If you’re financing a large expense — debt consolidation, home renovations, a major medical bill, or a big-ticket purchase — a long-term personal loan can spread the cost over several years and keep your monthly payments manageable. Long-term personal loans are widely used by Canadians, but they come with trade-offs: lower payments today usually mean more interest paid by the time the loan is done. Here’s how long-term personal loans work in Canada, where to get one, what Canada’s new 35% interest rate cap means for you, and how to decide whether the longer term is the right call for your situation.
Key Points
1. A long-term personal loan gives you a lump sum that’s repaid over an extended period — usually 3 to 10 years, depending on the lender and loan amount.
2. Monthly payments are lower than on short-term loans, but you’ll pay significantly more total interest over the life of the loan.
3. Since January 1, 2025, federally regulated lenders can’t charge more than 35% APR on long-term loans in Canada.
4. Before you commit, compare against alternatives — a line of credit, HELOC, or debt consolidation loan can sometimes be a better fit.
What Is A Long-Term Personal Loan?
A long-term personal loan comes with an extended repayment period that lets you spread your loan payments over a much longer period of time. This keeps your monthly payments low and is most suitable for large loan amounts. Long-term personal loans are typically either unsecured (no collateral required) or secured against an asset you own.
For context on how common this kind of debt is: Canadians carried an average non-mortgage debt of $21,931 per consumer in Q3 2025, with installment loans making up one of the fastest-growing segments of household credit<sup>1</sup>.
How Long Are Personal Loan Terms?
Long-term personal loans in Canada typically run from 3 to 10 years, with the most common term lengths falling into these ranges:
- 3 – 5 years: The most common term length for unsecured personal loans up to around $25,000.
- 5 – 7 years: Typical for larger amounts ($25,000+) or for borrowers with strong credit who want lower monthly payments.
- 7 – 10+ years: Available from some lenders for secured personal loans (backed by a paid-off vehicle or other asset) or for very large loan amounts.
Most lenders set a minimum term of 6 months. Shorter than that and you’re usually looking at a short-term loan or cash advance product, not a long-term personal loan.
Where Can You Get Long-Term Personal Loans In Canada?
Filters
- Amount
- Up to $35,000
- Rate
- 9.99% – 34.95%
- Term
- 6 – 84 Months
- Amount
- Up to $60,000†
- Rate
- 19.99% – 34.99%*
- Term
- 6 – 120 months
- Amount
- Up to $10,000
- Rate
- Up to 34.99%
- Term
- Up to 60 months
Types Of Long-Term Loans In Canada
Whether long-term or short-term, loans are typically divided into two categories: secured and unsecured.
Secured Long-Term Personal Loans
A secured long-term personal loan is backed by some form of collateral — something you own that has value. Common assets used as collateral for a personal loan include a vehicle you’ve paid off in full, a savings account or GIC, or another investment.
Because the lender has an asset they can seize if you default, secured personal loans usually come with lower interest rates and higher approval amounts than their unsecured counterparts. The trade-off: if you default, you lose the asset.
How Much Can You Borrow?
Collateral takes some of the financial risk off the lender. As such, when a loan is secured, you may be more likely to receive a larger sum of money, depending on your credit score and financial profile. If you have strong credit, you may also qualify for large unsecured personal loans without putting up an asset.
Unsecured Long-Term Personal Loans
An unsecured personal loan is the opposite of a secured loan — it does not require any form of collateral. With an unsecured loan, your approval is based purely on your financial standing and your ability to repay. Installment loans are the most common unsecured long-term option.
Since the lender has no asset to recoup if you default, an unsecured personal loan is considered riskier from their side. As such, the lender may charge you a higher interest rate and/or offer a smaller loan amount.
Can You Get Long-Term Loans In Canada With Bad Credit?
Yes, you can get a long-term loan even if your credit score is relatively low. However, you may have fewer options available, and the loan may not be as favourable:
- Traditional Lenders May Not Approve. Banks typically require good credit for loans. You’ll have better luck applying with a bad credit lender.
- Higher Interest Rate. A lower credit score increases the lender’s risk. To offset this, the lender will typically charge a higher interest rate, which makes the loan more expensive.
- Lower Loan Amount. Lenders may also mitigate the risk of your lower credit score by offering a smaller loan amount.
Note: Bad Credit Loans Can Be Expensive
If your credit is below-prime and you stretch the loan out over many years, the total interest you pay can be high.
If you have to borrow long-term with bad credit, make sure your contract allows penalty-free prepayment so you can shorten the term once your finances improve. See whether you can pay off your loan early for what to watch for.
Can You Get A No Credit Check Long-Term Loan In Canada?
