📅 Last Updated: April 30, 2024
✏️ Written By Bryan Daly
🕵️ Fact-Checked by Caitlin Wood
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Ontario is the largest province in Canada with approximately 14 million Ontarians living there. It is considered an expensive province to live in due to the high cost of living, particularly in its major cities like Toronto, Brampton, Mississauga, Markham, Oshawa, Ottawa and Barrie. For a 2-bedroom apartment, rent alone can cost Ontarians $2,000 a month depending on the city they live in.

Other costs like insurance, daycare, transportation and general activities can also have a big impact on cash flow for many Canadians in Ontario. If you’re struggling to cover certain costs or need extra cash to cover an expense, a personal loan can help.

What Can A Personal Loan Be Used For In Ontario?

Personal loans come in the form of cash that is deposited directly into your bank account. As such, you could use your personal loan to pay for any expense or activity in Ontario:

  • Pay For Your Utilities – Pay your cell phone bill or water heater bill using a personal loan. You can even use it to buy out of your water heater rental contract
  • Pay For A Local Trip In Ontario –  While it’s not recommended that you use a loan to pay for a trip, it is an option if you know 100% that you can pay it off with ease. So whether you want to go camping at Ontario Parks, the Algonquin Provincial Park, Bruce Peninsula National Park or any of the other major parks in Ontario, a personal loan can make your trip affordable.
  • Education In Ontario Is Expensive – Many students rely on OSAP in Ontario, however, not everyone qualifies. A personal loan can help cover your cost of education in Ontario. 
  • Cover Your Car Repairs And Maintenance Costs – In Ontario, auto insurance can cost an arm and a leg in certain cities like Toronto. Many Ontarians opt for less coverage as a result. If you have an accident and your auto insurance isn’t able to cover the entire bill, you could use a personal loan to cover the cost.

Regulations You Should Know When Getting A Personal Loan In Ontario

A handful of provinces in Canada have a framework designed specifically to deal with high-cost credit loans. However, Ontario has not yet adopted such a framework, though there are talks of such regulations coming in the near future. 

In January 2021, a proposal was created with suggestions surrounding how business practices can be improved in Ontario to better protect consumers in the high-cost credit industry. Right now, only British Columbia, Alberta, Manitoba, Quebec, and Newfoundland have regulations in place to govern these costly loan products, but Ontario still has not cemented such regulations. 

Max Interest RateCurrently, there are no provincial interest rates or fee limits on high-cost credit lenders (other than payday lenders) in Ontario. However, lenders must follow the federal Criminal Code interest rate limit of 60% (APY), which is equivalent to 47% (APR).
Fee CapsWhile there are no provincial caps on fee charges, there are federal rules. The total fees, cost and interest of a high-cost personal loan cannot be more than the criminal interest rate of 47% APR.
Licensing RequirementsAlternative lenders (other than payday lenders) are not required to be licensed in Ontario.
Debt Collection RulesWhile there are consumer protection rules on how collection agencies can contact borrowers, none such exist for high-cost credit lenders (other than payday lenders).

What Credit Score Do You Need To Get A Personal Loan In Ontario?

Lenders in Ontario often examine your credit scores as part of their application procedure to determine your creditworthiness. If you have bad credit scores, it can be difficult to get a personal loan from a traditional bank in Ontario, however, there are alternative lenders in Ontario who look beyond your credit during their underwriting process.

Normally, a score of 650 or above signals that your credit is solid and gives you the best opportunity for approval in Ontario, as well as a favorable interest rate. Depending on your lender, a score below that level may still be acceptable. However, your interest rate might end up being higher, ultimately making the loan more expensive over time.

Documents Required To Get A Personal Loan In Ontario

Lenders in Ontario will require a number of personal and financial information from you in order to assess you for a personal loan. Generally, you can expect to provide the following:

  • Personal Information – You’ll need to provide documents to prove your identity and address, this includes a government-issued photo ID, SIN card (optional), utility bill and other personal documents. 
  • Financial Records – In order to evaluate your financial situation, your lender will require documents that show your income like pay stubs, a T4 slip or an NOA statement. Similarly, they may also for an employment letter to verify your employment and its stability. They may also require your bank statements to calculate your debt to income ratio. Your bank statements from previous months/years
  • Bank Details – Your lender may also ask for a void cheque or direct deposit information for the loan funding and repayment.

