When it comes to covering your expenses and debts, a predictable payment plan is generally the easiest to budget. Paying off expenses in even installments can give you the flexibility needed to not live paycheque-to-paycheque. If you need a quick way to access a set amount of cash, you can apply for an installment loan.
Keep reading to learn about what an installment loan is and how you can find one that matches your financial profile.
What Is An Installment Loan?
An installment loan generally refers to a personal loan. With it, you get a set amount of cash from a lender that you can use to cover any expense. Any funds you are approved for will usually be deposited directly into your bank account. The loan is then paid back in equal installments, over a predetermined schedule, plus interest.
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.
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.
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.
If you’re short on cash, Bree offers cash advances of up to $350 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.
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.
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.
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.
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 $10,000 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.
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.
Unfortunately we couldn't find you a provider with the given filters
What Can You Use An Installment Loan For?
Once you have the money in your bank account, you can use it for anything you want. However, the fact that some lenders offer fast approval makes installment loans a good choice for important costs, like paying your bills or dealing with financial emergencies.
Features Of An Installment Loan
Loan Amounts – Depending on the lender and your financial profile, you can get installment loans from $500 up to $35,000 or more.
Interest Rates – According to the Criminal Code of Canada, the maximum annualized interest rate lenders are allowed to charge is 60% and anything above that is deemed illegal. However, most installment loan rates vary between 3% to 46.96%.
Term Lengths – Every lender also offers different installment loan terms to match their loan amounts and client profiles. Smaller loans often come with short terms of 6 – 12 months, while larger loans may be repayable over 5 or more years.
Repayment Plans – Lenders may offer several payment options when it comes to your loan installments, like monthly, bi-weekly and semi-monthly payment plans.
Requirements To Get An Installment Loan
Obtaining an installment loan can be easy enough. However, most lenders impose certain requirements that you’ll need to meet to qualify, including but not limited to:
Age & Residency – To be eligible for an installment loan, you must be a Canadian resident and over the age of majority in your province or territory (18 – 19+).
Credit Score – Generally, to qualify for a low interest rate, you’ll need good credit along with a strong income. If you have poor credit, it may be in your best interest to improve it before applying for the loan. To check whether you have good credit, use Compare Hub; a free platform to check your credit score.
Income – You also have to meet the lender’s minimum income requirement and show proof of income, like recent pay stubs. While a job works best, government benefits and other incomes may be accepted too.
Employment – If your income is from your job, most lenders will want you to be steadily employed at the same location for at least 3 – 6 months before you apply.
Bank Account – Some lenders require you to have an active bank account for direct deposits and withdrawals but may offer other payment methods as well.
How To Apply For An Installment Loan?
Getting a personal installment loan can involve several steps and documents, but generally, you can follow these steps when applying for an installment loan.
Step 1. Find A Lender
Pick a lender with a valid business license and a good reputation. Banks and credit unions are the safest but there are many reputable alternative lenders too. Be sure to compare lenders and get loan quotes to score the best rates and terms.
Step 2. Apply
Once you find a good lender, submit your application in person or online. You may need several documents to apply such as :
bank statements
a tax slip or job verification letter
a government photo ID (passport, driver’s license, etc.).
Step 3. Get Funded
Some lenders take a couple of days to review your application and fund your installment loan. However, if you apply on a typical business day, your loan may be deposited directly into your bank account within the next 24 hours.
How To Calculate Your Installment Loan Costs
Generally speaking, 4 major factors affect the cost of an installment loan:
Loan Amount – Probably the most obvious expense is the amount you borrow, the more money you borrow, the more your loan will cost and ultimately the longer it will take to pay off.
Term Length – The same goes for your installment loan term. Shorter terms will have higher payments but you will end up paying less in interest compared to a loan with a longer term.
Interest Rate – Your finances and loan conditions are key factors here. So, if you apply for a short-term loan with bad credit or a low income, you should prepare to qualify for higher rates.
Fees – Some lenders also charge high borrowing fees. Make sure to read the fine print and ask the lender about any service or administrative fees before applying.
