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If you’re one of the 1 million Canadians with bad credit, you probably know first-hand how it can disrupt every area of your life. From getting approved for a credit card, applying for a mortgage, renting an apartment, or even getting a job, having bad credit makes even the most important tasks difficult. Getting a personal loan when you have bad credit isn’t easy. Many lenders won’t approve you for a personal loan if you’ve made choices that have resulted in bad credit, bankruptcy, or defaulted loans, but there are still options out there. Below is the list of our top recommended bad credit lenders, and there is more information about each lender further down in this article.
Bad Credit Loans Explained
When you apply for a loan through either a bad credit lender or a bank, the first thing your lender will do is pull your credit report. Your credit report shares information about your financial history, including whether you’ve declared bankruptcy or whether you’ve defaulted on any loans. If either of these things has happened to you, you’ll likely have a bad credit score, and unfortunately, there aren’t many mainstream banks in Canada that will approve a loan for a borrower with bad credit.
Top Bad Credit Loans Providers in Canada 2019
|Company||How Much You Can Borrow||The Interest Rate You’ll Pay||More Info|
|Loans Canada||Up to $50,000||Starting at 5.15%||Learn More|
|LoanConnect||$500 - $50,000||4.8% - 49.96%||Learn More|
|Ferratum Loans||$2,000 - $10,000||Up to 18.9%||Learn More|
|Lending Mate||$2,000 - $10,000||34.9% - 43%||Learn More|
|Loan Away||$1,000 - $5,000||19.9% - 45.9%||Learn More|
|Easy Financial||$25,000||From 29.99%||Learn More|
|Northstar Brokers||$300 - $3,000||Not specified||Learn More|
Unsecured Loans for Bad Credit
What is an unsecured bad credit loan? It means that you don't have to use any collateral, such as your home or car, as security for the loan. So you won't be putting your property or possessions at risk if you default on payments. If you have bad credit, getting an unsecured loan can be tricky, but not impossible. If you can provide a guarantor/co-signer with a good credit rating, many of the best bad credit loan lenders will likely approve your application.
Top Unsecured Bad Credit Loans Providers
An unsecured loan does not use any collateral (such as your car or home) as security for your loan, which means you won’t be putting your property at risk f you can’t keep up with repayments.
To apply for a loan with Loans Canada, you need to be the age of majority within your home province, have proof of employment, and be either a Canadian citizen or have permanent residence. Loans Canada doesn’t offer loans itself, but rather, works like a search directory to help you find the best loans, maximum loan amounts and interest rates vary greatly. That being said, this company prides itself on being able to find the best loan option based on your needs and location, making it a good place to look for those with bad credit.
If you’re over the age of majority and a Canadian citizen, you qualify to apply for a Loan Connect loan and borrow between $5,000 and $50,000. Loan Connect promises to give you a reply about your application immediately and connect you with lenders who can provide you with funds within 24 hours of submitting your application. Loan Connect accepts applicants with bad credit, those in a consumer proposal, and those with bankruptcies on their credit reports.
To apply for a Ferratum Loan, you must be at least 18 years old, a permanent resident of Canada, and with your employer for at least three months. You can borrow between $2,000 and $10,000 for up to 5 years, and you can choose to make payments weekly, bi-weekly, or monthly. Ferratum Loans does not add any extra fees to their loans, and you can pay your loan off ahead of schedule without penalties. The interest rates are as low as 18.90%, and you can receive your funds in 24 hours. On the downside: Ferratum Loans are only available for residents of Newfoundland, Nova Scotia, New Brunswick, Ontario, Alberta, or British Columbia.
LendingMate offers loans for Canadians between 19 and 75 years of age, and they can lend to anybody, regardless of credit score, as long as they are not bankrupt or in an active consumer proposal. All you need to do is provide a suitable guarantor. That means if a friend or family member trusts you will make payments on time, they can be your guarantor and you can borrow the money you need over a more flexible term. LendingMate has a 95% approval rate and you can borrow up to $10,000 within 24 hours.
To apply for a loan through Loan Away, you need to be at least 18 years or older, be a Canadian citizen, not be in bankruptcy or consumer proposal proceedings, and have been employed for three months or more. If you meet these requirements, you can apply for a personal loan as large as $5,000, and repay over three years. Loan Away operates in Alberta, Ontario, and Newfoundland, and they claim to accept over 90% of loan applications. It takes about 8 minutes to apply for a loan through Loan Away, and the money could be deposited in your account in 24 hours.
EasyFinancial is an option for Canadians who are over 18 years old and are Canadian residents. To apply for a loan through EasyFinancial, you’ll need a bank account and be employed for at least two months. Easy Financial offers both secured and unsecured loans in Canada, and they don’t discriminate against Canadians with previous bankruptcies on their credit history. They offer unsecured loans up to $15,000 and secured loans up to $25,000. EasyFinancial reports your regular payments to Equifax and Transunion, which will help you rebuild your credit score.
