Bad Credit Loans in Canada: What To Look for and What To Avoid

Bad credit can put you in a vicious cycle. Not only is it difficult to get loans or credit cards, but you can also end up paying higher fees, making it harder to improve your credit score. A bad credit history makes loan approval challenging, even with a steady job and income.

That’s where bad credit loans come in: These often have higher fees and less favourable terms, but allow applicants who wouldn’t pass credit checks elsewhere to get some funding in an emergency. Today, we’ll look at some of the best options for bad credit loans in Canada and talk a little about what to look for in a loan provider.

Loans for Bad Credit in Canada

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LoanConnect Review

Best for Long Loan Terms

  • A solid alternative to payday loans
  • A large marketplace with lots of lenders
  • Quick online application procedure

Loans Canada Review

Best for Loan Variety

  • Numerous loan types
  • Completely free service
  • Excellent lender comparison features

Loanz Review

Best for Quick Unsecured Loans

  • Available in all 10 provinces
  • Reports repayments to credit bureaus
  • Instant approval options

Spring Financial Review

Best for Loans You Want to Repay Quickly

  • Flexible loan terms
  • Same-day personal loan approvals
  • No prepayment penalties for personal loans

SkyCap Financial Review

Best for Low APR

  • Competitive APR
  • No need for collateral
  • Official approval within 24 hours

Bad Credit Loans in Canada: Our Reviews

Finding a loan with reasonable terms can be a nightmare if you have suboptimal credit. Some lenders flat-out refuse borrowers who do not meet certain credit score thresholds, while others specialize in loans for bad credit borrowers but charge premium APR and other fees.

For this article, we reviewed five reputable loan providers, each offering a variety of options for borrowers with poor credit scores. To start with, let’s take a look at one of Canada’s largest lenders, LoanConnect.

LoanConnect Review

star 10

Best for Long Loan Terms

  • APR range: 6.99% to 46.96%
  • Loan term: 3 - 120 months
  • Loan types: Secured and unsecured
  • Loan amount: Up to $50,000
  • Minimum credit score: Any
  • BBB rating: A+

LoanConnect is a Canadian online lending marketplace based in Ontario that offers numerous loan types valued at up to $50,000. LoanConnect gives borrowers access to a network of lenders, allowing them to compare rates and terms to find the best loan for their needs. It’s a fantastic option for borrowers who have been denied by their bank or want to find loans for bad credit that won’t rob them blind with exorbitant annual percentage rates and predatory fees.

As a marketplace/search engine rather than a direct lender, LoanConnect offers many lending options, including unsecured personal loans. You can find anything from student and car loans to business, home renovation, and even debt consolidation loans.

Loan terms are just as varied, although there are no payday-style short-term unsecured loans here, as the minimum repayment term you can sign up for is three months. This is actually a good thing, as short-term personal loans with bad credit typically have horrible rates unless some collateral is provided.

Speaking of rates, LoanConnect claims an APR as low as 6.99% on unsecured personal loans and 1.90% on auto loans with collateral. Don’t get your hopes up too much, though: While there is no minimum credit rating requirement, everything depends on the lender. This means that if you’re looking for a personal loan in Canada and have bad credit, you’ll certainly find lenders that won’t turn you down. The problem is that your APR is likely to be over 40%, and it’s in your best interest to cosign a loan or use collateral.

To apply, you’ll need to be a Canadian resident aged 18 (or 19 in some regions) and have a debt-to-income ratio no higher than 60%. Many providers give instant approval, so you’ll get your funds within 12 to 48 hours.

LoanConnect is a well-regarded online marketplace, evidenced by an A+ rating and fantastic 4.64 out of 5 stars on the Better Business Bureau website. Although you’ll have to get in touch with individual lenders for any issues regarding your loans, the site also offers customer support through email and a toll-free phone line at 1-855-936-5626.


Pros

  • + A solid alternative to payday loans
  • + A large marketplace with lots of lenders
  • + Quick online application procedure

Cons

  • A marketplace, not a direct lender

Loans Canada Review

star 9.9

Best for Loan Variety

  • APR range: 2.99% - 46.96%
  • Loan term: 4 - 60 months
  • Loan types: Secured & Unsecured
  • Loan amount: $500 - $35,000
  • Minimum credit score: 300
  • BBB rating: A+

Loans Canada is a popular online loan marketplace based in Toronto, Ontario. It was founded in 2012 by Scott Satov and is a member of the Canadian Lenders Association (CLA). The company offers numerous online loans for bad credit borrowers and connects them to various lenders providing both secured and unsecured loans.

