Best personal loans for bad credit
If you have ever been refused a loan or a credit card, declared bankruptcy, or failed to make payments on a debt, you likely are one of over 1 million Canadians with bad credit. Having bad credit can affect every area of your life: It makes it difficult to get approved for a credit card, take out a loan like a mortgage or an auto loan, or sometimes even get a job.
Best bad credit loans in Canada
You may think that having bad credit implies you don’t have a lot of choices for your personal loan. In truth, even with bad credit, you can apply for a loan or a secured credit card if your goal is to rebuild your credit. We’ve done our research and assure you there are plenty of lenders willing to approve bad credit personal loans in Canada. Here is our list of top loan companies for bad credit in Canada.
LoanConnect
Quick Facts
Eligibility requirements:
Be over the age of majority in your province
Be a Canadian citizen or permanent resident
You can be connected with a lender for any loan amount between $500 to $50,000 and get a reply about your loan application immediately. It takes only one minute to complete a loan application through LoanConnect, and the funds could come through within 24 hours. Even borrowers with bad credit, a consumer proposal, or bankruptcies can access an unsecured cash loan for any purpose with LoanConnect.
Click here to apply for a loan or learn more by reading our complete LoanConnect review.
Loans Canada
Quick Facts
Eligibility requirements:
Be over the age of majority in your province
Be a Canadian citizen or permanent resident
Bad credit doesn’t mean you can’t get a good personal loan. Canadians struggling with weak credit can look to Loans Canada, an indirect lender that helps connect potential borrowers to a series of the best bad credit lenders in the country for relief. Loans Canada offers bad credit loans and debt consolidation for those who would rather repackage their existing balances into a single sum—usually at a lower average interest rate. Bad credit borrowers can get approved for $500 to $50,000 and repay it in 3 to 60 months. The process of getting a quote, picking a lender, and accessing funds is quite simple and, in some cases, can occur in 24 hours.
Click here to apply for a loan or learn more by reading our complete Loans Canada review.
Loan Away
Quick Facts
Eligibility requirements:
Be at least 18 years of age
Be a Canadian citizen or permanent resident
Not have any active bankruptcy proceedings or consumer proposals
Be employed for at least the past three months
Loan Away offers unsecured personal loans of $1,000 to $5,000, repayable over 6 to 36 months The funds disbursed by Loan Away can be used for any purpose or expense you like, and although they don’t guarantee approval, they do accept over 80% of all loan applications. The application process takes as little as eight minutes to complete, and you could have the funds within 24 hours.
Loan Away provides loans to all provinces and territories, with some exceptions.
Click here to apply for a loan with Loan Away.
Easy Financial
Quick Facts
Eligibility requirements:
Be at least 18 years of age
Be a Canadian citizen or permanent resident
Own a verifiable bank account
Be in employment for at least the past two months
Easy Financial provides both unsecured and secured personal loans to Canadians, even if you have bad credit or previous bankruptcies. You can borrow up to $20,000 as an unsecured bad credit personal loan or up to $75,000 when you use your home equity as collateral to secure the loan. Easy Financial helps you rebuild your credit rating by reporting your on-time loan payments to the main credit bureaus. It also offers educational resources to help Canadian borrowers regain control over their finances.
Click here to apply for a loan with Easy Financial.
Prudent Financial
Quick Facts
Eligibility requirements:
Be employed full-time for at least the past six months in a business that has at least 10 employees
To be able to show computerized pay stubs with deductions
Earn a minimum income of $18/hour or $38,000 per year
Prudent Financial uses your car, home equity, or similar valuable item as collateral so that they can provide bad credit loans even for borrowers with consumer proposals or bankruptcy history. It has a high approval rate and usually processes your loan on the same day. If you’re self-employed or in collections, you can still be eligible for a loan as long as you have home equity or a paid-off car as collateral.
Click here to apply for a loan with Prudent Financial.
Tribecca Finance
Quick Facts
Eligibility requirements:
Be at least 18 years of age or older
Be a citizen or permanent resident of Canada
Tribecca offers secured personal loans for borrowers with bad credit, home equity loans, and first and second mortgages. You can use your car or other personal items as collateral for a personal loan or tap into the equity in your home. If you’re applying for a personal loan, you’ll need to earn at least $20,000 per year and have been discharged from any bankruptcy proceedings. For home equity loans and mortgages, the only requirement is that you own your property. Tribecca serves Canadians with bad credit in the greater Toronto area.