Instant Bank Verification For Personal Loans In Ontario

When you apply for a personal installment loan in Ontario, the approval process will typically involve an instant bank verification (IBV) process. Lenders use IBV to quickly verify your identity and income, without you having to provide any documents. Instead, you simply sign into your bank account through a secure portal hosted by a reputable third-party provider. 

Through IBV, the lender will receive a read-only copy of your bank statement, which they’ll use to identify and verify your income.

How To Increase Your Chances Of Qualifying For A Personal Loan In Ontario

There are several factors that lenders look at when assessing your loan application. Lenders want to make sure that you have the financial strength to make timely loan payments. And to do that, they’ll look at your income, debt levels, credit score, and other factors.

To boost the odds of getting approved for a personal installment loan, consider the following tips:

Improve Your Credit Score

Lenders look at credit scores as a way to estimate how likely you are to repay your loan. The higher your credit score, the more likely you’ll be approved, and the lower your interest rate will be. If your credit score is lagging, take some time to give it a boost. 

Find out where you’re starting from by checking your credit score for free on Loans Canada’s CompareHub tool.

Get A Cosigner

A cosigner is someone with good credit and strong financials who guarantees the loan on your behalf. If you’re unable to continue making loan repayments, the cosigner will take over. This reduces the risk for the lender and may improve your chances of getting approved for a loan.

Secure The Loan With An Asset

Secured loans are backed by collateral. This lowers the lender’s risk, since the asset can be seized and sold to cover the lender’s losses if you default on your loan. If possible, consider adding a valuable asset, such as your home or car, to increase the chances of loan approval. Just keep in mind that using collateral can be risky, as you could lose possession if you fail to keep up with your loan payments. 

Pay Off Some Debt Before Applying

If you’re carrying a lot of debt, that could weaken your loan application. Before applying for a short-term loan or personal installment loan in Ontario, take some time to pay down your existing debt. This will improve your debt-to-income ratio and make it easier to get approved for a loan.

Benefits Of A Personal Loan

  • Versatile – They allow you the opportunity to pay for whatever you want, possibly larger expenses than your credit card or current income will allow.
  • Lower Interest Rate -They usually come with lower interest rates than most credit cards
  • Flexible Payment Options – Most personal loans are offered with different payment period options (monthly, semi-monthly, weekly, bi-weekly, etc.)
  • Secured – You may have the choice of using your assets (home, car, or other property) as collateral to secure your loan, possibly earning you an even better interest rate

Drawbacks Of A Personal Loan

  • Higher Requirements – Generally, there are more requirements to qualify for a personal loan than a credit card
  • Impact Credit Scores Missed payments may negatively impact your credit.

Can You Get Personal Loans In Ontario On Employment Insurance?

Yes, many lenders accept non-traditional forms of income, such as EI. Many of these alternative lenders provide a quick and easy online loan application and often approve loan applications within 24 hours.  

Do note, however, that applying for a personal loan while on EI will likely mean that you’ll pay higher interest than you would if you were traditionally employed and earning a steady income. This is because the risk for the lender increases when dealing with non-traditional income sources such as EI.

Places To Help You Get A Job In Ontario

A great option for those looking for work is to use the services of a staffing agency. These companies network with employers in the local area and are able to help job-seekers fill job vacancies. There are several employment agencies in Ontario that specialize in recruiting unemployed residents.

Here are a few to consider:

Quality Staffing Pro

Quality Staffing Pro connects job seekers with businesses in Ontario looking for reliable and hard-working employees. The company has headquarters in Toronto and Oshawa, but services all residents of Ontario. You’ll find jobs of all sorts, including contract, temporary, and permanent positions. Job openings are available in a wide variety of industries, including administrative, data analysis, general labour, and management. 

LRO Staffing

LRO Staffing is an employment agency headquartered in Ottawa that services job seekers in Ottawa and Toronto. The company specializes in recruiting and placing employees in permanent, temporary, and contract positions across several markets in Canada, including administrative, finance, human resources, marketing, construction, government, and manufacturing, among others. 

Workforce Inc.

Headquartered in Sudbury, Workforce Inc. is staffed with a team of recruiters who have all received their Certified Personnel Consultant designation. The company services job seekers in Sudbury, Sault Ste. Marie, Thunder Bay, Timmins, and Toronto. 

Workforce Inc. focuses on filling jobs in skilled trades, labour, and professional designations. You’ll find jobs like Mine Technicians, AZ Truck Drivers, Logistics Coordinators, Receiving Clerks, Electrical Designers, Machine Operators, and General Labours, to name a few.