Although based in Toronto, this online marketplace helps Canadians from across the country find the ideal lender. Whether you are in British Columbia, Newfoundland, Nova Scotia, or anywhere else within Canada, you should be able to find a loan to suit your needs.

There are plenty of options in terms of loan types and terms, just as you’d expect from a loan marketplace. You can get personal, home equity, business, auto, debt consolidation, and credit-building loans. If you want to get a loan with bad credit, you can also opt to co-sign it to get more favourable terms.

The loan repayment schedule ranges from four to 60 months, and you can borrow as little as $500. On the flip side, the maximum available loan is only $35,000. As with other online loan marketplaces, you can apply with just about any credit score, but expect the APR to be highly unfavourable if your credit rating is below 550.

The application process is pretty quick, and you’ll initially need to provide only basic information, such as your age, place of residence, phone number, and employment information. Once you get in touch with the lenders, they may also require proof of residence or citizenship, bank statements, pay stubs, and other information that proves you are an eligible borrower.

When looking for a personal loan with bad credit in Canada, you want to use a reliable marketplace so that you know you’re not getting scammed by predatory lenders. Luckily, Loans Canada has been in business for almost a decade and has an excellent A+ rating and accreditation from the Better Business Bureau. You can contact the customer support team at 1-877-995-6269 from Monday to Friday between 9 a.m. and 5 p.m (EST), get in touch on social media, or shoot them an email at [email protected].


Pros

  • + Numerous loan types
  • + Completely free service
  • + Excellent lender comparison features

Cons

  • Some lenders include extra fees for loan processing or early repayment

Loanz Review

star 9.7

Best for Quick Unsecured Loans

  • APR range: 29.9% - 46.9%
  • Loan term: 12 - 60 months
  • Loan types: Unsecured
  • Loan amount: $1,000-$15,000
  • Minimum credit score: Any
  • BBB Rating: NR

Loanz is an online lender with a Canadian branch based in Calgary, Alberta that offers quick access to unsecured loans for Canadians with fair and bad credit. You can certainly apply if you have a better credit score, though the company focuses on providing a range of personal loans for bad credit borrowers. Loanz offers services across Canada, touting swift approval times and no collateral requirements.

Since this lender is focused on unsecured loans, you’ll get a slightly narrower selection—terms range from one to five years, and borrowers can get anywhere between $1,000 and $15,000. As mentioned, the main advantage here is that you don’t have to put down any collateral, but borrowers with very low credit scores may still be denied or asked to find a cosigner.

As you’d expect from a company willing to provide instant approval loans for people with bad credit, the APR is somewhat unfavourable. The best you can hope for is around 29.9%, with poor credit borrowers looking at well over 40% APR.

The application process takes around three minutes, and you’ll need to provide standard information such as your name, place of residence, phone number, proof of employment and income, and so on.

As with any other lender in Canada, you’ll have to be the age of majority in your province, have a steady income, and provide all the necessary documentation such as pay stubs, bank account information, and a government-issued ID.

The company behind the site, Loanz, Inc., isn’t accredited by the Better Business Bureau and doesn’t currently have a rating on this website. It’s well-received by the general public, though, with a 4.3/5-star rating on Trustpilot.

If you’re wondering how to get a loan with bad credit or just want to chat with customer service about your loan, you can get in touch through via phone at (587) 412-5004 or send an email to [email protected]


Pros

  • + Available in all 10 provinces
  • + Reports repayments to credit bureaus
  • + Instant approval options

Cons

  • Low maximum loan amount

Spring Financial Review

star 9.5

Best for Loans You Want to Repay Quickly

  • APR range: 18.99% - 46%
  • Loan term: 9 - 60 months
  • Loan types: Unsecured
  • Loan amount: $500 - $15,000
  • Minimum credit score: Any
  • BBB Rating: D

Spring Financial is an online lender specializing in bad credit personal loans in Canada. The company is based in Vancouver and offers its services across the country. Everything is handled through an online platform that was first launched in 2014. Spring Financial prides itself on quick approvals for unsecured loans and claims to offer loan options even for people with very poor credit scores.

