While Canada is a land of great opportunity for many newcomers, there are many challenges. As a new immigrant, you have to re-establish yourself. You might need to navigate college or university systems, find a job, find a home, apply for any relevant social support, and start building your credit.
Unfortunately, settling in Canada isn’t cheap, and sometimes you’ll need to borrow money. But are there loans for immigrants in Canada?
Key Points To Remember
- Newcomers can get any type of loan in Canada so long as they are permanent residents.
- Newcomers can access various types of loans from banks, alternative lenders, non-profit organizations and government programs.
- The biggest hurdle for newcomers when it comes to getting credit is their lack of credit history.
- As a newcomer, you can improve your odds of getting a loan by building your credit score, gaining stable employment and increasing your income.
Can You Get A Loan As A Newcomer In Canada?
Yes, you can get a loan as a newcomer in Canada. However, qualifying for one may be difficult, depending on your status and financial health.
In Canada, you must have good credit, a healthy income and low debt to secure loans with the best terms.
Why Is It Difficult For Newcomers To Get Loans?
Unfortunately, newcomers with healthy income and debt levels may still face challenges when it comes to accessing loans due to their lack of credit. Credit history and credit scores do not follow immigrants from country to country, they must start from scratch once they come to Canada.
The good news is that starting to build credit from scratch is generally much easier than recovering from bad credit. Moreover, so long as you are a permanent resident of Canada, many loan and credit options cater to Canadian immigrants.
If you’re unsure you have a credit score in Canada, you can check yours for free using Loans Canada’s Compare Hub.
Where Can You Get A Loan As A Newcomer In Canada?
There are many sources and types of loans you can access as a newcomer in Canada. From the government to banks to alternative lenders, the possibilities are endless.
Windmill Microlending
Windmill Microlending is a Canadian charity that provides affordable loans to skilled immigrants and refugees. Since 2005, Windmill Microlending has helped thousands of newcomers to Canada cover the costs of accreditation and career development.
Those with specific skills, training, and education who are new to Canada may find it difficult to advance their careers due to financial hurdles. With Windmill Microlending’s low-interest microloans, underemployed immigrants can access credit despite their low income or lack of credit history in Canada.
What Does Windmill Microlending Offer?
Windmill Microlending offers small loans of up to $15,000. Windmill microloans have a fixed rate of 6.7%. In addition to its affordable microloans, Windmill also provides support through:
- Career path coaching
- Mentorship
- Budgeting tools
- Financial planning advice
- Career development resources
You can use the money for numerous purposes, including qualifying examinations, assessments, training, educational materials, living allowance, relocation expenses and professional association fees.
Banks
In Canada, you generally need good credit and healthy finances to access loans from banks. However, some banks offer specialized loan offers for newcomers. Instead of credit requirements, they may have strict income and employment requirements. They may also require collateral as security or a higher down payment for car loans or mortgages.
Alternative Lenders
Private lenders offer loans without as strict criteria requirements as banks normally have. For example, in exchange for a higher interest rate, a private lender may overlook a Canadian immigrant’s lack of credit history or low income and approve a loan more quickly.
Moreover, unlike banks, many alternative lenders will offer loans to newcomers who have an alternative source of income, such as self-employment income, pension or government benefits such as Canada Child Benefit (CCB), employment insurance (EI) and disability benefits.
Where Can You Get Loans As A Newcomer?
Are There Government Grants For New Immigrants In Canada?
The federal government of Canada offers loans to immigrants (mainly refugees) through their Immigration Loans Program (ILP). Specifically, this program offers immigrants three kinds of loans:
Transportation Loans For Immigrants In Canada
This type of loan is meant to cover the costs associated with transportation for immigrants and their families from their home country to Canada. This may include the cost of travel to Canada, transportation tax and any IOM (International Organization for Migration) service fees.
New immigrants must book their travel with the assistance of the IOM to be eligible for this loan.
Assistance Loans For Immigrants In Canada
The assistance loan is meant to help immigrants cover the costs of initial resettlement, like basic needs and employment costs. It can help cover basic needs such as rent, utilities, food, clothing and household items.
Right Of Permanent Residence Fee (RPRF) Loans
The RPRF loan is meant to assist immigrants in covering the cost of RPRF when seeking permanent residence for themselves or their families. For more information about RPRF loans, visit the Canadian government’s RPRF webpage.
Learn more: Immigration Loans Program (ILP)
What Types Of Loans Can You Get As A Newcomer In Canada?
As a newcomer to Canada, you can access any type of loan so long as you meet the lender’s criteria. This may include income, debt, and credit requirements.
Personal Loans For Newcomers In Canada
A personal loan provides a lump sum of money that is repaid in regular installment payments over a specific period. Loan amounts range from $100 to $50,000, with terms between 6 months and 5 years. The loan may come with either a fixed or variable interest rate, and the funds can be used for just about any purpose, including the cost of advancing one’s career.
Borrow Up To $50,000
Lines Of Credit For Newcomers In Canada
A line of credit is a type of financing that allows you to borrow money up to a certain limit, similar to a credit card. There is no set payment schedule, and you’re only charged interest on the funds withdrawn from the credit line.
However, you must make interest payments on the amount you borrow each month. Like personal loans, the money obtained through lines of credit can be used for a variety of purposes.
