Best Bad Credit Loans 2022

Best Bad Credit Loans 2022

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated July 20, 2022

Once you become a credit user, a world of possibilities can open up to you, such as the ability to mortgage a home. That said, if you’re not careful, it’s easy to end up with bad credit, which can prevent you from getting approved for any credit products, including loans.  

Can You Get A Loan With Bad Credit? 

Having bad credit doesn’t mean you have no options when it comes to applying for and getting approved for a loan. In fact, borrowers with bad credit have more options than ever. Whether you’re looking for a quick loan or an installment loan to cover a large expense, we have all the information you need to find the right bad credit loan.

Best Bad Credit Loans in Canada 2022

AmountAPRTerm (months)Type of Loan
FairstoneUp to $35,00026.99% - 39.99%6 - 60Secured & unsecuredMore Info
easyfinancialUp to $15,00029.99% - 46.96%9 - 60Personal loanMore Info
Mogo Finance$5,000 - $35,0005.9% - 45.9%12 - 60Personal loanMore Info
Borrowell$1,000 -$35,0005.99% - 29.19%36 - 60Persona loanMore Info
Loan AwayUp to $5,00019.9% - 45.9%3 - 36Personal loanMore Info
Lending MateUp to $10,00043%36 - 60Guarantor loanMore Info
514 LoansUp to $3,00022% - 35%3 - 4Installment loanMore Info
Refresh Financial$1,600 - $25,0009.47% - 20.07%36 - 60Secured Savings LoanMore Info
MarbleUp to $20,00019.44% - 31.90%36 - 84Consumer Proposal Exit LoanMore Info

How To Qualify For A Bad Credit Loan?

Besides researching your lender properly, there are a few things you can do to get approved for the best bad credit loan in 2022, such as:

  • Have a full-time job for at least a few months
  • Increase your income and save up as much as possible
  • Consolidate your current debts to lower your debt-to-income ratio
  • Offer an asset (vehicle, real estate, etc.) as collateral for a secured loan
  • Find a stronger borrower to cosign your application

While requirements may vary from lender to lender, you’ll have an easier time qualifying for a larger bad credit loan, with a more affordable interest rate and repayment plan when you have the ability to pay your debts on schedule. The less risky your lender considers you, the better the result. 

Types Of Bad Credit Loans In Canada

Loan AmountLoan TermInterest Rate
Bad Credit Personal Loan$500 - $10,00012 - 60 months19% - 46.96%Learn More
Payday Loan$100 - $10002 weeks$15 to $25 for every $100 borrowedLearn More
Vehicle Title Loan$500 - $50,00012 - 60 months9.9% - 46.96%Learn More
Credit Builder Loan$1,250 - $10,0006 -12 months2% - 19.99%Learn More

How To Apply For A Bad Credit Loan? 

1. Review Finances And Score

Before applying for any type of loan, whether you have bad credit or not, you should review your financial situation and even check your credit score. This will help you better understand what type of offer you expect to receive. 

2. Compare Lenders

Depending on the loan you want and your financial situation, it’s likely that certain lenders will be a better fit for you. This is why it’s so important to compare lenders. Compare interest rates, loan amounts, fees, and the total cost of the loan once you’ve paid it back, and check out consumer reviews.

3. Gather Documents

While application requirements can vary from lender to lender, make sure you have the following documents and information ready to help facilitate the application process.

  • Government-issued I.D.
  • 3 months’ worth of bank statements
  • Proof of address
  • Proof of income/ employment 

4. Apply

Once you’ve decided on which lender you want to apply with, it’s time to submit an application. The majority of bad credit lenders will have an online application system which means you won’t have to leave your house to apply.

5. Wait For Response

Most alternative lenders will get back to applications within a few days or even sooner. Make sure you check your email or answer your phone in case the lender requires more information or has questions for you.

6. Get Funded

Once approved, you can expect to receive your loan within 24 hours. Most lenders can send funds via Interac e-Transfer or direct deposit

How Much Does A Bad Credit Loan Cost?

Before you apply for a bad credit loan, it’s extremely important to think about your budget and the associated costs of the loan.  