If you’re looking for a long-term loan that doesn’t require a credit check, you’ll have very limited options. That’s because almost all long-term loans are large loans.
A lender is taking on significantly more risk than they do when they provide smaller short-term loans. This heightened risk level means a lender will want to verify your creditworthiness, which usually includes a credit check. That’s why it’s difficult to find a lender who can provide a long-term loan without one.
Whether you apply with a bank or a private lender, both will likely require a credit check. That said, you can get no-credit-check short-term loans, as these are generally less risky for lenders.
Canada’s 35% Interest Rate Cap On Long-Term Loans
On January 1, 2025, the federal government lowered Canada’s criminal interest rate from 60% effective annual rate (EAR) to 35% annual percentage rate (APR) under the Budget Implementation Act, 2023<sup>2</sup>. This is the biggest change to Canadian consumer lending law in decades, and it directly affects long-term loans.
What The Cap Covers
- Personal loans, installment loans, and lines of credit from federally regulated lenders — banks, credit unions, and most online lenders — can’t charge more than 35% APR.
- The cap applies to the full cost of borrowing, not just the headline rate. Lenders can’t pile on fees to push your effective rate above 35%.
Why It Matters For Long-Term Loans
Before the cap, some subprime long-term lenders were charging 45% – 60% APR on multi-year loans. On a $10,000 loan repaid over 5 years, that was the difference between paying about $5,800 in interest (at 25%) and over $14,000 in interest (at 50%).
The 35% cap doesn’t mean you’ll automatically get a low rate — your credit score still drives where you land in the 9% – 35% range. But it does set a hard ceiling on what any licensed Canadian lender can charge you on a long-term loan.
Long-Term Loans vs. Short-Term Loans
Long-term loans and short-term loans differ in key ways:
| Aspect | Short-Term Loan | Long-Term Loan |
|---|---|---|
| Loan Term | Typically less than 1 year | Over 1 year, up to 10 years or more |
| Loan Amount | Smaller amounts (as little as $50) | Larger loan amounts (up to $35,000 or more) |
| Monthly Payments | Higher payments due to shorter term | Lower payments spread out over a longer period |
| Total Interest | Lower overall interest cost | Higher overall interest cost |
| Interest Rates | Often higher due to short repayment period | Often lower, especially for secured loans |
Cost Of A Short-Term Loan vs. A Long-Term Loan In Canada
Despite shorter-term loans having a higher interest rate compared to long-term loans, the total amount of interest you pay can be much less than what you pay for a long-term loan. To illustrate the difference in interest costs, here’s an example:
| Term Length | Monthly Payment | Total Paid | Total Interest |
|---|---|---|---|
| 3 years (36 months) | $332.14 | $11,957.04 | $1,957.04 |
| 5 years (60 months) | $222.44 | $13,346.65 | $3,346.65 |
| 7 years (84 months) | $176.53 | $14,828.78 | $4,828.78 |
As you can see, even with a significantly higher interest rate, the short-term loan comes with lower total interest paid over the life of the loan. If you’re trying to minimize what a long-term loan costs you, comparing the best personal loan interest rates in Canada before applying can save you thousands.
Benefits Of A Long-Term Loan
Depending on your needs, certain products will benefit you more than others. Here are the main benefits of taking out a long-term loan:
- Smaller, More Affordable Payments. A longer term lets you repay the loan over a longer period of time, so the payments are smaller. That means you have more of your income at your disposal each month — important if you value keeping more cash available for general costs and emergencies.
- Larger Loan Amounts. Long-term installment loans are typically larger. If you need a big loan, it’ll generally come with a long term.
- More Options. A long-term loan gives you more options to purchase the things you need. It also lets you take advantage of opportunities you might not be able to without a loan — a house in the right location, a business opportunity, or a major investment.
Drawbacks Of A Long-Term Loan
There are a couple of notable downsides of a long-term loan to consider:
- Higher Overall Cost. When comparing two loans where the only difference is the term length, the longer-term loan will cost more. That’s because interest accrues over more months. If your finances improve, you can refinance your personal loan into a shorter term to cut total interest.
- In Debt Longer. While you may benefit from lower monthly payments, it also means you’ll be in debt for a longer period of time.
Should You Choose A Long-Term Loan?
Use the framework below to decide whether a long-term loan fits your situation:
- Loan size: You’re borrowing $10,000 or more — large enough that a 1-2 year repayment would be unaffordable monthly.
- Income stability: Your income is steady and you can commit to fixed payments for 3+ years without strain.
- Cash flow priority: Lower monthly payments matter more to you than minimizing total interest cost.
