A personal loan gives you one lump sum that you repay in fixed instalments over a set term, at a fixed or variable rate. The Financial Consumer Agency of Canada (FCAC) notes that most personal loans range from $100 to $50,000, with terms between 6 and 60 months. Where you borrow makes the biggest difference to what the loan costs: the big banks quote a rate only after a credit check, credit unions set their own terms for members, and online lenders and marketplaces serve a wider range of credit scores at higher rates. This page compares those lenders, explains how they decide, and lists the fees and checks to go through before signing. The rest of our personal loans and lines of credit guides cover calculators, bad credit borrowing and specific loan types.
Personal loan lenders in Canada compared
| Lender | Rate | Loan amount | Term | Type |
|---|---|---|---|---|
| RBC | Not published, quoted after application | $1,000-50,000 | 1-5 years | Unsecured |
| TD | Not published, quoted after application | $2,000-50,000 | 1-5 years | Unsecured |
| BMO | Not published, quoted after application | $2,000-50,000 | 1-5 years | Unsecured |
| Scotiabank | Not published, quoted after application | $1,000-50,000 | 1-5 years | Unsecured |
| CIBC | Not published, quoted after application | $2,000-50,000 | 1-5 years | Unsecured |
| Credit unions | Set by each credit union | Varies | Varies | Unsecured or secured |
| Loans Canada, LoanConnect (marketplaces) | 8.99-35%, depending on the matched lender | $1,000-50,000 | 3 months-10 years | Online |
| easyfinancial | Up to 35%, the legal maximum | $500-25,000 | 1-5 years | Alternative lender |
The big banks don’t publish personal loan rate ranges: each applicant gets an individual quote after a credit check, so the only way to compare them is to get quotes. Credit unions are member-owned and are regulated provincially, so their products and disclosure rules differ from the federally regulated banks. Marketplaces such as Loans Canada and LoanConnect are not lenders themselves: they pass one application to several lenders and show the offers that come back.
At the high-cost end, no lender may charge more than 35% a year once all fees are included. Our guide to bad credit loans explains how that criminal rate cap works and which lenders serve lower credit scores. A loan backed by a car, savings or a GIC usually costs less than one with no collateral; secured loans explains the trade-off.
How lenders decide: personal loan eligibility
FCAC lists what lenders generally ask for: proof of a regular income, a bank account and a permanent address. Most lenders also run a credit check, and they look at the debts you already carry, because your credit report, credit score and existing debts affect both whether you’re approved and the rate and type of loan you’re offered.
In practice, lenders weigh four things:
- Credit history and score. Bank personal loans are generally aimed at borrowers with good credit, often a score in the mid-600s or higher. Below that, the options move toward credit unions, online lenders and bad credit lenders.
- Income and its stability. Salaried applicants show pay stubs; applicants without T4 income show tax assessments and bank statements, as described in personal loans for self-employed Canadians.
- Existing debt payments. Lenders compare your monthly debt payments with your income. Our guide to the debt-to-income ratio shows how it is calculated.
- Collateral or a second borrower. Pledging an asset or adding a co-signer can help an application that falls short on its own, though a co-signer takes on the full debt; see co-signing a loan for what that commits them to.
Getting quotes without hurting your credit
Many online lenders and marketplaces show an estimated rate after a soft credit check, which doesn’t affect your score; the formal application that follows triggers a hard check. Personal loan pre-approval explains what an estimate does and doesn’t promise. If timing matters, same-day personal loans covers how quickly each lender type funds a loan and the warning signs of fast-cash scams.
What a personal loan costs: rate, term and fees
FCAC says the rate a lender offers depends on your credit history, the type of lender and whether the loan is secured or unsecured. The term matters too: a longer term lowers the monthly payment but adds to the total interest paid. Our personal loan calculator shows the payment and total interest for any amount, rate and term, with a table for $10,000 and $20,000 loans over five years.
