Compare Personal Loans in Canada in 2018
In an ideal world, you’d never need to borrow money. But we all fall a bit short once in a while. A personal loan can be the safest and least costly way of closing your financial gaps.
Personal loans in Canada are made only to individuals, and most banks and lending companies have conditions about what you can use a personal loan for. There are different types of personal loans, including secured, unsecured, and reverse loans (explained below). Personal loans can have terms and interest rates that vary widely, so read our personal loans comparison for the best personal loan rates in Canada.
Best Personal Loans in Canada in 2018
|Loan Type||Cash secured savings loan||Unsecured||Unsecured and secured||Unsecured loan referrals||Unsecured debt consolidation loans|
|Loan Term||36 or 60 months||3 & 5-year terms||6-60 months for unsecured, 36-120 months for secured||Up to 3 months||36-60 months|
|APR Range||7.26% to 29.95%||5.6%-25%||19.99%-39.99%||28%-32%||Unspecified|
|Minimum Credit Score||None||660+||None||None||None|
|Minimum Income||None||None||None given||None||None|
|Funding||From 24 hours||24-36 hours||Up to 24 hours||Within 24 hours||A few days|
|Closing/Origination Fees||$200-$400||1-5%||Unsecured loans: none. Secured loans: variable||Variable brokerage fee||Unspecified|
|Early Payment Fees||N/A||None||Unsecured loans: none. Secured loans: variable||None||None|
|Learn more||Learn more||Learn more||Learn more||Learn more|
Why Get a Personal Loan?
There are many reasons why you might opt to take out a personal loan:
- To make a down payment on a new home
- To consolidate credit card debt
- To pay for a vacation or a wedding
- To cover medical expenses
- To replace expensive household appliances
- To buy a car
- To fund home repairs or improvements
Who Is Eligible for a Personal Loan?
To be eligible for a personal loan in Canada, you must:
- Be over age 18
- Be a resident of Canada
- Be the owner of a bank account
- Have proof of identity, like your driver’s license, photo ID or passport
- Have proof of residence, i.e., a recent utility bill
- Have proof of income, like recent pay stubs
- Have proof of your regular monthly expenditure, such as mortgage or rent payments, utility costs, etc.
- Have some kind of Canadian credit history
Meeting the above requirements makes you eligible for Canadian personal loans in general. But to get the best interest rates and conditions, you’ll need:
- A credit score that is average to excellent – ideally over 650
- A low debt to income ratio, namely the percentage of your income that goes toward paying debt – your debt to income ratio should be below 36%
- No history of bankruptcy
Personal Loan Interest Rates in Canada
When you compare personal loan rates to credit card rates, personal loan rates are almost always lower. Our recommended lenders have personal loan rates that begin at 5.6%. In contrast, average credit card rates begin around 20%. Of course, interest rates for personal loans can vary widely, so it’s important to compare personal loans in Canada.
Types of Personal Loans
These are ‘unsecured’ because you don’t put up anything as collateral to guarantee the loan. If you default on payments, you don’t risk losing your collateral, but you generally need a better credit score and will pay slightly higher interest rates for an unsecured loan.
For a secured loan, you’ll have to put something up as collateral such as your house, your car, or valuable jewelry. Secured loans often have lower interest rates, but you risk losing your collateral if you can’t make the loan payments.
Reverse Loan/Cash Secured Savings Loan
A cash secured savings loan is often called a ‘backwards loan,’ because you deposit the amount that you eventually want to borrow and then can withdraw that amount as a loan later . A reverse loan helps you build your credit score fast while saving a lump sum at the same time.
Compare Personal Loans in Canada
Borrowell provides fast unsecured personal loans of up to $35,000 with interest rates starting at just 5.6%. There are no prepayment fees and no loan fees apart from an origination fee, which is between 1-5% of your loan amount.
To take out a loan through Borrowell, you’ll just need to apply for your credit score through the Borrowell platform and share some information. Your chances of a successful approval can be increased significantly by making sure you meet the following requirements prior to application:
- Your credit score is above 660
- You have no record of a bankruptcy or consumer proposal
- You have no active collection or current delinquencies on file
- You have a minimum 12 months of Canadian credit history
- You’re not a resident of Quebec or Saskatchewan
If you’re eligible, you’ll receive a quote from Borrowell. All you’ll have to do is accept the quote, send proof of income, and verify your bank account – all online. If you’re not eligible, Borrowell sends suggestions of trusted partners who might be able to help you out.
Approved applicants will see the loan amount in their bank accounts as soon as the next business day.
Refresh Financial is a direct lender that offers only cash secured personal loans, also known as reverse loans, with APR rates of 7.26% to 29.95%. Its aim is to help you rebuild your credit and save money along the way so that you can qualify for the very best interest rates on unsecured personal loans, mortgages, or car loans after your Refresh Financial loan ends. You don’t have to have a good credit score or particular income level to qualify and you can set your loan amount of $1,200, $2,300, $3,200, or $5,500 and agree on terms of 36 or 60 months with your loan advisor.
A Refresh Financial reverse loan is not the same as regular unsecured or secured loans. You don’t borrow a lump sum and then pay it back in installments. Instead, you begin by making regular monthly payments. These payments go partly towards a lump sum of savings, and partly to paying off a low level of interest. At the end of the loan period, you have a lump sum of your own money that you saved up, which you can then withdraw without the worry of having to repay it, and you also have an improved credit rating which shows that you made regular, on-time payments for a loan.
Fairstone is an online direct lender offering three types of loans—small unsecured loans up to $5,000, medium unsecured loans up to $20,000, or large secured loans up to $30,000. Fairstone’s unsecured loans have a term of 6 to 60 months, while the secured loan has a term of 36 to 120 months.
Fairstone’s interest rates can be fairly high—up to 36.99%—beginning at 19.99% for secured loans and 27.99% for unsecured loans. There are no fees on unsecured loans, although you might have to pay fees on a secured loan. To apply for a loan through Fairstone you’ll begin online, but you’ll need to complete the process over the phone.
LoanMeNow is a loan brokerage service that matches you with a direct lender who is best for your situation. You will have to pay a fee for the loan arrangement, and further fees are decided by the direct lender. LoanMeNow is also distinct in that it provides referrals for small loans of up to $1,000 with terms of up to 3 months.
LoanMeNow is ideal for anyone with poor credit, since qualification is based on income and not a credit score/history. It’s also fast, with funds deposited as quickly as within 24 hours. However, interest rates are between 28% and 32%, and there could be a lot of fees to pay depending on the direct lender you end up choosing.
Consolidated offers unsecured debt consolidation loans as part of its debt consolidation program. Consolidated isn’t a direct lender, and you don’t really get a new loan—instead, it’s a renegotiation of your existing loans into one single loan. You pay one monthly payment to Consolidated, and it will use that to pay all of your various debt obligations.
Consolidated negotiates with your existing lenders to lower your rates—generally by 6% – 10%—and reclaim some fees. Loan terms and amounts depend on your debt situation, but terms are usually from 36 to 60 months, and the expert debt counsellors help you to find the lowest possible rates.