  • Interest – What your lender charges to borrow from them. The lower your interest rate is, the cheaper your loan will be. However, bad credit lenders often charge higher rates because they are taking on riskier clients. 
  • Fees – All too often, borrowers don’t think about the fees their lender could charge, whether they are for each payment or a one-time cost. These fees can include loan origination, preparation of documents, and other administrative services.
  • Penalties – If you pay your loan installments on time, then you shouldn’t have to worry about penalties. Unfortunately, every late, incomplete, or missed payment will lead to a penalty fee.
  • Term – The length of your loan term, as well as the size and frequency of your payments, are also important. While a longer term means more affordable payments, a shorter term and larger payments mean the total cost of your loan will be lower.
APRMonthly PaymentTotal InterestTotal Cost
10%$87.92$54.99$1,054.99
20%$92.63$111.61$1,111.61
30%$97.49$169.85$1,169.85
40%$102.47$229.66$1,229.66
*$1,000 personal loan with a 1-year term.

What Is Bad Credit?

Bad credit can be difficult to understand, especially if you’ve just started using credit products. Here’s an example of how credit works:

  • When you use your first credit card, your provider will begin reporting your payment activity to Equifax and/or TransUnion, Canada’s credit bureaus.
  • Each bureau will create a slightly different credit report in your name. This document contains all your credit-related actions over the past few years. 
  • You will also have a 3-digit credit score ranging from 300 to 900, which summarizes how healthy your credit is. Keep in mind that credit users have more than one credit score. 
  • If you apply for another credit product, such as a loan, many lenders will check your credit to know how risky you would be as a potential client.

What Happens When You Have Good Credit?  

If your score is in the “good” range of 660 – 900, it’s generally because you’re a responsible borrower. As such, lenders will assume you’re more likely to pay your debts on time, so it will be easier for you to get approved for a large amount of credit, a lower interest rate, and an appealing payment plan.

What Happens When You Have Bad Credit? 

If you haven’t been paying your previous debts responsibly, your credit score can quickly fall into the “bad” range of 300 – 659. By checking your credit history, lenders can also see every payment you’ve missed over the past few years. As a result, they will consider you more of a liability, so you may only qualify for a small amount of credit, a high-interest rate, and a restrictive payment plan.  

Unfortunately, while late or missed payments are the fastest ways to decrease your credit score, there are a few other events that can lead to bad credit, such as: 

  • Uncorrected errors on your credit report (wrong name, address, etc.) 
  • Having your identity, credit card, or banking information stolen
  • Moving without informing your lender(s) of your new address
  • Having too much revolving debt on your credit card or line of credit
  • Applying for credit too often (every time a lender checks your credit, a hard inquiry will appear on your report and decrease your score slightly)

How Bad Credit Can Affect Your Loan Rates

Credit RangeEstimated Interest Rate Based On Credit RangeExplanation 
Excellent Credit Score (760 - 900)1.5% to 10%Borrowers within this credit range will usually be able to qualify for the best interest rates. 
Very Good Score (725 - 759) 3% to 17%Individuals in this credit range will also generally qualify for the best interest rates. 
Good Credit Score (660 - 724)5% to 29.99%Interest rates offered to borrowers within this credit range are typically very affordable, but may not be as low as the excellent credit range.  
Fair Credit Score (560 - 659)15% to 35%Borrowers who fall in the “fair” credit score range may not only find it difficult to qualify for a loan but will usually be charged much higher interest rates.
Poor Credit Score (300 - 559)18% to 46.96%Borrowers with poor credit generally have a hard time finding a lender who will approve them. They are also charged high-interest rates due to their risky credit profile.
Note: These rates are for illustrative purposes only. Actual charged rates will depend on the lender, your credit and your overall financial profile.

Should You Add Get A Secured Bad Credit Loan?

When you offer an asset as collateral, your lender will temporarily own it until your loan is fully paid. So, if you default on too many payments and don’t negotiate the situation, they will have the right to seize your asset and sell it to cover your debt.  The added security of the collateral can not only help you secure a bad credit loan but may help you qualify for lower interest rates. 

Should You Add A Co-Signer To Your Bad Credit Loan? 

While having someone cosign your application can lead to better rates and loan conditions, there are certain risks that come with it: 

  • By co-signing your application, your guarantor is agreeing to cover your payment(s) if you can’t afford to. 
  • If they end up responsible for your payments but also cannot afford them, they could be subject to the same penalties and credit damage as you would if they were still your responsibility.   