Fees can add as much to the cost as a higher rate. These are the ones to look for in the agreement:
| Fee | What to check |
|---|---|
| Origination or administration fee | Whether it is charged up front or added to the loan, and whether it is included in the quoted APR |
| Prepayment fee | FCAC notes that some lenders charge a fee if you pay the loan off early; others allow it without a penalty |
| Insufficient funds (NSF) fee | What the lender charges if a pre-authorized payment bounces, on top of your bank’s own NSF fee |
| Late payment fee | The fee per late payment, and whether a missed payment changes the rate |
| Loan insurance | FCAC: you don’t have to take loan insurance with a personal loan. Creditor insurance offered at signing is optional and adds to the cost |
Checking that a lender is legitimate
FCAC lists what a federally regulated lender such as a bank must tell you when you take a personal loan: the amount of the loan, the interest rate and whether it is fixed or variable, the term, the payment amount, other fees and service charges, and any optional services you accepted. Lenders under provincial rules, including some credit unions, may not have to provide the same information, so it is worth asking for it in writing.
Before signing, these checks catch most problem lenders:
- The lender is licensed or registered in your province and gives a physical address you can confirm
- The annual percentage rate (APR), including fees, is disclosed in writing before you sign
- The APR is no higher than 35%, the criminal rate cap
- No fee is asked for before the money is released (an upfront fee, often by gift card or e-transfer, is the pattern of a loan scam)
- The total interest over the full term is shown, not just the monthly payment
- The agreement is one you can read and understand, and optional products are marked as optional
When a personal loan makes sense
A personal loan suits a known, one-time cost with a clear repayment plan. It works less well when the payment would squeeze an already tight budget.
| Situation | How a loan fits |
|---|---|
| Replacing higher-rate debt | Saves money only if the loan’s rate, after fees, is lower than the rates on the debts it pays off; our guide to debt consolidation works through the numbers |
| An essential purchase with no cheaper option | A car needed for work, a necessary appliance or a medical cost |
| Bridging a confirmed gap in income | Income that is certain to arrive, where only the timing is the problem |
| A planned renovation | A fixed amount and a fixed end date, for homeowners without home equity to borrow against |
| Discretionary spending | Interest raises the price of the purchase; saving first avoids it |
| Borrowing to make another loan’s payment | A sign of a debt spiral, the situation non-profit credit counselling is set up to help with |
| Payments already take a large share of income | A new payment leaves less room for every other expense and for future borrowing |
Personal loan, line of credit or credit card
A personal loan has a fixed end date, while a line of credit lets you borrow, repay and borrow again, and a credit card suits short-term spending that is paid off quickly. Our comparison of a personal loan vs a line of credit vs a credit card sets the three side by side, and line of credit rates lists what lenders charge for a personal line of credit. Choosing between just a line of credit and a credit card has its own guide. Homeowners can also borrow against their home at lower rates through a home equity line of credit; see HELOC rates.
Secured and unsecured loans
A secured loan is backed by an asset you pledge, such as a home, a car or savings, which the lender can take and sell if you don’t repay. An unsecured loan has no asset behind it: the lender relies on your income and credit history, and if you stop paying it has to collect through a collection agency or the courts. That difference decides how much the debt costs, how much you can borrow and what is at stake if repayment goes wrong. This page explains how secured loans work, the main types of secured and unsecured debt in Canada, and what happens on default. It is one of our personal loans and lines of credit guides.
Secured vs unsecured debt: the difference
| Secured debt | Unsecured debt | |
|---|---|---|
| Collateral | Yes, a specific asset named in the agreement | None |
| Cost | Usually lower, because the lender can recover its money from the asset | Usually higher, to cover the lender’s greater risk |
| How much you can borrow | Linked to the value of the asset | Linked to income and credit history |
| Lender’s remedy if you stop paying | Repossess or sell the pledged asset | Collections, then a lawsuit and a court judgment |
| Court order needed to take the asset | Not usually for the pledged asset, though rules vary by province and type of loan | Yes, before it can garnish wages or seize property |
| Examples | Mortgage, HELOC, car loan, car title loan, secured credit card | Credit card, most personal loans, unsecured line of credit, government student loans |
| Effect on credit if payments are missed | Reported to the credit bureaus | Reported to the credit bureaus |
How a secured loan works
- You pledge collateral: a property, vehicle, savings deposit, GIC or investment account.
