Finding the best personal loan interest rates in Canada can make a huge difference in how much you pay over time. With rates varying widely between banks, credit unions, and online lenders, knowing where to look is important. This guide highlights the most competitive options so you can borrow smarter and keep more money in your pocket. For a broader look at your choices, you can also compare the best personal loans in Canada.
Key Points
1. Personal loan interest rates in Canada vary widely depending on your credit, lender type, loan term, and loan security.
2. Borrowers with good to excellent credit typically qualify for the lowest rates, especially through banks and credit unions, while fair or poor credit leads to higher rates.
3. Comparing lenders, improving credit, and using collateral or a cosigner are some of the most effective ways to secure a lower personal loan interest rate.
What Is A Good Personal Loan Interest Rate In Canada?
In Canada, a “good” personal loan interest rate depends on your credit profile, lender type, and whether you’re applying for a secured or unsecured loan. Borrowers with excellent credit may qualify for rates as low as 6% to 9.99%, while those with fair or poor credit may be quoted rates between 15% to 35%.
Knowing what qualifies as a competitive rate for your financial situation can help you set realistic expectations and avoid overpaying for a loan.
Average Personal Loan Interest Rate
According to the Bank of Canada, the average interest rate on a new personal loan from a Canadian chartered bank was 7.80% (June 2026).1
Personal Loan Interest Rate By Credit Score*
Your credit score is the single biggest factor in the rate you’re offered. Here are the typical personal loan interest rate ranges by credit tier in Canada.
| Credit Score Range | Typical Personal Loan Rate |
|---|---|
| Excellent (760 to 900) | 6% to 10% |
| Good (660 to 759) | 10% to 18% |
| Fair (560 to 659) | 18% to 30% |
| Poor (below 560) | 30% and up, or alternative lenders |
*These are typical ranges for illustrative purposes; your actual rate will depend on the lender and your full financial profile.
Best Personal Loan Interest Rates 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
What Personal Loan Interest Rate Do You Qualify For?
While Canadian personal loan interest rates can be as high as 35% APR, the rate you qualify for can vary according to several factors, including the following:
- Your Lender: Every lender has different requirements and interest rates. Banks and credit unions generally offer more competitive rates than private lenders.
- Your Credit Score: 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.
- Your Loan Amount & Term: Larger loans may feature longer terms and lower rates. But longer terms generally mean you could pay more interest overall.
- Your Current Debt: 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. Taking on several loans at once, known as loan stacking, can make this worse.
- 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 help you qualify for a loan at a lower interest rate.
- Rate Type: 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
Average Bank Personal Loan Rates
Banks and credit unions typically offer the most competitive personal loan rates in Canada, but you’ll usually need good to excellent credit to qualify. As of June 2026, the average rate on a new personal loan from a Canadian chartered bank was about 7.80%, according to the Bank of Canada. Credit unions often undercut the big banks by one to two percentage points, so they’re worth comparing too. Here’s how that compares to the average rates on other common types of consumer credit.
| Type Of Credit | Average Interest Rate (June 2026) |
|---|---|
| Secured line of credit | 4.05% |
| Auto loan | 6.55% |
| Unsecured line of credit | 7.69% |
| Personal loan | 7.80% |
| Credit card | 21.34% |
Source: Bank of Canada, interest rates for new lending by chartered banks.1
Average Private Lender Rates For Personal Loans
Private and alternative lenders serve borrowers who may not qualify with a bank, such as those with fair or poor credit. Because they take on more risk, their rates are higher, often ranging from around 18% up to the legal maximum of 35% APR. The trade-off is easier approval and faster funding, but you’ll pay more in interest, so a private lender is usually best as a short-term option while you rebuild your credit.
Average Interest Rate For Secured Vs. Unsecured Personal Loans
Whether your personal loan is secured or unsecured also affects your rate. A secured loan is backed by collateral, like a vehicle or savings, which lowers the lender’s risk and earns you a lower rate. An unsecured loan has no collateral, so it typically comes with a higher rate.
You can see this gap clearly in the Bank of Canada’s line of credit data. As of June 2026, secured personal lines of credit averaged about 4.05%, while unsecured lines averaged about 7.69%. The same principle applies to personal loans: adding collateral is one of the most reliable ways to bring your rate down.
Personal Loan Rates Vs. Personal Line Of Credit
A personal loan and a personal line of credit are both popular ways to borrow, but they work differently and are priced differently. A personal loan gives you a lump sum at a fixed rate, while a line of credit lets you borrow as needed up to a limit, usually at a variable rate. Here’s how their average rates compared as of June 2026.
A secured line of credit often has the lowest rate of the three, but it requires collateral. An unsecured line of credit and a personal loan tend to be priced similarly, so the right choice usually comes down to whether you need a one-time lump sum or ongoing access to funds.
Is 12% Interest On A Personal Loan Good?
Whether 12% is a good interest rate on a personal loan depends on your credit. It’s higher than the roughly 7.80% average that banks charge borrowers with strong credit, but it’s well below the rates charged on credit cards (around 21%) and far under the 35% legal maximum.
For someone with fair or average credit, 12% is a reasonable rate. If you have good to excellent credit, though, you may be able to qualify for something lower by comparing lenders and applying with a bank or credit union.
The Criminal Interest Rate In Canada
In Canada, there’s a legal limit on how much interest a lender can charge, known as the criminal rate of interest. As of January 1, 2025, that limit is 35% APR (annual percentage rate). Charging more than this is a criminal offence.
