Best emergency loans for bad credit in Canada
If you have bad credit, you are going to find it challenging to apply for a loan. Traditional lenders like banks and credit unions usually require a credit score of at least 650 to extend credit, and it’s easy to have a score lower than that if you’ve had a string of bad financial luck. Emergencies still happen, so if you find yourself needing an emergency bad credit loan, here are the best options in Canada.
Best emergency loan lenders in Canada for bad credit
| Lender | Best For | Interest Rate | Loan Term |
|---|---|---|---|
| Loans Canada | High loan limits | 1.99%-46.96% | 3-60 months |
| Loan Connect | Fast loans | 6.99%-46.96% | 3-120 months |
| LendDirect | No fixed term loans | 19.99%-46.93% | Open-ended |
| Mogo | Short term loans | 9.9%-46.96% | 6-60 months |
| LoanMeNow | No credit check | 28.00%-32.00% | 3 months |
| Fairstone | Lowest interest rates | 26.99%-39.99% | 6-60 months |
Loans Canada
Loans Canada is an online loan aggregator with access to a wide variety of financial institutions. All of the lenders have good reputations, and you can be confident that the emergency loan offer you receive won’t have unpleasant surprises. The best part about Loans Canada is that they work with various lenders, so there are no minimum credit requirements. Instead, you’ll submit your application and be matched with lenders that will work with your credit score.
◦ Loan amounts: $500 to $50,000
◦ Loan terms: 3 to 60 months
◦ Fees: Dependent on the final lender but usually 0.5% to 8% of the balance
◦ Interest rates: 1.99%-46.96%
Loan Connect
Like the lender above, LoanConnect is not a direct lender. Instead, they are a platform designed to connect you to dozens of lenders with a single loan application. LoanConnect works with a wide variety of lenders and provides emergency loans for almost every need. If you have bad credit, LoanConnect will match you to a lender that works with bad credit or doesn’t require a credit check. Applying for a loan through LoanConnect is easy as long as you are a Canadian citizen and you are the age of majority in your province.
◦ Loan amounts: $500 to $50,000
◦ Loan terms: 3 to 120 months
◦ Fees: Dependent on the final lender but usually $100
◦ Interest rates: 6.99%-46.96%
LendDirect
Instead of offering personal loans that you’ll pay off in monthly installments, LendDirect provides a revolving credit line. Revolving credit lines are similar to a credit card from a traditional bank. LendDirect can be ideal if you are looking for a credit tool that you can have on hand in case of emergencies because you can use it over and over again (as long as you keep paying it off). LendDirect offers lines of credit up to $15,000, and you’ll only pay interest on the money you use.
◦ Loan amounts: up to $15,000
◦ Loan terms: open-ended
◦ Fees: Not specified
◦ Interest rates: 19.99%-46.93%
Mogo
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Mogo is a Fintech company offering a wide variety of products, including personal loans from $300 to $35,000 with terms as short as 6 to 60 months (with no prepayment penalty). Mogo does not require a minimum credit score from its borrowers, though you do need to earn at least $13,000 per year to qualify.
The interest rates on these loans are highly variable, from 9.9%-46.96% per year, and if you have a bad credit score you can expect to pay on the higher end of this spectrum. Those with good credit scores who qualify for the lower end of that interest rate range will be referred to a company called Lendful, which is Mogo’s partner lender.
◦ Loan amounts: $300 to $35,000
◦ Loan terms: 6 to 60 months
◦ Fees: See Mogo
◦ Interest rates: 9.9%-46.96%
LoanMeNow
LoanMeNow can help if you need a small loan quickly without a credit check. LoanMeNow offers loans from $300 to $1,000 with a short payback term of three months. LoanMeNow promises to get you cash within 24 hours, so it could be an option if you are short on time. Because there is no credit check, LoanMeNow has higher interest rates between 28.00% to 32.00%. These high-interest rates mean that some other forms of credit like credit cards will be a better choice.
Loan amounts: $300 to $1,000
Loan terms: 3 months
Fees: Brokerage fee payable before the loan is finalized
Interest rates: 28.00% to 32.00%
Fairstone
Fairstone offers a range of products, from secured and unsecured loans to mortgages. If you need cash fast to cover an emergency, they offer unsecured loans up to $25,000 that you’ll pay back over 6 to 60 months. There are no fees to qualify for Fairstone, and you can qualify for a loan with a “fair” credit score. The interest rates for Fairstone loans are higher than traditional lenders, but you’ll receive your loan amount within 24 hours.