- The lender registers its claim: a mortgage or charge on the land title for property, or a security interest in the provincial personal property registry for a vehicle or other assets.
- You receive the funds and repay them in the agreed payments of principal and interest.
- The lender releases its claim when the loan is fully repaid.
- If you default, the lender can take and sell the collateral, and you can still owe any shortfall if the sale doesn’t cover the debt.
Because the lender can fall back on the asset, it takes less risk, which is why secured borrowing generally costs less and allows larger amounts than unsecured credit.
Types of secured loans
- Mortgage. Your home is the collateral, and mortgages are the largest secured debt most households carry. If you default, the lender uses power of sale or a court foreclosure process, depending on the province; our guide to the mortgage foreclosure process explains each.
- Home equity loan or home equity line of credit (HELOC). Borrowing against the equity in your home, as a lump sum or a revolving line. A HELOC is secured against the home like a mortgage, so the lender can move against the property if it isn’t repaid; HELOC rates covers what lenders charge and how much you can borrow.
- Car loan. The vehicle being bought secures the loan, and the lender can repossess it if payments stop. Car loan rates compares lenders.
- Car title or car equity loan. A loan against a car you already own; see car title loans for how they work and what they cost.
- Secured line of credit. A personal line of credit backed by an asset such as a home or investments, priced between a HELOC and an unsecured line; line of credit rates compares the two kinds.
- Savings- or GIC-secured loan. A loan backed by money you deposit with the lender, often used to build or rebuild credit, since the deposit covers the lender’s risk.
- Secured credit card. A card whose limit is backed by a cash deposit; if you don’t pay, the issuer can apply the deposit. Secured credit cards explains how they help build a credit history.
Types of unsecured debt
- Credit cards are the most widely held unsecured debt. If you stop paying, the issuer reports the missed payments, may pass the account to a collection agency, and can sue.
- Personal loans are usually unsecured; personal loan lenders compared covers where to borrow and how lenders decide.
- Unsecured lines of credit are revolving credit with no asset behind them, generally available only to borrowers with good credit.
- Government student loans are unsecured but have their own rules in bankruptcy and their own repayment help; see what happens if you can’t pay a student loan.
- Tax debt owed to the CRA is unsecured too, but the CRA can collect without first going to court; see what happens if you don’t pay the CRA.
How the cost compares
Collateral is the main reason rates differ so much between products. Each product’s current rates are on its own page:
| Product | Collateral | Current rates |
|---|---|---|
| Mortgage | Home | Mortgage rates |
| HELOC | Home | HELOC rates |
| Car loan | Vehicle | Car loan rates |
| Secured or unsecured line of credit | Varies, or none | Line of credit rates |
| Personal loan | Usually none | Personal loan lenders compared |
| Bad credit loan | Usually none | Bad credit loans, up to the 35% legal maximum |
| Payday loan | None | Payday loans and alternatives |
What happens if you stop paying
Secured debt. The lender can enforce its security. On a mortgage or HELOC that means power of sale or foreclosure, usually after a period in which you can catch up on the arrears; any money left after the debt and costs are paid goes to you, and a shortfall can remain your debt. On a car loan or title loan the lender repossesses the vehicle and usually sells it at auction; if the price is less than the balance, you can owe the deficiency. Provinces set notice and court rules for repossession that differ by province and by how much of the loan you have repaid.
Unsecured debt. The lender reports missed payments to the credit bureaus, may assign or sell the debt to a collection agency, and can sue. With a court judgment, it can ask for your wages to be garnished or for a lien on property. Our guides to your rights with debt collectors and wage garnishment cover each step.
