How to Get a Personal Loan in Canada
A personal loan in Canada is usually unsecured with a fixed rate, fixed payment, and a term of 1–5 years (up to 7). Banks and credit unions serve strong credit; online lenders approve wider ranges at higher rates. Newcomers can qualify by building Canadian credit history first — or through newcomer banking programs that lend on foreign credit references.
The Steps
Follow these in order
Each card shows the phase, expected time, and any cost. Data checked against official CAN sources(2025-Latest).
0 of 6 steps
- Before You Go 15 min
Check your credit score and history
Free through Equifax and TransUnion (the official sources) or your bank's app. Big banks generally want 660+ for their best unsecured rates; 620–660 moves you toward credit unions and mid-tier online lenders; below 600 narrows to alternative lenders and secured or co-signed options. If your score is borderline, paying card balances below 30% of limits for a month or two helps before you apply.
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- Go 1 hour
Pre-qualify with several lenders
Many Canadian lenders and brokers (Loans Canada, LoanConnect, and several banks) offer soft-pull pre-qualification showing your rate without affecting your score. Compare banks (RBC, TD, Scotiabank, BMO, CIBC, National Bank), your local credit union, and one or two online lenders. Credit unions are frequently the most flexible for newcomers and average credit.
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- Fill / Prepare 20 min
Compare APR, term, and — in Quebec — the cap
Judge offers by APR and total cost of borrowing, which lenders must disclose. Rates commonly run from around 7% for strong credit to above 40% from alternative lenders; Quebec caps most consumer loans at 35% APR, making it stricter than other provinces. Choose the shortest term whose payment fits your budget, and confirm there are no prepayment penalties so you can pay extra freely.
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- Fill / Prepare 10 min
Decline loan insurance unless you have shopped it
Canadian lenders commonly offer creditor life/disability insurance on personal loans — often priced into the payment at a cost well above term life insurance you could buy separately. It is optional and can be refused at signing. If you want coverage, compare a personal term policy first; it is usually much cheaper for the same protection.
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- Submit & Pay 1–7 days
Sign and receive funds
Approval can be same-day at online lenders and within a few days at banks; funds arrive by direct deposit, often within 24–48 hours of signing. Set the payment date for the day after payday, and set up automatic payments — one missed payment hits your credit file and your renewal rates for years.
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- Follow Up 10 min
Watch for the fee-advance scam pattern
The classic Canadian loan scam: an "approved" lender demands an insurance fee, deposit, or "first payment" by e-Transfer or crypto before releasing funds. Legitimate Canadian lenders never require money upfront to issue a loan. Verify any lender with your provincial consumer affairs office or the FCAC, and report fraud to the Canadian Anti-Fraud Centre.
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FAQ
Frequently Asked Questions
Can newcomers to Canada get a personal loan?
Yes, though thin Canadian credit history is the hurdle. Practical routes: newcomer mortgage and banking programs at the big banks (some lend against foreign credit references and employment letters), credit unions (more manual underwriting), a secured credit card or credit-builder loan first (6–12 months of history makes a real difference), or a co-signer already established in Canada.
Secured or unsecured loan — which should I pick?
Unsecured loans need no collateral and are the standard choice; rates are higher because the lender carries all the risk. Secured loans (against a car, savings, or home equity) approve more easily and cost less, but the asset is at stake if you default. If you qualify for an unsecured loan at a workable rate, keep your assets unencumbered.
What rate should I expect?
Rough guide for 2025: excellent credit (720+) can find roughly 7–13% at banks and credit unions; good credit (660–719) around 13–20%; fair credit (600–659) 20–30%+ at online lenders; below that, alternative lenders 30–46.96% — approaching territory where a secured or co-signed route usually beats the unsecured offer.
Is a line of credit better than a personal loan?
A personal line of credit offers flexibility (draw as needed, pay interest only on what you use) at a variable rate; a personal loan is a fixed lump sum with a fixed end date. For a one-time known expense and payment discipline, the loan's fixed payoff date wins. For ongoing or unpredictable needs with disciplined repayment, a LOC costs less in total interest.
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