◦ Loan amounts: $500 to $50,000
◦ Loan terms: 6 to 120 months
◦ Fees: No
◦ Interest rates: 19.99%-39.99%
Summary: The best emergency loans for bad credit
(more columns to the right)
| Lender | Best For | Loan Amount | Interest Rate | Loan Term | Minimum Credit Score | Funding | Closing Fees | Early Payment Fees |
|---|---|---|---|---|---|---|---|---|
| Apply to Loans Canada | High loan limits | $500 to $50,000 | 1.99%-46.96% | 3-60 months | None | Within 48 hours | Varies | Varies by Lender |
| Apply to Loan Connect | Fast loans | $500 - $50,000 | 10% - 46.96% | 6-60 months | None | From 12 hours | Approx. $100 | None |
| Apply to LendDirect | No fixed term loans | Up to $15,000 | 19.99% | Open ended | None | 24-48 hours | Not specified | None |
| Apply to Mogo | Short term loans | $100 - $35,000 | 9.9% - 46.96% | 2 weeks - 60 months | 660 | 48 hours | 1% | None |
| Apply to LoanMeNow | No credit check | $300 to $1,000 | 28.00% - 32.00% | 3 months | None | 24 hours | Brokerage Fee | None |
| Apply to Fairstone | Lowest interest rates | $500 to $50,000 | 19.99%-39.99% | 6-120 months | Fair-Good | 24 hours | None | None |
How did we choose these brands?
The brands we’ve chosen above are lenders that specialize in lending to Canadians with poor credit or specialize in connecting Canadians with poor credit to the appropriate lenders. Here are the criteria we used:
- Eligibility: Traditional lenders do not work with Canadians who have a credit score under 650. The lenders we’ve listed above will work with you even if your score is below this threshold.
- Reputation: There are many alternative lenders with a reputation for bad practices, hidden fees, and pushy sales tactics. These lenders have good reputations and have been in the marketplace for some time.
- Ease of use: If you need money quickly, you’ll want to use a company with an online application process and quick approvals. The lenders above are available online and will deposit money in your bank account within two business days.
- Transparency: Hidden fees are a huge issue with some alternative lenders. The lenders we’ve chosen above clearly outline their fees and interest rates on their website, so you know what you are getting before you even apply.
- Early payback: While you might be in crisis and need access to cash now, you may have the means to pay back your loan ahead of schedule to minimize the interest costs. All of the lenders above allow early payback with no penalties.
What can I use an emergency loan for?
Emergency loans are deposited into your account as cash, so you can use the money for any purpose you want. That said, the interest rates on these loans are very high, and you should only use them as a last resort for a real emergency. Here are some examples:
- Emergency car repair if transit is not an option
- Emergency vet visit for life-threatening injury/illness
- A deposit on an apartment if you are exiting an untenable living situation
- Spending money for unexpected job loss before employment insurance activates
- Emergency home repair visits before home insurance can payout
There is a common denominator in all of these situations: you need cash immediately to remedy an urgent, unavoidable need. Due to the high interest rates associated with these loans, you should not use them unless there are no other options, and you need the cash to maintain your basic security (for example, shelter, food, and heat).
How will an emergency loan impact your credit score
If you take out an emergency loan and faithfully repay it, the loan may improve your credit score when the lender reports those faithful repayments to the Canadian credit bureaus. In this respect, an emergency loan can be beneficial to your finances overall. However, keep in mind that if you don’t make your payments on time or go into default on your loan, your credit score will be negatively affected. For this reason, you must be sure you can afford to pay back the loan before you sign the paperwork.
How to apply for an emergency loan
When you apply for an emergency loan, you’ll need to visit the lender online and submit an initial application. This application will include basic details like:
- Your name, address, and email address
- Your employment information
- Information about your debts
- How much you’d like to borrow
- Consent to perform a soft credit check (will not impact your credit score)
Once your loan is pre-approved, you’ll be contacted by your lender and asked for some of the following documentation:
- Photo ID
- A void cheque to a Canadian bank account
- Income verification (via pay stub or employer letter)
- Bank statements for the previous 60 days
After that documentation is submitted, your loan will be approved, and you’ll need to sign the loan offer paperwork. After the loan paperwork is signed and returned, you’ll receive the funds in your bank account within 24-48 hours.
Alternatives to an emergency loan
If you need cash quickly and have bad credit, many traditional avenues for cash may not be available. You may be denied common cash sources like a personal line of credit or home equity line of credit. Here are some other options:
- A secured line of credit: A secured line of credit uses collateral such as a car to secure your loan. Because it is secured, it is less risky, so you may still qualify even if you have bad credit.
- Credit card cash advance: A cash advance on a credit card gives you instant cash from an ATM with no need for loan approval. Cash advances start accumulating interest right away, and the interest rate is often higher than your purchase interest rate, so pay it off promptly.
- A personal loan from family: If you can borrow cash from a friend or family member, that will be the lowest interest option for you. Be sure you can pay the loan back. Otherwise, you could permanently damage your relationships.
The bottom line
Needing access to cash quickly when you have bad credit is a stressful situation. In these cases, it can feel like there is nowhere to turn except costly payday loans. But other options will help you get the cash you need and get back on your feet quickly, without subjecting you to the sky-high interest rates designed to keep you in debt forever. If you can’t access any of the alternative options we’ve mentioned above, then these emergency loans for bad credit will quickly get you the cash you need. Just make sure to plan to pay the loan back in full, on-time, or ideally ahead of schedule.
FAQs
Jordann Brown is a freelance personal finance writer whose areas of expertise include debt management, homeownership and budgeting. She is based in Halifax and has written for publications including The Globe and Mail, Toronto Star, and CBC.
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