Click here to apply for a loan with Tribeca Finance.
Canadalend.com
Quick Facts
Eligibility requirements:
Be at least age 18 or older
Holding Canadian citizenship or permanent residency
Owning home equity
Getting a loan through Canadalend.com is easy, even for Canadians with bad credit. Your credit history doesn’t matter—all that matters is that you have equity in your home. Your home equity serves as collateral for your secured bad credit loan. Canadalend.com will fund first, second, and even third mortgages, even if you’re self-employed and have been refused by your bank.
Click here to apply for a loan with Canadalend.com.
Bad credit loan providers vs. banks
When you apply for your loan, the lender checks your credit history, which includes information like your credit score, whether you’ve declared bankruptcy in the recent past, and if you’ve defaulted on a debt. Sadly, very few Canadian banks will approve personal loans for those with bad credit.
Fortunately, the good news is that banks are no longer the only lenders in town. Today, Canadians who need bad credit loans can apply to a range of private lenders for personal loans in Canada. Unlike banks, which generally only lend money to applicants with high credit scores and perfect financial history, alternative lenders in Canada will often accept your bad credit loan application. Let’s look at some of the key differences between the way banks and alternative lenders approach personal loans:
- Some alternative lenders offer bad credit loans in Canada with guaranteed approval, even if you have a recent bankruptcy, a delinquent account, collections, or a consumer proposal on your credit history. You won’t get that from a bank.
- Many alternative lenders for bad credit loans in Canada can be found online. Because they don’t have to keep up expensive brick-and-mortar branches like banks do, they can afford to accept the risk of lending to borrowers with bad credit without charging exorbitant rates.
- Many lenders that provide bad credit personal loans in Canada have no credit check because they consider numerous factors when deciding whether or not to make the loan. A bank, on the other hand, will always check your credit score.
- Alternative lenders charge higher interest rates and fees on bad credit personal loans in Canada than banks because they’re taking on a bigger risk by approving your loan.
- You can get unsecured and secured bad credit personal loans in Canada with an alternative lender
Bad credit personal loans with no credit check
If you’re applying for bad credit personal loans with no credit check, you should still be prepared to answer some questions about other areas of your financial life. Bad credit lenders that don’t check your credit score still look at other factors to decide whether or not to approve your bad credit loan request. Here are some of the things that bad credit lenders could ask you about before approving your bad credit loan:
- Your average monthly or yearly income
- Your employment status and the size of the business where you work
- If you have anyone to co-sign your loan
- Whether you are currently going through bankruptcy
- How much debt you carry at the moment
Benefits of a bad credit loan
Even Canadians with bad credit can benefit from bad credit loans in Canada. Bad credit loans can allow you to:
- Rebuild your credit score – If you qualify for a bad credit loan and make your repayments in full and on time, you can gradually increase your credit score. After you’ve improved your credit score with a bad credit loan, you’ll be able to qualify for unsecured credit cards and get better rates on a mortgage.
- Access better interest rates – No matter what you do, you’ll be charged higher interest rates when you have bad credit, but some alternative lenders will offer lower rates than others. Keep an eye out for “payday loans,” which often have rates of several hundred percent.
- Borrow large amounts of money. Sometimes you need to borrow a large amount in a short space of time. Bad credit loans let you borrow up to several thousand dollars at once, so you can pay off a number of smaller loans, credit card debts, or handle an emergency expense.
What to look out for with personal loans for bad credit
You’ll need to do your homework when you apply for bad credit loans in Canada. Unfortunately, there are some dishonest and unreliable bad credit lenders, so look for these issues when you apply for a bad credit personal loan:
- Interest rates – Some lenders can charge exorbitant interest rates, so always check a lender’s maximum rates before applying for a loan.
- Fees – Always read all of the fine print before signing on a loan to check for high hidden fees.
- Penalties – Check what the penalties are if you miss a payment, make a late payment, or want to prepay on your loan amount/pay your loan off earlier than anticipated.
- Credit reporting – If you’re making regular repayments on a bad credit loan, it should go on record. Make sure that the lender reports to the credit agencies regularly so that your responsible borrowing serves to rebuild your credit score.
Related articles:
- Best emergency loans for bad credit
- Best credit cards for bad credit
- How to get a car loan with bad credit
- How to improve your credit score in 4 weeks
- Secured vs. unsecured credit cards
- Best low-income loans
Sarah Pritzker has been writing for Money.ca since 2017, and loves learning about the latest trends in Canadian personal finance.
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