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The Best Personal Loans for Bad Credit in Canada
Your credit rating affects more aspects of your life than you might think. Just when we need financial aid the most - for the down payment on a house, a vacation, or getting our finances in order - we realize how difficult it is to get a bank loan with credit in the red.
Thankfully, bad credit loans in Canada are not that challenging to get. There are plenty of providers competing to offer Canadians the best service possible in this market.
We’ve compiled a list of the top lending companies for this niche and reviewed their services. Read on to learn more about what they offer.
Best Bad Credit Loans in Canada in May 2024
Loans Canada
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Loans Canada offers up to $35,000 to potential borrowers, and has a broad base of lenders to choose from. With its APR starting from just 2.99%, it is one of our favourite picks for Canadians searching online for a bad credit loan. Read more
- •Low interest rates
- •Excellent search platform
- •Quick access to cash
LoanConnect
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
LoanConnect is a Toronto-based company founded in 2016. Its service is available to all Canadians trying to relieve their financial troubles using loans for bad credit. Read more
- •High loan amounts
- •Fast approval
- •No credit score requirements
Mogo
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Mogo is a Canadian online lender founded in 2003. It gives customers a chance to test its services before fully committing to a loan. Read more
- •User-friendly platform
- •100-day test drive
- •Monitors your credit ratings
Spring Financial
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Spring Financial is a lender that has been offering Canadians bad-credit-loan online solutions since 2014. Read more
- •No collateral required
- •Credit-building loans
- •No prepayment penalty
Loan Away
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Loan Away is a Canadian online lender active since 2015. Its business niche is small to medium-sized credit loans. Read more
- •Fast and easy approval
- •High approval rates
- •Available for requests 24/7
Best Personal Loans For Bad Credit in 2024:
Loans Canada - Best for Low Interest Rates
LoanConnect - Best for High Loan Amounts
Loan Away - Best for Fast Loan Approval
Spring Financial - Best for Unsecured Loans
Mogo - Best for Fair Credit Borrowers
Detailed Reviews of Bad-Credit Personal Loans
Loans Canada Review
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Loans Canada has been in business since 2012. It owes its success to flexible loan amounts and a wide choice of lenders.
The thing that lands this company on any list of top bad credit loans in Canada is a starting APR rate of 2.99%. Those tempting figures are provided via a robust platform that does the searching for you and connects you to the perfect lender.
Applying and getting a loan with Loans Canada is relatively easy. Your application will be reviewed and preapproved in a matter of minutes. There are no requirements in terms of credit score or income.
Once you choose a lender appropriate to your needs, the loan will get approved in 48 hours in most cases, and you’ll get the money in one business day.
Loans Canada charges no service fees, although some additional costs might accompany the loan, depending on the lender you opt for. For example, you could be charged up to $45 per missed payment.
LoanConnect Review
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
LoanConnect is an auspicious choice for those looking for bad credit loans online. It provides a well-rounded service and has a base of very satisfied clients.
It is a BBB-accredited business with an A+ rating. We’ve taken a deeper look to figure out what makes LoanConnect so popular with its customers.
The first thing that sets LoanConnect apart from the competition is its wide range of borrowing amounts. It tops our list in this regard, as you can borrow up to $50,000. Some competitors might see this as too much of a risk, but LoanConnect’s lending policies inspire confidence in its borrowers.
Also, you can use the loan for anything you need, be it home renovation, a vacation, medical expenses, or debt consolidation.
One of the benefits of looking for a loan for bad credit online is the quick and easy access to cash. You just need to be the age of majority in your province and give proof you are a Canadian citizen or a permanent resident. LoanConnect’s service will get you preapproved quickly, and you can expect the funds to be in your account in the next 24 hours.
The rates start at 8.99%, which isn’t the lowest on this list. On the plus side, the service is free, with no maintenance or origination fees attached. However, be advised that, although LoanConnect’s service is free, some of the lenders it connects you to might charge an origination fee.
Mogo Review
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
If your search for online loans in Canada with bad credit is giving you trouble, Mogo could be an excellent place to start looking.
What sets this provider apart is its excellent and user-friendly platform, competitive rates, and vast borrowing amount range.
Mogo lets you “test drive” its loans. You can withdraw from a deal after 100 days and pay back the principal, and Mogo will return all the fees or interest you have already paid. We haven’t found a similar deal with any competitors, so this is the company’s strongest selling point.