Most payday loans are an exception to this rule and are regulated separately at the provincial level. This cap is the reason even the highest personal loan rates you’ll see from licensed lenders top out at around 35%.
How To Get The Best Personal Loan Interest Rate In Canada
Consider the following tips to get 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. For secured loans, lenders also consider the loan-to-value ratio, or how much you’re borrowing against the value of your asset.
Get A Cosigner
Having someone 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.
Apply With Your Bank
Banks and credit unions tend to charge more competitive interest rates compared to alternative lenders. However, you will need good to excellent credit and a steady income to qualify for the best personal loan interest rates with your bank.
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.
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. Again, CompareHub can be used to quickly compare lenders and loans with the best rates and terms.
When Is The Best Time To Apply For A Personal Loan?
Applying when your credit score is strong, your income is stable, and your debt levels are manageable can improve your chances of securing a better interest rate. Avoid applying immediately after taking on new debt or missing payments, as lenders may view this as higher risk. When you’re ready, you can apply for a loan online.
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 interest for a longer period of time. The opposite is true for shorter terms, which can result in higher interest rates but less interest paid during your loan plan. Some loans may also end with a balloon payment, a large lump sum due at the end of the term.
Fixed Vs. Variable Personal Loan Interest Rates In Canada
Most personal loans in Canada come with fixed interest rates, offering predictable payments. Some lenders offer variable rates that may start lower but can increase if the prime rate rises. Fixed rates are generally preferred for budgeting certainty. Understanding fixed loans vs. variable loans can help you choose the right one.
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?
Your credit score influences your interest rate and has 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 to 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 to 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.
How Your Debt-To-Income Ratio Affects Interest Rates
Lenders also evaluate your debt-to-income ratio to assess affordability. A lower ratio signals financial stability and can help you qualify for better interest rates, while a high ratio may lead to higher rates or declined applications. Many lenders want to see a debt-to-income ratio under 40%, and the lowest rates typically go to borrowers with a ratio below 20%.
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.
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 |
How Much Would A $30,000 Personal Loan Cost A Month?
The monthly cost of a $30,000 personal loan depends on your interest rate and loan term. At an interest rate of around 8% over a 5-year (60-month) term, you’d pay about $608 per month. Here’s how the monthly cost changes at different rates over the same term.
| Interest Rate | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 8% | $608 | $6,497 | $36,497 |
| 12% | $667 | $10,040 | $40,040 |
| 20% | $795 | $17,690 | $47,690 |
These figures are estimates for a 5-year term. Use the personal loan calculator below to see your exact numbers.
How Much Is A $20,000 Loan For 5 Years?
A $20,000 personal loan over a 5-year (60-month) term would cost about $406 per month at an 8% interest rate, for a total of roughly $24,300. Here’s how that changes at different rates.
| Interest Rate | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 8% | $406 | $4,332 | $24,332 |
| 12% | $445 | $6,693 | $26,693 |
| 20% | $530 | $11,793 | $31,793 |
How To Calculate Your Personal Loan Interest Costs
Since every lender has a different way of assigning interest rates, it’s helpful to calculate your personal installment 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 calculator will then give you several pieces of key information, including the following:
- Number of Payments
- Monthly Payment
- Total Interest
- Total Payment
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. Together with your rate, these fees make up your loan’s APR, which reflects the true cost of borrowing. Some lenders also charge certain fees and penalties, such as the following:
- Non-Sufficient Funds (NSF) Fees: Most lenders will withdraw personal loan payments directly from your bank account. A penalty may apply if you don’t have a sufficient account balance when your payment is due. As of March 2026, NSF fees are capped at $10 per failed payment, down from the previous $45 to $48.
- Loan Origination Fees: Some lenders may charge a loan origination fee to process your funds. This fee usually costs about 1% to 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 fee 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 loan 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.
Final Thoughts
Securing the best personal loan interest rate in Canada ultimately comes down to comparing lenders and understanding how your credit health affects what you’re offered. With so many lenders competing for borrowers, taking the time to shop around can translate into real savings. Once you’ve explored your options, you’ll be in a better position to choose a loan that keeps your costs low.
Personal Loan Interest Rates Canada FAQs
As of June 2026, the average interest rate on a new personal loan from a Canadian chartered bank was about 7.80%, according to the Bank of Canada. Your actual rate will depend on your credit, income, lender, and whether the loan is secured.
Your credit score, income, debt levels, loan amount, and lender type all influence your rate.
It depends on your credit. At 12%, you’re paying more than the roughly 7.80% average banks charge borrowers with strong credit, but far less than a credit card or the 35% legal maximum. For fair or average credit, 12% is reasonable, but strong credit could qualify you for less.
As of January 1, 2025, the criminal rate of interest in Canada is 35% APR. Lenders cannot legally charge more than this, though most payday loans are regulated separately at the provincial level.
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.
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.
If your credit score is within the 300 to 659 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.
Banks and credit unions tend to offer the most competitive rates to borrowers with strong credit.
A personal loan can offer quick, predictable financing with fixed payments, but it may come with higher interest rates and the risk of added debt if not managed carefully.
References
- 1Government of Canada. Funds advanced, outstanding balances, and interest rates for new and existing lending, Bank of Canada. StatCan.gc.ca
- Bank of Canada. (2026). Interest rates for new and existing lending by chartered banks. Bank of Canada. Data also published by Statistics Canada, Table 10-10-0006-01.
®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.