Alternatives To Personal Loans In Ontario

If you require financial assistance, there are other options that may be available to you as an alternative to a personal installment loan in Ontario, such as the following:

Financial Resource
Ontario Works Learn More
Ontario Disability Support Program (ODSP)Learn More
Low-Income Energy Assistance Program Learn More
Ontario Guaranteed Annual Income System (GAINS) Learn More
Ontario Child Benefit Learn More

Other Financial Assistance Programs In Ontario

In addition to the above-mentioned programs, many other financial assistance programs are available in Ontario to help residents cover the cost of basic necessities. An easy way to find these resources is by searching www.211.ca, a website that connects Canadians with various services. Here are a few programs available to Ontario residents: 

Financial Assistance For Utility Bills

Many low-income residents in Ontario struggle to keep up with the cost of utilities. To offset these costs, financial assistance programs are available in Ontario to help pay for gas and hydro bills, such as the following:

  • Ontario Energy Board’s Low Income Energy Assistance Program (LEAP). This program provides up to $1,000 in emergency financial assistance to help low-income Ontario residents pay their gas or electricity bills.
  • Ontario Electricity Support Program (OESP). This program applies a monthly credit directly to electricity bills.

Housing Affordability Assistance

An increasing number of residents in Ontario are struggling to afford mortgage payments and rent. To ward off potential homelessness as a result of the housing affordability crisis, the Canada Ontario Housing Benefit (COHB) program is available. This program provides eligible Ontario residents with a housing benefit to help with rental costs in private housing markets anywhere in Ontario.

To qualify for the COHB, applicants must live in Ontario and be on the waiting list for social housing. The benefit pays the difference between 30% of the household income and the average rent in the area. 

Food Banks

More and more Canadians are turning to food banks to help provide nourishment as the cost of groceries continues to rise. Fortunately, there is no shortage of food banks throughout Ontario, such as the following:

  • Native Women’s Resource Centre of Toronto Food Bank: 230 College St, Toronto, ON, M5T 1R
  • St Joseph’s Parish, St. Joe’s Supper Table: 151 Laurier Ave E, Ottawa, ON, K1N 6N8
  • Thunder Bay Food Bank: 129 Miles St E, Thunder Bay, ON, P7C 1J5
  • Windsor Goodfellows Food Bank: 401 Park St W, Windsor, ON, N9A 5V4

Where Can You Find Consumer Protection Offices In Ontario?

Businesses in Ontario have specific rules to follow when it comes to how they deal with consumers. The Ontario Consumer Protection Act sets out various consumer protection laws that businesses must follow. The goal is to protect consumers and ensure they’re treated fairly.

If you believe that you’ve been unfairly treated by a business, you can reach out to the Consumer Protection Division:

  • By telephone: 1-800-889-9768 
  • By email: consumer@ontario.ca
  • In person: 900 Bay St. #6, Toronto, ON, M7A 1L2

Frequently Asked Questions

Can I get a personal loan with bad credit in Ontario?

Yes, while it may be tough to qualify for a personal loan with a bank or credit union when you bad credit, there are many alternative lenders whose entire business model revolves around providing loans to individuals with bad or no credit. These lenders have different requirements than traditional financial institutions and approve their applicants on their overall financial health. Your level of income, your job stability and your debt level are some common factors they’ll use to determine your creditworthiness.

Should I get a payday loan instead of a personal loan?

While a payday loan has much lower requirements for approval, it is also the most expensive form of borrowing. It usually carries an APR between 400% to 600% and has an extremely short repayment period of 14-days. Many borrowers who use payday loans, often fall into the payday loan cycle and get trapped in a web of debt. On the other hand, a personal loan comes with much lower interest rates and longer repayment terms, which makes payments affordable and manageable.

How do I know I’m getting the best personal loan in Ontario?

Comparing lenders is one of the best ways to know if you’re getting a good deal for you. Interest rate, repayment terms, administrative fees, NSF fees and any other fees involved should be compared to understand which loan terms work the best for you. While a low-interest rate with a short repayment term may work for one person, another may prefer a longer repayment period even if it means they get a slightly higher rate. Be sure the calculate the fees involved, as some lenders may offer a low rate but compensate it through high fees.

How To Apply For A Personal Loan In Ontario? 

If you want a personal loan to pay for something essential, the time to apply is now. Loans Canada can help set up with a lender in Ontario who can offer you terms and conditions that best meet your needs. Simply click the “apply today” button to get started!

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