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You can get a personal loan for almost any reason, and whether you need to catch up on overdue bills, cover an emergency expense, or pay for a major purchase, Smarter Loans can help you find the best personal loan rates in Canada. We will connect you with personal loan lenders who are able to help you, no matter your financial situation. Pre-apply online now, or check out our roster of private lenders for personal loans in Canada to find the best rate for you.
To Find out the total cost of a personal loan & monthly payments, please use our personal loan calculator.
Getting personal loans in Canada has never been easier thanks to the availability of online personal loans and the streamlined application processes they offer. You can shop for the best personal loan rates and the most trustworthy lenders from the comfort of your own home, even connecting with private loan lenders to access the best deal. All you need to have on hand is:
Depending on the lender you choose, you may also need some financial situation, such as:
With just these items, you can access online personal loans in minutes.
Personal loans in Canada are available to residents in all parts of the country, so no matter if you live in Newfoundland or British Columbia, you have multiple lenders to choose from. This includes online personal loan lenders, private loan lenders, and more traditional lenders such as your local bank or credit union. Personal loans from all of these lenders can be used for any purpose, so you really can shop around to find the best personal loan rates. In addition, if you need a personal loan for a specific purchase, such as a car, then you may also be able to access loans from dedicated lenders, like auto loan companies and auto dealerships.
There are two broad types of personal loans in Canada: secured personal loans, and unsecured personal loans. A secured personal loan (or title loan) is “secured” by putting up an asset (like your house or car) as collateral in the event you can’t repay the money you owe. If you default on the loan, the asset can be seized by the lender as payment. Because secured loans are considered less risky by lenders, you can often borrow a larger sum of money at a lower interest rate, or get approved even when you have a poor credit score. The best personal loan interest rates in Canada are for secured loans.
In contrast, an unsecured personal loan requires no collateral. Because they are considered riskier to loan lenders, unsecured personal loans tend to be for smaller amounts and have higher interest rates and stricter payment schedules than secured loans. They are still widely available though; in fact, they are more common than secured personal loans, and most online personal loans are unsecured. But if you’re worried about securing the best personal loan rates in Canada, a secured loan may be your best option.
Within these two broad types of personal loan there are many sub-types; all of the following are types of personal loan:
One of the reasons personal loans are so popular is that loan amounts are so varied. You can borrow as little as $100, or as much as $100,000 – as long as you qualify for the loan you apply for. Larger loan amounts are subject to greater scrutiny and may require better credit, higher income or collateral.
Many personal loans in Canada can be used for almost any purpose; most common amongst the reasons for getting a personal loan are: debt consolidation or debt restructuring (as personal loan interest rates are often lower than the interest rates on credit cards and other debt instruments); home improvements; weddings; vacations; tuition; medical bills; vehicle purchase or repair; startup capital for a business; emergencies; and other bills and expenses. As long as you make your loan payments on time, and are not engaging in anything illegal or otherwise violating the conditions of your loan, you can use the funds from your loan however you want. This is true of payday loans, home equity loans, guarantor loans, emergency loans, personal lines of credit, home equity lines of credit, bad credit loans, and installment loans.
However there are some personal loans that are use-specific. For example, an auto loan is a type of personal loan, but it is specifically designed to be used for a car purchase. A boat loan must be used for a boat. A debt consolidation loan must be used to pay off other debts. A home repair loan must be used for home repairs. To be sure you always get the right personal loan for your needs, check the lender’s conditions before you apply.
Personal loan interest rates in Canada are calculated using a combination of borrower-specific data – such as income, credit score, collateral, other debts and so on – and macroeconomic factors – such as central bank rates, inflation rate, etc. This means that not every borrower will be able to access the same personal loan interest rates, and the same borrower may see different rates at different times depending on what’s going on in the wider economy. Annual interest rates (APR) on personal loans can be as little as 5%, but may be as high as 40% or more. To find the best personal loan rates in Canada for you, right now, it’s best to shop around and compare lenders, including online personal loan lenders.
Most personal loan lenders will consider the following when deciding on what interest rate to offer:
The higher your income, the easier it will be to qualify for a personal loan, and the better your interest rate will be.
Salaried employees usually have an easier time getting approved and accessing competitive loan rates than someone who’s self-employed or a contract worker.
If you pay alimony, spousal, or child support, these amounts will be factored into your application. Alternatively, if you receive support, counting it as income could help you qualify for better loan terms.
In general, the better your credit score, the easier and cheaper it will be to get a loan. Those with the best credit can access the most competitive financial products.
If you own a valuable asset – like property – you can use this as collateral to secure better loan terms.
Finding the best personal loan interest rates in Canada starts with understanding your financial position and what type of personal loan will work best for you. Not every loan is suitable for every person or every circumstance. If you have bad credit, then looking at bad credit loans will get you a better loan rate and higher chance of approval than a standard personal loan. If you need money to buy a car, then an auto loan may offer you a better rate than an installment loan.
Once you know what to look for, you can compare loan offerings and rates across lenders. Check out online loan lenders, private lenders of personal loans, and other providers of small loans in Canada. And remember that the cheapest rate does not necessarily mean the best loan for you; always take into account the lender’s fees and reputation too.
With so many personal loans available in Canada, it’s important to know how to pick the best product for you. When comparing your different loan options, remember to look at:
You must choose a loan that suits your purposes and that is affordable throughout its term. For example, a loan with a variable rate of interest might seem affordable now, but if rates go up it could become much more expensive, so you need to consider whether you’d still be able to afford it in the future. Only ever apply for what you need and what you think you will be able to afford, even in changing circumstances.
As well as comparing loan terms, you also need to consider factors related to personal loan lenders – such as reputation. Look at how long the lender has been in business. Are they trustworthy or proven in the market? What do past customers say of their customer service? What are their fees like, and how transparent are they about their terms and conditions? A really great interest rate on a personal loan might seem attractive, but if the lender has poor customer service or hides its terms, you may find yourself in trouble should you ever need help with your loan down the line.
Different personal loan lenders have different eligibility criteria for their products, so you always need to check with a specific lender to see if you qualify for a loan from them. However, there are several hard and fast rules about who can get personal loans in Canada. All loan applicants must:
Other factors, such as income, credit score and so on will affect your chances of loan approval, but without the three factors above, you won’t have any options.
Amy Orr is a professional writer and editor with over 10 years of experience in the Canadian, U.S. and U.K. financial markets. She has written for numerous publications on topics as diverse as economic literacy, corporate finance, and technical analysis of numerical data. Prior to transitioning to full-time writing, she worked in the hedge fund sector. Her academic background is astrophysics, and she has a Masters in Finance from the University of Edinburgh Business School.
Jenna West is Smarter Loans' in-house financial writer and content director. She has been covering the Canadian FinTech and finance industry since 2017, including financial trends analysis, industry surveys, regulatory updates and changes in Canadian consumer behaviour when it comes to finance.
