Installment Loans

Installment Loans in Canada

An installment loan is a fast and easy method of getting financing in Canada. Whether you are looking to pay for unexpected bills, fix up your car, make an investment into your business, or just go on vacation, online installment loans in Canada is a great option.

It’s easy to get approved for an online installment loan in Canada. You don’t need to wait in long lines or fill out stacks of paperwork. After you complete a simple application online, you can usually get the cash you are looking for within just a few days, deposited directly into your bank account.

At Smarter Loans, we’ve done the heavy lifting for you. Below you’ll find a list of reputable companies that offer installment loans in Canada.

Take a look and compare your installment loan options, including products offered, interest rates, terms, qualifications and even reviews from other customers.

When you’ve found the loan you’re looking for, hit “Apply Now” next to the installment loan lender. You’ll be redirected to their website where you complete the online loan application. You can also pre-apply for a Canada installment loan right here on Smarter Loans, and we will find a suitable lender for your situation. They will reach out to you to process your loan request within 24-48 hours.

You can pre-apply here at Smarter Loans and we will find a suitable lender for you.

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Top Installment Loans Providers in Canada

Company
Amount
Interest Rate
Reviews
Terms
$500 - $15,000
29.99% - 47.72%
12 - 60 Months
$120 - $15,000
29.90% - 46.90%
12 - 60 Months
$500 - $30,000
19.99% - 39.99%
6 - 120 Months
$500 - $10,000
12.99% - 39.99%
9 - 36 Months
$500 - $1,000
Varies
3 - 6 months
$1,000 - $5,000
19.9% - 45.9%
12 - 36 months
$100 - $15,000
46.93%
12 - 60 Months
$2,000 - $10,000
34.9% - 43%
12 - 60 Months
$100 – $15,000
19.99% - 46.93%
Open Line of Credit
$500 - $10,000
46.93%
Open Line of Credit

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What are Installment Loans?

Installment loans are a form of online loans that are provided to the borrower in a lump sum at the beginning of the transaction and then paid back over time at monthly or biweekly intervals. Installment loans are typically between $500 and $10,000 but can go up to $25,000 or more.  

The terms of an installment loan can range from short-term to medium-term durations, but most fall within the range of 6 months to under 5 years. Installment loans are unsecured which means they do not require any collateral from the borrower. 

Installment Loans Canada

How Do Installment Loans Work?

Taking out an installment loan means that you are borrowing a specific sum of money, usually somewhere between $2,000 and $10,000, which must be repaid over a set period of time (such as a few months or a few years) and at a set frequency (for example, weekly, or monthly).

Check out our video on Personal Loans to understand the different types of personal loans available, including installment loans, and how to pick the right solution for your situation. Different loans serve different purposes and come with different terms, so it is very important to compare your options.

What are Installment Loans Used for?

Installment loans can be used for a variety of purposes, most common being automotive or home repairs, renovations, catching up on overdue bills, medical or emergency expenses, consolidating debt, travel or making a purchase. 

Automotive or home repairs

Installment loans can be issued to cover the costs of these repairs that are typically paid out in a lump sum either prior to or directly after completion of the repairs depending on the vendor.

Utility bills

In cases where the borrower finds themselves unable to pay off an impending hydro, cellphone, or other type of basic utility bill, the installment loan can be used to keep the lights on – literally and figuratively.

Medical Expenses

Unforeseen medical expenses that arrive unexpectedly often cannot be met by income and savings. If this is the case for a borrower, then the installment loan can be a lifeline that provides lump sum payment at the outset.

What You Need to Apply for an Installment Loan?

When searching for an online installment loan, most lenders will typically ask for the same basic requirements for you qualify for a loan. This includes proof of income and employment, a valid bank account, proof of age and residency. Most lenders will conduct some sort of a credit check to ensure you are not currently in collections, or undischarged bankruptcy or consumer proposal. 

  • Proof of Income:

    This can be a tax slip, employer verification letter or other such document. However, a full-time job is not a criteria for the proof of income requirement. Part-time jobs, disability income, pension income, and social welfare benefits count too.

  • Bank Account:

    In most cases, online installment loan providers ask for a valid and active bank account to deposit the funds into. However, it is also possible to obtain cash loans from a physical branch location in some cases, albeit rare.

  • Age Verification:

    In most provinces and territories, the minimum age for receiving an installment loan is 18. For this reason, installment loan providers will ask for government-issued ID.

  • Canadian Citizenship or Permanent Residency:

    Installment loans are typically extended only to Canadian citizens or permanent residents.

Decision Drivers

When choosing between online installment loans, there are a multitude of providers. However, it is important for the borrower to screen each provider’s offerings to achieve the best alignment with their needs and financial capabilities to repay. Some of the factors that should weigh into this selection decision are:

Principal Amount

While it is tempting to take out a large amount that covers the entirety of the expense, the high interest rate makes this an unfeasible idea. Borrowers should therefore look to budget conservatively, and obtain a loan only for the amount they cannot cover through savings and income.

Speed

While some borrowers can wait for a few days, other situations call for an immediate need for cash. An important caveat though is that faster loans could also be more expensive.

Interest Rate

Evaluating the interest rate upfront is an important consideration as it determines the borrower’s cost of borrowing. Higher rates mean higher indebtedness when it comes to repayment time.

Term

Longer loan terms mean lower monthly payments, but higher interest charges in total by the end of the loan term, It is therefore important to evaluate which of the two to prioritize when selecting the loan term.