- Refinance flexibility: Your lender allows penalty-free prepayment, so you can shorten the term later if your situation improves.
- Loan purpose: The loan funds a long-term asset (home, vehicle, education) or a high-value consolidation — not a discretionary purchase.
If 4 or 5 are true: a long-term loan is a strong fit. Apply and compare offers.
If 2 or 3 are true: consider a mid-term loan (24 – 36 months) or compare alternatives like a line of credit.
If 0 or 1 is true: a long-term loan likely costs more than it saves you. Look at short-term options or smaller borrowing instead.
How To Apply For A Long-Term Loan In Canada
To apply for a long-term loan, follow these steps:
Step 1: Assess Your Needs
Decide how much you want to borrow. Don’t apply for a loan that’s more than what you need — every extra dollar borrowed is interest you’ll pay.
Step 2: Check Your Credit Score
It’s helpful to know your credit score before applying. This helps you understand your borrowing power, your likelihood of approval, and which type of lender you may qualify with. For a breakdown of where you stand, see what credit score you need for a personal loan.
You can check your credit score for free using Loans Canada’s CompareHub.
Step 3: Compare Lenders
CompareHub also lets you compare lenders and their loan offers based on your financial and credit profile. Compare things like:
- Interest rates
- Loan terms
- Fees and penalties
- Eligibility requirements
Step 4: Gather Required Documents
Most lenders will ask for the following to verify your identity and income:
- Government-issued photo ID
- Proof of income (pay stubs, bank statements)
- Proof of residency (utility bills, lease agreements)
Step 5: Apply
Once you find the lender that fits your credit and financial situation, you can apply directly with them. Online lenders tend to process applications faster and can sometimes provide funding the same day.
Step 6: Review And Sign The Loan Contract
If you’re approved, carefully review the loan contract to make sure you understand all terms and fees. If everything checks out, sign the contract, get your funds, and start making loan repayments according to the repayment schedule.
Alternatives To A Long-Term Loan
A long-term loan isn’t the only way to fund a large expense. Depending on your situation, one of these might be a better fit:
- Personal Line Of Credit. A revolving credit account you can draw on as needed. You only pay interest on what you actually use, and you can repay and re-borrow without applying again. Best for ongoing expenses or unpredictable cash flow needs.
- HELOC (Home Equity Line Of Credit). If you own a home with equity, a HELOC typically offers a much lower interest rate than an unsecured personal loan — often close to the prime rate. The trade-off: your home backs the loan, so default risk is higher.
- Debt Consolidation Loan. If your goal is to combine multiple high-interest debts (credit cards, payday loans) into one fixed monthly payment, a dedicated debt consolidation loan is often a better structure than a general-purpose long-term personal loan.
- Credit Union Loan. Credit unions often offer lower personal loan rates than the big banks, especially if you’ve been a member for several years. Worth a quote before you commit to a non-bank lender.
- Family or Private Loan. The least formal option. Can be interest-free, but mixes finances with personal relationships — get the terms in writing.
Final Thoughts
Applying for a long-term loan can be a great way to fund big expenses while spreading the cost over a longer period. Just be sure the lower payments justify the higher interest charges you’ll pay. Choose a lender that fits your needs, and do your research to make a choice that makes the most financial sense for you. If your long-term loan is for a vehicle, comparing auto loan options separately can also save you money.
Long-Term Loan FAQs
References
- Equifax Canada. (2025). Q3 2025 Market Pulse Consumer Credit Trends Report. https://www.equifax.ca/business/insights/market-pulse-report/
- Department of Finance Canada. (2023). Budget Implementation Act, 2023, No. 1 — Criminal interest rate amendments (S.C. 2023, c. 26). https://laws-lois.justice.gc.ca/eng/acts/c-46/section-347.html
®Fairstone Financial Inc. is a wholly owned subsidiary of Fairstone Bank of Canada.
*Interest rates are subject to change. Actual Annual Percentage Rate (APR) varies based on the province of residence and individual factors like credit details and loan amount. The interest rate on an unsecured personal loan is 31.99% in BC.
†On approved credit. Terms and conditions apply. Interest rates vary by province/territory and from customer to customer based on factors like credit score and borrowing history. See Fairstone’s website for details.
Fairstone Financial Inc. holds high-cost credit licenses in AB, MB (License #85047, expiring 20-02-2026) and QC; it has applied for a high-cost credit grantor license in NL. For license information by province, visit Fairstone.ca/HCCG
In Ontario, Fairstone Financial Inc. is licensed as mortgage brokerage 10821.
In Nova Scotia, Fairstone Financial Inc. is licensed as mortgage lender #2021-3000028.