Credit Cards
As a newcomer, a credit card can provide you with financial flexibility and the ability to build credit. However, getting approved for a credit card can be difficult as many require good to excellent credit. That said, many banks offer newcomer packages that include access to a credit card. You can also apply for secured credit cards or credit cards with low-income or no credit requirements.
Learn more: Best Credit Card For Newcomers In Canada
Mortgages
If you need financial assistance to help pay for housing, a mortgage can help. Mortgages are specifically designed to cover the cost of buying a home. These secured loans are backed by the house itself. With a mortgage, you’ll make installment payments over a specific loan term until the loan amount — plus interest — is fully repaid.
Loan terms can be as long as 25 or 30 years, but tend to come with lower interest rates compared to unsecured personal loans because of the collateral involved. Many lenders and banks offer mortgages that are specially designed for newcomers.
Learn more: Mortgages For Newcomers In Canada
Car Loans
Car loans are designed to help pay for the purchase of a vehicle. These loans are secured by the vehicle and are repaid with installment payments over a set period. You can get a car loan from a bank, private lender, or from the car dealer’s in-house financing.
Car loans can be used to finance both new and used vehicles, though rates tend to be lower for new vehicle financing.
Learn more: A Guide To Car Loans For Newcomers To Canada
How To Qualify For Loans As A Newcomer To Canada
Whether you’re looking to apply for a personal loan, car loan or mortgage, there are certain factors lenders assess when determining your creditworthiness. While banks may put more emphasis on your credit score, private lenders base their approval on your overall financial health. Some factors private lenders consider include:
- Income
- Debt level
- Job stability
- Assets
Do You Need To Be A Permanent Resident To Get A Loan?
Yes, you must be a Canadian citizen or permanent resident to be eligible for a loan in Canada. If you don’t have your permanent resident card or if it’s expired, be sure to get one or have it renewed.
Learn more: What Can You Do With A Temporary Resident Visa In Canada?
How To Get A Loan As A Newcomer: Build Your Credit With Credit Building Products
One of the best ways to qualify for loans as an immigrant is to build your credit. There are many types of credit-building products to help new immigrants build their credit in Canada. Let’s take a look:
Secured Credit Cards
Unlike traditional credit cards, secured credit cards have security deposits to back them up. If the borrower cannot pay their bill, the security deposit covers the credit used. These credit cards are a popular choice for newcomers to Canada. The security deposit allows enough trust from the creditor to overlook the lack of credit history.
If you’re looking to start building your Canadian credit history, finding a secured credit card that meets your needs should be your first step. Once you have your card, use it to purchase important necessities like groceries or set up a recurring bill payment. Our number one piece of advice is to make sure the credit card provider reports your payment to the credit bureaus, this is how you will build your credit history.
Cap One
| Annual Fee | Minimum Security Deposit | Perks | |
| Neo Secured Credit | $0 ($5 monthly fee) | $50 | – Earn cash back on purchases – Add extra optional perks for a fee |
| Secured Tims® Mastercard | $0 | $50 | – Earn Tim Rewards on purchases – Extended warranty |
Credit Builder Products
Canadians have access to a wide range of digital tools designed to help build and improve credit. From credit building apps to rent reporting services, these tools offer valuable features to track, manage, and strengthen credit. Let’s explore some of the top options, how they work, and where you can find them.
| Product | Cost | Features | |
| Nyble | Credit building line of credit | Optional $11.99/ month membership fee | – Reports to Equifax– Access up to $250 |
| KOHO Credit Building | Credit building line of credit | – $5 to $10/ month- $5 monthly service fee for secured option | – Reports to Equifax– Secured and unsecured options |
| Kikoff | Credit builder | Starting at $10/ month | – Reports to Equifax |
| Spring Financial – The Foundation | Credit building program | ~66$/ biweekly | – Reports to Equifax and TransUnion– You save $750 |
| Chexy | Rent reporting for credit building | No monthly fee | – Reports rent payments to Equifax |
Newcomer Programs From Banks In Canada
Many banks in Canada offer newcomers programs designed to help immigrants access credit. Let’s take a look at some of them.
CIBC Banking Solutions For Newcomers
The CIBC Newcomers Program provides various deals on everyday banking products. Newcomers can get the CIBC Smart™ Account with no monthly fee for 2 years. Similarly, they offer global money transfers with $0 transfer fees.
TD Banking Solutions for Newcomers
TD offers a variety of programs designed to help newcomers settle into their Canadian financial life. Including chequing accounts with no fees for 12 months, flexible mortgages for individuals with no credit history, secured credit cards, and more.
RBC Newcomers Advantage
RBC offers a variety of products for newcomers to Canada. Including car loans and mortgages with no credit history required. Preferred interest rates for investments, no fees for chequing accounts, and free international money transfers (for a limited time).
Learn more: Best Bank For Newcomers In Canada
Final Thoughts On Loans For Immigrants In Canada
Finding a loan as a new immigrant in Canada is a challenging task. For a variety of reasons, including risk and credit history, most Canadian lenders prefer applicants to have a permanent residency.
That being said, many options are offered by the federal government, banks, and private lenders to help establish their credit and access loans.