In terms of loan options, the focus is on bad credit personal loans, but you can also get a $1,500 cash advance called the Evergreen Loan, mortgage options such as home loans and lines of credit, and even a credit-building loan called the Foundation.

So, what is it like to get one of this company’s loans with a bad credit score? The APR ranges from 18.99% to 46%, and terms last anywhere from nine months to five years. For personal loans, you’re looking at sums between $500 and $15,000, while the Evergreen Loan is a $1,500 cash advance you can repay over 18 months at an APR of 18.99%. On the other hand, the Foundation builds your credit by recording your payments for 12 months and reporting them to the credit bureaus, at the end of which you will have saved $750.

The application process is very quick, and you’ll typically receive funds within a day. You’ll need to provide a credit report with your credit score, proof of Canadian citizenship or residency, and employment and bank account details. You’ll naturally have to be 18 or over (19 in some territories) and have a bank account capable of receiving direct deposits.

If you are looking for a loan with a bad credit score, you want to know that the lenders who accept you are reputable and trustworthy. Spring Financial is not accredited by the Better Business Bureau and has a disappointing D rating on its site. The company fares much better on TrustPilot, though, with customers giving it 4.8 stars out of 5 across over 9,000 reviews.

Regarding customer support, you can get in touch through a toll-free phone at 1-888-781-8439 between 7 a.m. and 6 p.m. PST Monday through Friday every week or send an email to [email protected]. There is even a live chat option open Monday through Friday between 8 a.m. and 5 p.m. PST.


Pros

  • + Flexible loan terms
  • + Same-day personal loan approvals
  • + No prepayment penalties for personal loans

Cons

  • You may be asked for references to secure your loan

SkyCap Financial Review

star 9.4

Best for Low APR

  • APR range: 12.99% - 39.99%
  • Loan term: 12.99% - 39.99%
  • Loan types: Unsecured
  • Loan amount: $500 - $10,000
  • Minimum credit score: 550
  • BBB rating: A+

Spring Financial is an online lender specializing in bad credit personal loans in Canada. The company is based in Vancouver and offers its services across the country. Everything is handled through an online platform that was first launched in 2014. Spring Financial prides itself on quick approvals for unsecured loans and claims to offer loan options even for people with very poor credit scores.

In terms of loan options, the focus is on bad credit personal loans, but you can also get a $1,500 cash advance called the Evergreen Loan, mortgage options such as home loans and lines of credit, and even a credit-building loan called the Foundation.

So, what is it like to get one of this company’s loans with a bad credit score? The APR ranges from 18.99% to 46%, and terms last anywhere from nine months to five years. For personal loans, you’re looking at sums between $500 and $15,000, while the Evergreen Loan is a $1,500 cash advance you can repay over 18 months at an APR of 18.99%. On the other hand, the Foundation builds your credit by recording your payments for 12 months and reporting them to the credit bureaus, at the end of which you will have saved $750.

The application process is very quick, and you’ll typically receive funds within a day. You’ll need to provide a credit report with your credit score, proof of Canadian citizenship or residency, and employment and bank account details. You’ll naturally have to be 18 or over (19 in some territories) and have a bank account capable of receiving direct deposits.

If you are looking for a loan with a bad credit score, you want to know that the lenders who accept you are reputable and trustworthy. Spring Financial is not accredited by the Better Business Bureau and has a disappointing D rating on its site. The company fares much better on TrustPilot, though, with customers giving it 4.8 stars out of 5 across over 9,000 reviews.

Regarding customer support, you can get in touch through a toll-free phone at 1-888-781-8439 between 7 a.m. and 6 p.m. PST Monday through Friday every week or send an email to [email protected]. There is even a live chat option open Monday through Friday between 8 a.m. and 5 p.m. PST.


Pros

  • + Competitive APR
  • + No need for collateral
  • + Official approval within 24 hours

Cons

  • High credit score requirements and low maximum loan amount

How To Pick Bad Credit Lenders in Canada

Canadians owe over $1.70 for every dollar of disposable income. Individuals with overdue mortgages and business owners whose companies are struggling may find themselves in need of urgent funding.

