a $5,000 loan could cost over a 3 year loan term vs. a 5 year term at 6%, 15% and 25% interest rates (for illustration purposes only).
| Interest rate | Monthly payment (3 year loan term) | Monthly payment (5 year loan term) | Total cost after 3 years | Total cost after 5 years |
|---|---|---|---|---|
| 7% | $154.39 | $99.01 | $5,557.88 | $5,940.36 |
| 15% | $173.33 | $118.95 | $6,239.76 | $7,136.98 |
| 25% | $198.80 | $146.76 | $7,156.77 | $8,805.40 |
Find out your potential monthly payments on any loans for the self-employed you’re considering with this calculator.
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Yes, there are loans for self-employed with bad credit. Although getting a loan from a traditional lender like a bank might be hard to do, many online lenders will consider applicants with credit scores as low as 300.
To find the best loan for you, consider the following factors when comparing self-employed loans in Canada:
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First, always check that you meet all eligibility and documentation requirements before applying for a loan. Second, consider having a cosigner on your loan to help alleviate any hesitation of the lender. You can file a joint application with another person, where you and the second party would be equally responsible for the requested loan.
Make sure you know exactly what you need the loan for and avoid getting stuck in a cycle of debt by borrowing more than you need. This also means that you should avoid applying for loans if you don’t actually need them.
Besides personal loans, types of loans and personal financing you can get with self-employed income include credit cards, payday loans or even a mortgage. Many lenders offer loans to the self-employed, but sometimes with strict eligibility requirements. Depending on the lender, you may have to provide anywhere from 90 days of account statements up to 2 years of tax returns to prove consistent self-employed income.
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See what eligibility criteria lenders consider and learn how to find a loan you’re eligible for.
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