When there isn’t enough money for every payment, the consequences above shape which bills come first: missing a secured payment can cost you the asset, while missing an unsecured one damages your credit first. Our guide to what to do when you can’t pay your bills sets out an order to work through.
In a consumer proposal or bankruptcy the two kinds of debt are treated differently: unsecured debts are dealt with by the proposal or the bankruptcy, while secured lenders keep their claim on the asset, so keeping a house or car means keeping up its payments. The consumer proposal and bankruptcy guide explains the rules, including which debts survive.
When a secured loan fits, and the risks
A secured loan suits a large amount, a lower rate or a borrower whose credit alone wouldn’t qualify, as long as losing the asset would be survivable. The risks are the other side of the same coin:
- Losing the collateral. Default can cost you the home, car or savings you pledged, and you may still owe a shortfall.
- Borrowing more than you need. Lower rates and larger limits make it easy to take on more debt than the original purpose required.
- Turning unsecured debt into secured debt. Paying off credit cards with a HELOC or a car title loan lowers the rate but puts an asset behind debt that wasn’t secured before, and the paid-off cards can fill up again. Our guide to debt consolidation weighs that trade-off.
Personal loans when you’re self-employed
Lenders build their standard approval process around T4 income and pay stubs, so self-employed Canadians, sole proprietors, freelancers and incorporated business owners go through a different process when they apply for a personal loan. It doesn’t mean approval is out of reach, but the documents you bring and the lender you choose matter more than for a salaried applicant. This page explains why lenders look harder, which documents they accept, how banks and alternative lenders differ, and how to make an application stronger. It is one of our personal loans and lines of credit guides.
Why lenders look harder at self-employed income
A salaried employee’s income is easy to verify and predict: the same employer, the same pay stub, regular deposits. Self-employed income can vary month to month, is reported by you at tax time, and is reduced by business deductions, so the taxable income on your return is often lower than the cash you actually take in. Lenders account for that by asking for a longer income history and more documents before they rely on your numbers.
Documents lenders typically accept
| Document | What it shows | Who usually asks for it |
|---|---|---|
| Notices of Assessment (2 years) | Taxable income confirmed by the CRA | Banks, credit unions and most online lenders |
| Form T2125, Statement of Business or Professional Activities | Business revenue and expenses for sole proprietors | Banks and some online lenders |
| Business and personal bank statements (3 to 12 months) | Actual cash flow and how regular the deposits are | Online and alternative lenders, sometimes banks |
| Corporate financial statements | Business revenue when you pay yourself in dividends | Banks, and larger loan amounts |
| Contracts or invoices | Ongoing client work for freelancers and contractors | Some online lenders, as extra proof |
Banks vs alternative lenders for self-employed applicants
| Banks | Online and alternative lenders | |
|---|---|---|
| Self-employment history | Usually 2 years | Often 6 to 12 months |
| Documents | 2 years of Notices of Assessment, the T2125, often full returns | Bank statements, sometimes 1 year of Notices of Assessment |
| Speed | Slower, manual underwriting | Faster; some analyze bank statements automatically |
| Suits | Established businesses with strong documented income | Newer businesses, or income that varies but shows healthy cash flow |
If your business is new, or deductions make your taxable income look lower than your cash flow, a lender that reads bank statements directly may approve an application a bank would decline, usually at a higher rate. Personal loan lenders compared shows how each type of lender prices its loans, and many let you see an estimate first through a soft credit check, as explained in personal loan pre-approval.
What strengthens a self-employed application
- Two years of Notices of Assessment on hand, even if a lender doesn’t ask for both up front, speed up underwriting.
- Separate business and personal banking. Income is much easier to verify when personal spending isn’t mixed into the business account.
- Regular pay to yourself, as a draw, salary or dividend, reads as lower risk than irregular lump sums.
- Lower existing debt payments. Lenders compare your debt payments with your income, and may hold self-employed applicants to a tighter limit because income varies; our guide to the debt-to-income ratio shows the calculation.