Here’s an example to show you how the above factors can impact the overall cost of your installment loan during a standard monthly payment plan (not including fees):
Scenario 1
Scenario 2
Scenario 3
Loan Amount
$20,000
$20,000
$20,000
Interest Rate
5%
10%
5%
Term Length
5 years
3 years
7 years
Payment Amount
$377.42/month
$645.34/month
$282.68/month
Total Interest Paid
$2,645.2
$3,232.24
$3,745.12
Total Paid
$22,645.2
$23,232.24
$23,745.12
Pros Of An Installment Loan
Fast Application Process – Some lenders offer quick approval and funding times of 1 – 2 days (or less), especially if you apply during their work hours.
Better Option Than Payday Loans – Installment loans are much safer than payday loans due to their higher amounts, lower interest rates, and repayment terms.
Bad Credit May Be Accepted – As long as they have a sufficient income, many lenders also approve clients who have weak credit scores and payment histories.
Cons Of An Installment Loan
Secured Loans – Some lenders ask for collateral, particularly from clients who have poor credit or finances. This can increase the level of risk you’re taking because the lender can legally seize your asset if you default on your payments.
High-Interest Rates – Consumers who have lower credit scores will likely qualify for higher interest rates, which will ultimately make the loan more expensive. Consumers in this situation may want to consider working to improve their credit first.
Fees – Unfortunately, many lenders will charge fees to process applications. You may even run into some hidden or illegal fees if you’re not careful when selecting a lender.
Installment Loans Alternatives
Not sure if an installment loan is right for your situation? Don’t worry, there are many other effective alternatives for paying your daily expenses in Canada, such as:
Using Your Home Equity – If your home has at least 20 – 25% value, you may be able to borrow against it using a home equity loan or line of credit (HELOC). This may qualify as a “second mortgage” and result in two sets of payments.
Getting a Secured Loan – Secured installment loans are risky but can help you access more cash than unsecured loans offer, especially with bad credit or a low income. Viable assets include vehicles and real estate properties in your name.
Credit Cards – For smaller purchases, a credit card can be a good alternative option. Be wary of high interest rates and not paying off your balance in full each month.
Peer-to-Peer Lending – P2P lending platforms connect borrowers directly with individual investors. These individuals are not traditional lenders. This is a good option for anyone who cannot get approved by a bank or personal loan lender.
Choosing the right installment loan for your needs may seem like a daunting task, especially with so many options available to Canadian borrowers. But, the good news is, it doesn’t need to be. Loans Canada can help you compare rates, terms, and reviews so you can make the best decision for your needs.
Installment Loan FAQs
Can I get an installment loan online?
Yes, plenty of prime and subprime lenders can offer you a fast and affordable online installment loan. Just make sure to pick a legitimate business with a good reputation, good reviews from former clients, and all the necessary permits to operate legally within Canada.
Do installment loans require credit checks?
It depends on your lender. Most banks and credit unions will run your credit because it tells them the likelihood that you’ll make your payments on time. However, if you have bad credit or you’re new to the country, many alternative lenders can offer you an installment loan with no credit check once you provide an acceptable income, a cosigner and/or collateral, for example.
Will an installment loan affect my credit?
This also depends on how your lender operates. For instance, if your lender reports your loan activity to both or one of Canada’s main credit bureaus (Equifax and Transunion), all your payments will impact your credit in some way. If you pay your installments on time, your credit scores and history will likely be positively affected.
What happens if I miss a payment?
If you miss a loan installment, several things can happen. First, the lender could add a penalty and interest to your debt. Then they may report it to the credit bureaus, which can lower your credit scores and leave a lasting negative mark on your credit history. The more payments you miss, the worse the situation will get. If you default entirely and your debt is large enough, the lender might turn it over to a collection agency, seize any asset that you gave as collateral or make your cosigner responsible for your payments.
Can I pay my installment loan off yearly?
Yes, many lenders will allow you to pay your loan off early, free of charge. Then again, some lenders will penalize you for breaking your contract, so always be very careful and confirm your lender’s rules before applying for an installment loan in Canada.
Get expert tips and guidance from a community of renown personal finance experts right here at Loans Canada. We're here to help you stay informed so you can make the best financial decisions.
Navigating financial challenges while receiving disability assistance can be tough, especially when you struggle to find approval for a loan. For Cana...
While both a grant and a loan can provide you with the funds you need, they are two very different options. Keep reading to see which one is right for...
As a senior, getting a loan can be more difficult due to lower income and age restrictions. Thankfully, there are many home equity loans for seniors i...
