Your interest rate is the most significant factor when calculating the cost of a personal loan. Since a low-interest rate can help you save hundreds, even thousands of dollars over the life of your loan, it’s important to find the best rate possible. Read this to learn about how and where you can locate the best personal loan interest rates in Canada.
Spring Financial is an online consumer lending company that offers innovative financial and credit-building solutions designed to give Canadians the opportunity to build credit, save money and borrow responsibly.With many Canadians struggling with high-interest debt and limited financing options, Spring Financial strives to provide Canadians with affordable and accessible financial products that can help them achieve greater financial freedom. Among their growing suite of smart money solutions, Spring Financial offers $1,500 cash advances, personal loans up to $35,000, and a credit-building program that helps you build credit and save money.
Available in seven provinces, iCash is an online source of fast, small loans that can be used for any emergency. Approved applications are processed within the same day and no documentation is required before the transfer of your funds. You can borrow up to $1,500 with iCash. Every time you pay the loan back following the agreed-upon deadline, you become a more reputable borrower. The increased trust allows you to borrow more each time. iCash uses a Trust Rating System, an algorithmic function that determines your merit as a borrower.
If you’re looking for an open-ended line of credit with credit limits up to $15,000, Fora is the best choice. Fora’s line of credit lets you withdraw funds from your available credit, and repay and redraw as needed. This makes it an excellent option for those seeking flexibility and quick access to cash as needed.Moreover, interest rates start as low as 19.9% and are only charged on the amount you withdraw.
The MogoMini line of credit offers Canadian consumers a great personal loan alternative. Borrowers can access up to $5,000, spend what they need when they need it, make the automatic minimum payments, and finally control their own principal payments. This Mogo product is flexible and users can test drive their line of credit for 100 days to see if it’s the right fit. Access their easy online application via your MogoMoney dashboard and get pre-approved in 3 minutes with no impact on your credit.
Fairstone is a great choice for consumers looking for loans with affordable payments that meet their needs and budget. As Canada’s leading non-bank lender of personal loans, consumers can get unsecured loans up to $25,000. Homeowners can choose a secured loan (backed by the value of their house) to borrow more money and access lower payments compared to an unsecured loan. Whether you’re looking to consolidate debt into one simple monthly payment, cover unexpected expenses or something else altogether, Fairstone is a great option.
Money Mart is a Canadian financial services provider that specializes in offering short-term financial products, including payday loans, cheque cashing, wire transfers, and installment loans. They're available both in person and online, providing borrowers with different options to apply for loans and access their borrowed funds. Their Payday Boost products are available for up to $1,500, and installment loans are available for up to $18,000. They're known for their easy-to-use services and same-day cash options, making Money Mart a great option for those who have little time to wait for much-needed funding.
Cash Money has been helping Canadians access easy and quick loans for more than 30 years. They offer payday loans, personal loans, and line of credit loans from $1,500 to $10,000. User will enjoy their simple online application, personalized options, and same-day funding. Whether you need to cover an emergency expense or simply need to make it to your next payday, Cash Money can a variety of options to meet your needs.
If you’re short on cash, Bree offers cash advances of up to $500 with zero interest. Bree is an online financial platform that provides interest-free cash advances to help consumers avoid overdrafts and NSF fees. Their mission is to be a dependable and accessible financial source that consumers can trust when they need financial support. Moreover, you can access the money you need with Bree without having to worry about credit checks, interest charges or late fees.
Nyble helps users quickly access a line of credit of up to $250 without credit score requirements. This is a good option for anyone who wants to avoid overdrafts or needs a small amount of cash quickly. Approval is instant and funding takes up to 3 days. But if you upgrade to a paid membership for $11.99 a month, you can receive your money within 30 minutes. Nyble reports your payment history to the credit bureau monthly and approves you for large amounts as you build trust with the platform. You can also track your credit score, earn reward points for improving your score, and access other features such as credit monitoring and digital identity theft protection.
SkyCap Financial has been helping Canadian consumers take control of their financial futures since 2013. Their main goal is to provide alternative financing to all Canadians, regardless of their financial past or credit history. They provide fast and easy short-term loans ranging from $500 to $100,000 and approve applicants in as little as 24 hours. Consumers can take advantage of SkyCap Financial’s quick application and a team of experienced individuals who strive to make your experience as smooth as possible. SkyCap Financial bases all their lending decisions on three main factors, current income, credibility, and stability, so they can approve more Canadians, especially those who have been rejected in the past based on credit issues.