If you’ve had a chequing account for three months, are free of bankruptcy proceedings, and have been employed for six months or more, Northstar Brokers might be a good option for you. This bad credit lender requires you to have lived at the same address for six months and have your employment earnings deposited through direct deposit or cheque. You can apply for unsecured loans in amounts up to $3,000, and they won’t run a credit check as part of the application process.
Bad Credit Loans Lenders
If you have bad credit, you’ll need to turn to an institution that is not a bank to secure a loan. This situation is where bad credit lenders come in handy. Bad credit lenders are private lenders for personal loans, and there are several in Canada. The main difference between bad credit lenders and banks is that banks tend to only lend money to individuals with good to excellent credit scores and an impeccable credit history, whereas bad credit lenders take a much wider range of factors into consideration between deciding whether to loan you money. There are a few key differences in how banks and bad credit lenders will approach your loan application:
- Some Canadian bad credit lenders will guarantee loan approval, even if you’ve had a bankruptcy, defaulted on a loan, or been in a consumer proposal. These money mistakes are usually no-go’s for banks.
- Many of Canada’s bad credit lenders are available online only. Since they don’t have physical branches, they can pass on those savings to the borrower, and keep your lending costs reasonable, even though you have bad credit and are riskier than the average borrower.
- Some bad credit lenders will approve you for a bad credit loan without a credit check. Instead, they’ll take other factors into account when approving your loan, like your debt load and your income. A traditional lender like a bank will always check your credit score and will deny your loan even if you prove that you can pay it off.
- You can expect to pay higher interest rates when you apply for a loan with a bad credit lender than you would through a regular bank. These higher interest rates offset the increased risk that bad credit lenders take on when approving a loan for someone with bad credit.
Secured Bad Credit Loans
What is a secured bad credit loan? It means that if you have collateral like home equity, a car, jewelry, or other valuable items, you can use it to secure a loan and obtain a lower interest rate. The downside to secured loans is that if you can’t make your payments, your lender can seize your collateral as payment. Lenders can issue secured loans to customers with both bad and good credit ratings, as the advantages are larger loans and a lower interest rate.
Is There a Guaranteed Approval for Bad Credit Personal Loans?
There is such a thing, but be wary of any lender advertising “guaranteed approval.” The truth is, there's no way to 100% guarantee approval and trustworthy lenders usually won't advertise that. A safer option is to seek out legit lenders who can provide personal loans without checking your credit rating during the application process. Instead, they'll look at other factors when evaluating your application. Another option is to apply for a guarantor loan, which means that the lender will check the credit score of your co-signer/guarantor instead. If you need access to fast cash, look for a lender that offers same-day approval.
Getting a Bad Credit Personal Loan in Canada with No Credit Check
If your credit score is very low, it might be worthwhile to seek out a lender who will approve your loan with no credit check. In this case, your lender will use other information to determine whether you can pay off your loan, so be ready to answer some questions about your finances. Some examples of the types of questions lenders may ask you include:
- Your income, either hourly or annually (and be prepared to provide proof)
- Whether you are employed or self-employed, how large the business is, and how long you’ve worked there
- Whether you have someone who can co-sign on your loan
- Whether you have declared bankruptcy or are currently going through bankruptcy
- How much debt you have, what types, and what the interest rates are
Avoid payday loans at all costs, as you'll get trapped in a cycle of payday loans because of the sky high-interest rates. Instead, consider applying for a short-term loan (4 to 24 months): it typically doesn't require a credit check and offers a more manageable repayment plan.
How to Choose the Right Personal Loan for Bad Credit
There are many bad credit lenders in Canada, so when you are doing your research and choosing the right one for your situation, keep these factors in mind:
- Interest rates: The lower the interest rate, the better – so prioritize lenders offering reasonable interest rates. Make sure you check their maximum interest rate before applying for the loan and do the math on whether you can afford the payments with the interest rate they offer you.
- Fees: Some bad credit lenders require you to pay either a flat fee or a percentage of your loan amount. Read the fine print of your loan agreement to check for any of these possibly hidden fees.
- Penalties: If you miss a payment on your bad credit loan, you’ll usually pay a penalty. The same is true if you want to pay your loan off early or make a late payment. Get a clear understanding of the possible penalties before signing up for your loan.
Credit reporting: A benefit of bad credit loans is that they report your regular payments to the credit reporting agencies in Canada, which in turn will boost your credit score. Make sure the lender you are considering reports your loan so that you can rebuild your credit score.
How to Get Unsecured Personal Loans with Bad Credit
It's not easy to get an unsecured personal loan with bad credit, but it's possible. With many of the lenders we've listed above, you can get an unsecured personal loan with bad credit if you provide a guarantor or co-signer. What this typically means is that someone you know who has good credit agrees to co-sign on your application and cover your loan payments if you default. This usually means that your credit score isn't checked, but your guarantor/co-signer's credit rating goes under the microscope instead. The advantages to a co-signer/guarantor are that you'll likely get a lower interest rate and your application is more likely to be approved. Plus, for every payment that you make, you're rebuilding your credit score. A “guarantor loan” is really the best way to get an unsecured personal loan when you have bad credit.
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