The problem is that those expenses and debts affect the credit score of the would-be borrowers, making it difficult to find credit lenders and loan products with favourable repayment terms. With that in mind, here are some things to consider when choosing a loan provider.

Loan Requirements

Before you start your loan application, you’ll need to understand the loan terms and requirements. These vary between lenders, but there are some general guidelines that most of them in Canada follow.

Since you’re looking for a bad credit loan, a steady source of income is almost mandatory. Your business should ideally be making a profit, and you’ll have better chances of approval with a loan secured with collateral (your house or car, for example). Even though you may have subpar credit, it’s worth checking out what the lender considers optimal. 

In other words, there are typically some minimum credit score requirements you’ll need to meet even for loans with bad credit in Canada.

Loan Terms and Conditions

There are a few essential considerations for any borrower looking for a loan provider. First off, what loan types are available? Are there both secured and unsecured loan options? The former have better approval ratings, but the latter don’t require collateral. How long are the loan terms, and are there prepayment penalties? What is the repayment schedule like?

How much money can you borrow, and how quickly is it deposited into your account? Are there any lengthy background checks or hidden costs to be aware of? Loans for people with bad credit tend to offer very unfavourable terms, so it’s worth reading through the fine print to ensure you truly understand and agree with the terms and conditions before starting the loan application process.

Ongoing Costs and Fees

Following up on the advice from above, you’ll always want to be aware of all the costs and fees associated with your loan. Even though more than four-fifths of Canadians are aware of credit card fraud, many people skip reading the fine print when they take out a loan. First and foremost, find out the annual percentage rate, or APR. This figure represents your yearly interest rate, plus lender fees.

You’ll also want to check for additional costs, such as cancellation, pre-payment, origination, and late payment fees. Be aware that compared to standard personal loans, a bad credit personal loan typically has a higher APR and possibly additional fees, as people with poor credit scores are considered high-risk borrowers.

Lender Reputation and Customer Experience

Last but certainly not least, you should read up on the lenders that make your shortlist. Online forums, reviews, and Better Business Bureau ratings are all good sources for checking out a lender’s reputation.

Don’t stop there, though. You’ll want to see for yourself how the chosen lenders treat their customers. Is there a dedicated phone line you can call? How detailed is the FAQ section, and is the lender trying to hide something on its site? Before getting a bad credit loan in Canada, you’ll want to ensure you’re dealing with a reputable provider with knowledgeable and friendly staff.

Canada and Bad Credit Loans: A Quick Summary

In this article, we’ve looked at five different loan options in Canada for people with bad credit scores. Remember that having a poor credit score means you’re a high-risk borrower, so the lenders will typically charge you higher fees to compensate for the higher risk they are exposing themselves to.

It’s always best to work on your credit score or get a cosigner before applying for a bad credit loan, but if you’ve run out of options, the lenders on our list will provide reasonable loan rates even if your credit is below average. Think about how much money you need and your ideal loan repayment period, then read our reviews and pick your favourite lender. Good luck!


FAQ

What happens if I have bad credit? Can I still get a loan?

Yes, you can still get Canadian loans with bad credit, but you’ll have to deal with less favourable terms. Lenders such as LoanConnect, Loans, and SkyCap Financial offer various options for people with subpar credit scores.

What Is a Bad Credit Loan?

It is simply a loan for bad credit borrowers with a credit score deemed too low for traditional lenders. The actual value varies, but generally speaking, anything below 600 is not a great score, and if you have 550 or lower, your credit rating will most likely be considered poor. Bad or poor credit loans tend to have unfavourable terms, with higher interest rates and fees compared to standard loans.

How can I get a loan with bad credit in Canada?

You can either look for specialized bad credit lenders or try and get a cosigner on your loan to lower the interest rates and get a better deal on your loan. Alternatively, look into government programs designed to help borrowers with poor credit scores.

What’s the easiest loan to get with bad credit?

There are numerous bad credit loans in Canada, and our article has covered several great options you could consider. We’d say that, overall, marketplaces like Loans Canada and LoanConnect are the easiest places to get a loan because they can connect borrowers with lenders that accept almost any credit score.

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