LoanMeNow offers Canadian consumers quick access to the cash they need. They offer loans up to $1,000 with no credit check required. Funds are deposited directly into your bank account within as little as 24 hours. A short-term loan from LoansMeNow can help you cover the cost of an unexpected expense or tide you over until your next paycheque. Whatever your financial needs are, LoanMeNow’s quick approval time means you’ll be able to get back on track as soon as possible.
GoPeer is a peer-to-peer lending platform that connects borrowers with individual investors who fund loans. Through GoPeer, you can get a personal loan for up to $35,000, with flexible repayment terms and competitive interest rates. Interest rates start at 8.99%, depending on your credit profile. GoPeer's unique peer-to-peer model allows consumers to benefit from a more personalized borrowing approach. The online application process is quick and easy, and funds can be deposited into your account in as little as 7 days.
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What Personal Loan Interest Rate Do You Qualify For?
While Canadian personal loan interest rates normally range from 2% to 35% APR, the rate you qualify for can vary according to several factors, including but not limited to:
Who Your Lender Is – Every lender has different requirements and interest rates. Banks and credit unions generally offer more competitive rates than private lenders.
How Healthy Your Credit Is –Generally, lenders like to see a credit score of 660 or above as higher credit scores mean you’re more likely to pay your bills on time. If you want to know what your credit score is, check it for free on CompareHub.
Your Loan Amount and Payment Term –Larger loans may feature longer terms and lower rates. But longer terms generally mean you could pay more interest overall.
Your Current Debts –If you have lots of debt, your lender might doubt your ability to repay your loan on time, which can lead to higher interest rates.
Your Collateral – You can reduce the risk for your lender by offering them an asset as collateral, like a home or vehicle (to protect them if you default on your loan). This can not only help you qualify but secure a lower interest rate.
The Type of Rate – Variable rates can start low and rise with Canada’s prime rate. Fixed rates may be higher but won’t change during your loan term. Private lenders usually charge fixed rates and financial institutions will offer both types.
Borrow Up To $50,000
How To Get The Best Personal Loan Interest Rate In Canada
If you plan to apply for a personal loan in Canada, always start with a bit of research. For instance, here are some of the things you can do to find the best personal loan interest rate in Canada:
Apply For A Secured Loan –Depending on your lender, you may be able to offer an asset as collateral in exchange for a lower interest rate. An asset will give your lender something to sell, should you default on your payments.
Get A Cosigner –Like collateral, getting someone to cosign your personal loan helps reassure the lender that your payments will be made on time. If you can’t afford them or default, your cosigner becomes responsible for your payments.
Go To Your Bank –Banks and credit unions tend to charge competitive interest rates, which can be lower than those of private lenders. Unfortunately, you may need excellent credit and a steady income to qualify for the best personal loan interest rates.
Compare Lenders & Quotes –Make sure your lender is a legitimate business with a good reputation and affordable loan options. They should also be able to give you a free quote that shows your approximate loan amount and interest rate.
Improve Your Credit & Finances – Overall, the best way to earn a low personal loan interest rate is by building strong credit and stable finances. Plus, you may qualify with banks and credit unions, which can be safer.
Can Your Term Length Affect Your Personal Loan Interest Rate?
As mentioned, longer personal loan terms generally come with lower rates but lead to more interest overall, because you’re being charged an annual rate (APR) for multiple months or years. The opposite is true for shorter terms, which can result in higher interest rates but less interest paid during your loan plan.
Here’s an example to show you the effect of long versus short personal loan terms:
You need $35,000 to renovate your home
You compare two loans; one with a 5-year term and one with a 7-year term.
Both personal loans feature a 3% ($1,050) origination fee (added to total loan amount being financed)
Personal Loan #1
Personal Loan #2
Loan Amount Required
$35,000
$35,000
Fee
3%
3%
Total Borrowed
$36,050
$36,050
Payment Term
5 years (60 months)
7 years (84 months)
Interest Rate
7.99%
5.99%
Monthly Payment
$730.79
$526.47
Total Interest Paid
$7 797.49
$8 173.11
Total Cost
$43,847.49
$44,223.11
How Is Your Personal Loan Cost Affected By Your Credit Score?