Pros And Cons Of Bad Credit Loans

Bad credit loans can be beneficial when you’re in need, but there are also many drawbacks associated with them that you must consider. Check out these pros and cons of bad credit loans before you give away any information:

Pros Of Bad Credit Loans

  • Easier Approval Requirements – Many loan companies that accept bad credit have lower requirements for approval. Most simply require you have the financial capability to repay the loan. 
  • Fast And Convenient – Many bad credit loans are offered by online loan companies, meaning you can complete your entire application online. Moreover, applications are usually short and simple and you can expect to receive your funds within a couple of hours or days.
  • No Credit Check – Certain bad credit loan companies don’t require credit checks.
  • Can Build Credit – If your bad credit loan company reports payments to the credit bureau, it can help you build a positive payment history which may help you gradually improve your credit

Cons Of Bad Credit Loans

  • Higher Loan Cost – Generally, loan companies that accept bad credit charge higher interest rates, fees, and penalties.
  • Qualify For Less – Loan companies for bad credit usually offer smaller loan amounts and more restrictive payment terms. 
  • More Chance Of Scamming   Private lending companies are harder to regulate, leading to a higher possibility of scamming, fraud, and illegal rates.

What Can You Use A Bad Credit Loan For? 

Essentially, a bad credit loan is a lump sum of money that you can borrow from various lenders in Canada. That sum is normally deposited directly into your bank account and you would repay it through divided installments. Unlike some traditional credit products, a bad credit loan can help you:

  • Get approved for credit with few requirements, even with weaker finances
  • Cover your expenses during unemployment or other financial emergencies 
  • Gradually build good credit when you make full payments on time 

Despite all these benefits, you should always research and compare a few lenders in your area before applying for a bad credit loan. That’s because every lender offers different loan amounts, interest rates, payment plans, and approval requirements.

How To Improve Bad Credit?

If your borrowing needs are not urgent, consider improving your credit prior to applying for a loan in order to increase your chances of approval and qualifying for a lower interest rate. 

  • Check your credit report for errors and have them corrected. 
  • Pay all your utility, cell phone, and internet bills on time
  • Use a secured credit card to make responsible payments 
  • Avoid applying for too many credit products within the same year
  • Increase your credit limit and don’t carry too much revolving debt
  • Avoid minimum or partial payments (this helps reduce interest)

Bad Credit Loan FAQs

Can I get a bad credit loan from a bank?

Most banks don’t offer bad credit loans because their lending policies are more restrictive, often preventing them from approving people who don’t have good credit or a decent income. So, you’ll most likely have to apply with an alternative lender or a subprime lender that caters to borrowers with bad credit. 

Can I still get a bad credit loan if I have a consumer proposal on my credit report?

Yes, there are many subprime lenders that will offer you a bad credit loan, even if you’ve gone through a consumer proposal, bankruptcy, or other debt relief program. However, they may want you to be discharged before they’ll approve you. Additionally, you must watch out for the higher costs associated with these types of loans.

Should I get a secured or unsecured bad credit loan? 

Remember, a secured loan is when you offer an asset as collateral. The more valuable your asset is, the better your approval chances, interest rate, and loan conditions will be. That said, there is definitely more risk associated with a secured bad credit loan because defaulting can result in the loss of your collateral.   If you want to avoid that danger or don’t have any collateral, an unsecured bad credit loan may be a safer choice. However, unsecured loans are typically smaller, have shorter terms and have higher overall costs.

Do bad credit loans get reported to the credit bureaus?

Some bad credit lenders don’t report to Equifax or TransUnion, this is particularly true for payday lenders. However, if you default on your bad credit loan, the lender may sell your debt to a collection agency which may end up on your credit report. If you’re looking to improve your credit with a bad credit loan, be sure to ask your lender if they report payments to the credit bureau.  

Bottom Line

While bad credit can make it difficult to get approved for a loan from a traditional financial institution like a bank, you can still get a loan from loan companies for bad credit. There are many online bad credit lenders who base their approval on your overall financial health. These lenders may be more expensive, but they can help you get the financing you need. Submit a request with Loans Canada today and get matched with a lender that accepts bad credit and meets your needs.


Rating of 5/5 based on 2 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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