Rates range from 9.9% to 47.42%, meaning that with a better credit score, you will have access to better deals.
You’ll need at least $13,000 in annual income to open an account. Also, you’ll need to have a steady income for at least 30 days; not all income types are accepted.
The only downside to Mogo’s offer, compared to some other providers for bad credit loans found online in Canada, is the required minimum credit score of 500.
Overall, Mogo is a reliable, user-friendly platform that goes out of its way to provide good service to its customers. Its unique features set it apart from the competition, and if you're looking for a well-rounded service, this just might be it.
Spring Financial Review
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Spring Financial is another online lender specializing in loans for bad credit in Canada.
This service will review your application in a matter of minutes, and promises same-day funding, paid directly to your account. The loans are open, which means you can pay them back anytime in the 9-to-60-month timeframe without additional fees.
The possible borrowing amounts go up to $15,000, and the APR is higher than you would have to pay with many banks, starting at 17.99%.
On the downside, Spring Financial may contact your employer before granting you a loan. We know this can raise some concerns, but the service claims it does not reveal any sensitive information during the process.
The company offers a credit-building loan called the Foundation. It will improve your rating and make you eligible for loans with lower APR, but requires that you make regular payments, with interest fees, for 12 months before receiving the funds back as savings.
You might get offered to pay for loan insurance, which will secure the lender in case you are unable to provide the payments, but this is entirely optional, and probably not your first concern when on a budget.
In the end, Spring Financial offers slightly better rates than some other providers for bad credit loans in Canada. The size of the loans and the open-ended, fee-free loan terms are its main selling points.
On the other hand, we noticed several features that could prove to be more in the company's interest than the client's, like the loan insurance and employment checks. Whether these are concessions you’re willing to make is up to you.
Loan Away Review
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Loan Away is a provider of bad credit loans specializing in smaller loan amounts.
Its platform is easy to use, efficient, and boasts a high approval rate: Over 80% of requested loans get approved. And you don’t have to wait long either, as its agents review the applications in real-time, seven days a week.
You can get approved within minutes and have the funds transferred to your account within 24 hours. The available loan terms are average but sufficient for most borrowers, as the company’s loans only go up to $5,000.
With smaller loan amounts, the company can afford to give loans to clients with a high-risk credit profile. There is no minimum credit rating to qualify; you just need to be of majority age, so an ID and proof of employment are all that’s required. What’s more, you can get a loan with a bankruptcy on your record, as long as it is no longer active.
With a limited loan amount range and starting interest higher than average at 19.9%, Loan Away is not going to be right for everybody. It will work best for those who need smaller amounts for quick funding with short repayment terms.
How to Get a Loan With Bad Credit
Personal loans may seem out of reach for those with subpar credit ratings, but not all is lost: This short guide will inform you about the critical elements of a bad credit situation, what it is, and how to fix it.
Financial stability may be closer than you think!
What Is Considered a Bad Credit Score?
Before you start applying for personal bad credit loans, you’ll want to know your exact score. Canadian credit scores range between 300 and 900. Generally, credit scores over 650 are good, and those over 750 are seen as excellent. If you have a credit score below 650, you would be considered a riskier client and would experience difficulty getting reasonable rates with a bank loan. If your credit is below 550, you might get outright rejected for a loan with most traditional lending institutions.
Transunion and Equifax are the main credit bureaus in Canada, but they have different scoring systems, and it’s a good policy to keep track of your score with both. If you want to know more about what a good credit score in Canada is, you can read about it in our guide.
A number of factors contribute to your credit score, including your payment history, the amount of debt you have, and the length of your credit history. If you have a bad credit score, you can do a few things to improve it. Paying your bills on time, maintaining a good debt-to-income ratio, and regularly using credit can all improve your standing over time.
What to Expect When Seeking a Bad Credit Loan
For starters, you should expect to pay a higher APR than people with good credit. Lenders will see you as a bigger risk and want to protect themselves by charging more interest. You may also be required to provide collateral for your loan. This means putting up something of value, like your home or car, as security to be repossessed by the lender in case you can’t repay the loan. Finally, you might not get approved for high borrowing amounts.
Also, you will probably have a shorter loan term than people with good credit. This is because lenders want to minimize their risk with borrowers of dubious eligibility by getting their money back sooner rather than later.