Remember, your credit score can change your interest rate and have a major impact on the final cost of your personal loan. Here’s how it tends to work with Canadian lenders:
Lower Scores – If your credit score is in the 300 – 659 range (bad to fair), some lenders will charge you higher interest rates because they consider you a riskier client.
Higher Scores – If your score is within the 660 – 900 range (good to excellent), it should be much easier to qualify for a lower interest rate. This is particularly true with banks or credit unions, which may only accept clients who have good credit.
Cost Of A Loan For Different Credit Ranges
In this example, we used a $10,000 loan paid monthly with a two-year term to illustrate how credit scores can affect the total cost.
Estimated Interest Rate Based On Credit Score
Total Interest Based On Lowest Estimated Rate
Total Interest Based On Highest Estimated Rate
Poor Credit Score (300 - 559)
18% to 35%
$11,981.78
$14,044.47
Fair Credit Score (560 - 659)
15% to 35%
$11,636.80
$14,044.47
Good Credit Score (660 - 724)
5% to 29.99%
$10,529.13
$13,417.84
Very Good Score (725 - 759)
3% to 17%
$10,315.49
$11,866.14
Excellent Credit Score (760 - 900)
1.5% to 10%
$10,157.00
$11,074.78
Note: These rates are for illustrative purposes only. Actual charged rates will depend on the lender, your credit and your overall financial profile.
How To Calculate Your Personal Loan Interest Costs
Since every lender has a different way of assigning interest rates, it’ll be a lot easier to calculate your personal loan interest costs with our online Loan Calculator. To compare loans, just enter your credit score range, interest rate, loan amount and term length. The Loans Calculator will then give you several pieces of key information, including your:
Number of Payments
Monthly Payment
Total Interest
Total Payment
Personal Loan Calculator
Don’t Forget About Your Fees
Before you apply for a personal loan in Canada, keep in mind that your interest rate isn’t the only cost to consider. Some lenders also charge certain fees and penalties, such as:
Non-Sufficient Funds (NSF) Fee – Most lenders will withdraw personal loan payments directly from your bank account. A penalty of around $25 – $50 may apply if you don’t have a sufficient account balance when your payment is due.
Loan Origination Fee – Although it’s rare for personal loans, some lenders also charge a loan origination fee to process your funds. This fee usually costs about 1% – 5% of your loan and might be deducted or added from your loan amount.
Late Fee – If your personal loan payment is late, a penalty of about $15 – $40 or 5% of your payment could be added to your total debt balance, on top of any NSF fees. Those penalties will probably increase the later your payment is.
Prepayment Fee – While it can help you save on interest, deviating from your original loan payment plan may result in a penalty too. This includes making early or lump-sum payments. However, this is another rare fee for personal loans.
Protection Plan Fee – Some personal loans give you the option of buying extra insurance. In exchange for a recurring or one-time fee, this plan covers your debt if death, illness or job loss prevents you from making the loan payments on time.
Do loan terms affect personal loan interest rates?
Yes, longer terms can lead to lower rates and payments but more interest is paid during the life of a personal loan. Shorter loan terms usually come with higher rates and payments. This can help you save on interest, provided your payments are on schedule.
What’s the difference between a personal loan interest rate and APR?
A personal loan interest rate shows the total amount that you’re paying yearly to borrow money and will appear as a percentage rate. APR is your interest rate, plus the other fees and costs of your loan. It’s typically higher and offers a more accurate loan price.
Can I qualify for a low interest rate with bad credit?
If your credit score is within the 330 – 660 range, it probably means you have bad or fair credit due to a spotty payment history. As a result, many lenders will deny your personal loan or charge you a higher interest rate for it. To qualify for a more reasonable interest rate, you might need to offer your lender some form of collateral or find a solid cosigner.
Looking For The Best Personal Loan Interest Rates in Your Area?
In that case, Loans Canada could be the perfect referral service for you. We can help find legitimate lenders and flexible personal conditions in your province or territory. Don’t forget that a personal loan is a serious financial responsibility, no matter how much cash you borrow. So, it’s important to do research and speak with an expert before you apply.
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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