- Collateral, when documents are thin. A vehicle, GIC or savings pledged as security can offset a lender’s doubts about income; secured loans explains how that works.
Personal loan or business financing
This page covers personal loans for personal purposes, such as consolidating debt, a large expense or home improvements, where you are the borrower. Financing for the business itself, such as equipment, inventory or working capital, is assessed mainly on the business; our guide to small business loans covers that route, including financing for sole proprietors. To estimate the payment on a personal loan you’re offered, use the personal loan calculator.
Pre-approval and soft credit checks
Pre-approval, sometimes called pre-qualification, lets you see an estimated rate and loan amount from a lender before you apply. Most online lenders and loan marketplaces base the estimate on a soft credit check, which doesn’t affect your credit score; the hard check comes only when you choose a lender and submit a formal application. That makes it possible to compare several estimates without the score cost of several applications, as long as you understand that an estimate isn’t an offer. This page explains how soft-check pre-approval works, what it confirms, and why the final rate can differ. It is one of our personal loans and lines of credit guides.
Soft check vs hard check
| Soft credit check | Hard credit check | |
|---|---|---|
| When it happens | Pre-approval or a “check your rate” estimate | A formal loan application |
| Effect on your credit score | None | Can lower it slightly for a time |
| Seen by other lenders | No | Yes, as an inquiry on your credit report |
| What it tells the lender | Your approximate credit tier | Your full credit history, for the final decision |
| Shopping around | As many estimates as you like | Several applications close together add several inquiries |
The difference between soft and hard credit checks explains how each appears on your report and for how long.
Which lenders offer soft-check pre-approval
Loan marketplaces show estimates from several lenders after a single soft check, and many direct online lenders offer a soft-check estimate on their own sites. The big banks more often go straight to a full application, though a branch may give an informal idea of what you’d qualify for, and credit unions vary. Personal loan lenders compared covers each type of lender and how it sets its rates.
If you aren’t sure whether a “check your rate” form uses a soft or a hard check, look for wording such as “won’t affect your credit score” near the form, or ask before you submit. Reputable lenders say so clearly.
What a pre-approval confirms, and what it doesn’t
A pre-approval gives you:
- an estimated rate or rate range for the credit tier the soft check places you in;
- an estimated maximum loan amount;
- estimated payments for different terms.
It doesn’t guarantee:
- the final rate, which is set only after the lender verifies your income and debts;
- approval, which depends on the hard check and the documents you provide;
- that the estimate will still stand if you wait; most expire after a few weeks.
From estimate to funded loan
| Step | What happens |
|---|---|
| 1. Pre-qualify | You enter your income, the amount you want and your employment; the lender runs a soft check |
| 2. Compare estimates | Rate, term and monthly payment side by side across lenders |
| 3. Apply formally | You submit identification, proof of income and banking details to one lender |
| 4. Hard check | The lender reviews your full credit history and confirms the final rate |
| 5. Sign the agreement | The APR, the fees and the repayment schedule are in writing before you sign |
| 6. Funding | Online lenders typically deposit the money within one to five business days after approval; same-day personal loans covers what speeds this up |
Why the final rate can differ from the estimate
- Income you couldn’t fully document. Income is self-reported at pre-qualification and verified only at the formal application. Applicants without T4 income face the most checking; personal loans for self-employed Canadians lists the documents lenders accept.
- Debts that weren’t in the estimate. The full report shows every obligation, which changes your debt-to-income ratio; our guide to the debt-to-income ratio shows how lenders calculate it.
- Details the soft check didn’t show. A recent late payment or collection can move you to a higher-risk tier.
If the estimates that come back are all at the high end, bad credit loans explains the options and costs at lower credit scores, and the personal loan calculator shows what each estimated rate would cost in total.
Pages in this section
Loans and lines of credit
- Lines of credit
- Line of credit vs personal loan
- Loan payment calculator
- Car loans and financing
- Car loan calculator
- Debt-to-income ratios
- Buy now, pay later