How to Get a Bad Credit Loan
When it comes to getting loans with bad credit approved, the easiest way is to get a secured, joint, or cosigned loan.
Secured loans require something to be held as a guarantee for the debt. The lender may ask for your home, car, or life savings as collateral.
Some companies will allow a person with bad credit ratings to get a consigner and secure a loan that way, as the cosigner will then be responsible for repayment if you default on your loan. Of course, there’s also the option of improving your own credit rating first, but that might not be possible if you need quick funding.
How to Improve Your Chances of Getting a Loan
There are a few things you can do here: First, make sure all your financial documentation is in order. This includes tax returns, pay stubs, and bank statements. Having this information readily available will show lenders you're serious about repaying your loan.
Second, try to get a co-signer for your loan. As mentioned, this is someone who agrees to repay the loan if you default on it. Having a co-signer with good credit will help you get an online loan for bad credit approved. Finally, make sure to shop around and compare offers from multiple lenders.
How We Evaluate Personal Bad Credit Loans in Canada
We thoroughly researched the Canadian loan market to find the best among loan companies offering bad credit borrowing. Here are the factors we took into consideration:
Loan Type
There are two most common types of personal loans for bad credit in Canada: unsecured and secured. Unsecured personal loans don't require collateral, while secured personal loans do, and we took both into account.
Also, we wanted to know if lenders restrict the use of loans for bad credit to only specific purposes. We preferred companies that allowed customers to use loans for all legal purposes, including medical expenses, home renovation, vacation, or debt consolidation.
Loan Amounts and Terms
The second thing we looked at was each company's loan amounts and terms. We wanted to ensure the lenders on our list had various options for borrowers. Companies with flexible terms that offered loans with no prepayment penalties were highly appreciated.
The lenders on our list offered online bad credit loans ranging from $1,000 to $50,000 with terms from several weeks to five years. The shorter the term, the higher the monthly payment, but the lower the total interest paid. The longest terms result in the lowest monthly payments, but the highest total interest paid.
Interest Rates and Fees
Competitive interest rates are essential for keeping your loan affordable, especially with non-stellar credit scores. We compared the starting rates of each lender on our list to ensure they were aligned with the industry average. The best personal loan companies offer rates much lower than the average interest rate, which is currently 6.72%.
Additional Fees
We also looked at the fees each lender charged. Some companies on our list did not charge any origination fees, while others charged up to 5%. Other expenses you might encounter when applying for bad credit loans in Canada include prepayment penalties, late payment fees, and annual fees. When choosing a personal loan, make sure to read the fine print, so that you are aware of all the costs you may be charged.
Turnaround Times
Nobody likes waiting for their money. We looked at how long it took for each lender to deposit funds into a borrower's account after the loan was approved. Processing times can be longer if you are applying for a loan with bad credit.
Application Process
The application process should be quick and easy. We looked at how long it took to complete an application and how easy it was to find the information we were looking for. We also considered whether a lender required a hard credit pull, which harms your credit score.
Unlike traditional banks, most lenders on our list offered straightforward online applications with soft credit checks.
Eligibility Requirements
Last but not least, we looked at each lender’s eligibility requirements. We wanted to make sure borrowers with varying credit profiles would be able to find a suitable loan. What is the minimum income required? Does the lender require proof of employment? What documents do I need to apply? We considered all these factors when determining the best personal loans for bad credit in Canada.
FAQ
What is the easiest loan to get with bad credit?
Secured loans, as well as joint and cosigned loans, are the easiest way to get a bad credit loan in Canada. Secured loans require a specific type of collateral to serve as a guarantee for the lender. Joint and cosigned loans can improve your chances of securing a loan if your partner has a better credit rating than you.
How can I borrow 10,000 with bad credit?
If you have bad credit and are looking to borrow $10,000, a few options are available. One option is to take out a personal loan from a lender specializing in bad credit loans. These lenders will typically charge higher interest rates than traditional banks, but they may be willing to work with you if you have a steady income and good repayment history.
How can I get a loan with bad credit in Canada?
If you’re not eligible for a loan from traditional lenders, like banks or credit unions, you should know some lenders specialize in bad credit loans in Canada. The average Canadian credit score is 650, and it’s below this point that most banks will consider a loan high-risk and might not approve it. If that’s you, these alternative lenders might be worth a shot.