Additional Fees

Some installment loan providers may charge fees upfront such as administrative fees. Other fees can also encompass fees for late payments, all of which should be considered when making the final decision.

Key Benefits

There are multiple benefits to obtaining an installment loan despite the higher interest payments that have to be made compared to personal loans. As compared to a similar substitute, the payday loan, the installment loan has a slightly lower interest rate attached to it and allows for longer repayment terms. Some other benefits include:

Efficiency, efficiency, efficiency: Installment loans are much faster to obtain than other forms of personal loans, which typically involve meeting with a banking institution’s representatives before approval for the loan is received. Comparatively, the online nature of these loans means that approval can be finished within an hour and funds can be received as soon as the next business day.

Acceptance of Poor Credit: These types of loans are available to all types of customers including those with poor credit scores as long as they demonstrate a reasonable ability to repay the principal and interest amounts. On the other hand, conventional personal loans come with strict lending criteria to target higher credit scores.

Flexible Repayment: Unlike payday loans which have to be paid back at the borrower’s next payday, the installment loans are structured more like personal loans in that regard. They allow the borrower to select the loan term and in some cases, even the repayment frequency (monthly, biweekly etc.)

Drawbacks

Potential downsides to installment loans include:

Interest Rates: With the simplified processes required to obtain the loan, and relatively fewer requirements in terms of credit strength, lenders have to be compensated for the additional risk they take in lending to borrowers with an installment loan structure. This results in higher interest rates.

Higher Repayments: Because installment loans can offer higher principal amounts than other payday loans, the cost of repayment from a purely principal perspective is higher as well, all other things equal.

Fees: Some installment loan providers may charge additional administration, origination or other affiliated fees, which could add up to total costs for the borrower.

Alternatives

Installment loans tend to be unsecured meaning that the lender cannot recoup losses via a sale of the borrower’s personal assets if the borrower fails to repay the loan. While this is a protective feature for the borrower, the flip side is that borrowers also have to pay the higher interest rate in order to compensate lenders for the greater level of risk undertaken. Therefore, some alternatives are:

Secured loans: While personal loans are typically extended to borrowers with stable credit scores, secured loans enable the borrower to offer collateral to the lender, thus making such loans less risky from the perspective of the lender. This translates to higher rates of approval and/or lower interest rates.

Mortgage/Home Equity: With a clear fixed asset (the home) as collateral, this type of secured loan enables borrowers to borrow against the value of their homes.

Credit unions: While credit union loans are largely offered on an unsecured basis, credit unions typically offer better rates than financial institutions. The rate can be pushed downwards further by securing the loan through a chequing account held with the union.

What the Numbers Say

Millennials tend to be the greatest users of “quick-cash” loans such as payday loans or installment loans. A survey conducted by PwC found that 42% of about 5500 millennial respondents surveyed had taken out one or both of these products at some point in their lives. The most common purpose that these loans were used for was to pay off student debt. 2 out of 3 respondents had at least one source of outstanding debt while 30% had more than one. Delving deeper into the college educated respondents, the number of people with atleast one source of long-term debt is 81%.

While data for installment loans is not publicly available due to lower regulations in the industry, the following graph shows the breakdown by age of payday loan users. This serves as a reasonable proxy for the installment loan, owing to the similarity in their loan profiles and target market.

Installment Loan Statistics
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Installment Loans Frequently Asked Questions


What is considered an installment loan?

Any type of loan that involves a lump sum of money that you must repay over a set term is an installment loan. Direct lenders are all examples of installment loan providers. Examples of installment loans include:

  • Personal term loans
  • Car loans
  • Typical mortgages

What is the difference between a payday loan and installment loan?


Payday loans are different from other types of loans. The main difference is the repayment process between the two.

Payday loans are fast, short-term loans where repayment is typically expected on the borrower’s next payday. Installment loans are more diverse and involve timely repayments over a longer term. An installment loan can involve monthly repayments over a term that can take years. Payday loan terms are usually between 2 and 4 weeks and will seldom go over one month in Canada.

Can I get an installment loan with bad credit?

Yes, there are plenty of installment loans for bad credit borrowers in Canada. You can even find bad credit long term installment loans online. Installment loans are a very diverse category, so there are countless options available.

When it comes to bad credit installment loans, you will have fewer options for lenders and you will also have to pay higher interest rates than a good credit borrower would.

Can I get an installment loan in Canada with no credit check?

Yes, it is possible to get no credit check installment loans. For example, someone who is new in the country may not have a credit history yet, and it doesn’t mean they cannot get an installment loan. The terms on the many no credit check installment loans vary widely in Canada. You should take your time to compare these lenders to find the best rate available.

What interest rates should I expect on an installment loan?

Installment loans come with as wide a range of interest rates as any other kind of loan. The rates you get will depend on your credit score and the type of lender you go to.

Installment loans are harder to get from banks, but they may offer interest rates of under 4% to the most qualified borrowers. Bank installment loan interest rates typically range from 4%-7%.

If you need faster approval and/or want a less judgemental lender, Canadian alternative lenders offer a wider range of interest rates. Typical installment loan interest rates range from about 6%-13% in Canada, assuming you have an average or higher credit score. Bad credit installment loans have the widest range of interest rates. If you’re not careful, you can get an APR of over 40%. However, you have many options to choose from regardless of your credit score.

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