The best personal loans in Canada for 2025

What is a personal loan?

A personal loan is a lump sum of money you can borrow for any purpose. They may also be referred to as instalment loans, consumer loans or long-term financing plans.

The loan is then repaid over a predetermined term, often between six months to five years. You can borrow as little as $100 to as much as $200,000, depending on eligibility factors like your income and credit score.

What can I use a personal loan for?

As the name says, you can use a personal loan for anything you like. Personal loans are often used for moving expenses, renovations, and paying off higher interest consumer debt. Other common uses include wedding expenses, vacations,  and any unexpected personal costs — really, the sky’s the limit.

This sets personal loans apart from other loan types such as mortgages, auto loans, and student loans; those are for very specific things like a home, a vehicle, or post-secondary education.  If you’re wondering whether to take out a loan, consider these factors first.

Types of personal loans

In general, personal loans are categorized as secured or unsecured loans.

Secured loans use an asset, such as your car, as collateral for the loan. This gives you a better chance of approval, especially for larger sums. If you’re unable to repay the loan, the lender can seize the asset in order to get their money back.

Unsecured loans do not require collateral, but this usually means you’ll be charged a higher interest rate and cannot borrow as much money. Lenders can find other ways to recover their money if you don’t repay your loan — such as taking money from your bank account, selling your debt to a collection agency, or suing you.

You may also find the following types of loans being marketed by lenders:

Variable rate personal loans can be secured or unsecured, but instead of a fixed rate, the interest charged fluctuates in line with prime rates, which follow the Bank of Canada’s target interest rate.

Debt consolidation loans may be used specifically to help combine and restructure your debt, so you make lower-interest payments to one creditor instead of having multiple debts. However, you must use the money to pay off your existing debts; you may also remain in debt for longer.

Where can you get a personal loan?

Banks: Canada’s Big Six banks and major financial institutions offer personal loans at rates ranging from 6%-24%. Bank loans usually require a good credit score, and you may get a better rate if you have an existing relationship with the bank.

Credit unions: Credit unions often provide smaller and more flexible loans, but you’ll need to be a member to take out a loan. The application process may also be more detailed. 

Private lenders: Private personal loans are an option for borrowers with a lower credit score as they’re usually less strict in their eligibility requirements. Many offer online loans with an easy approval process, making them highly attractive to those who urgently need cash. However, since private lenders are not regulated by the you should do your research to ensure that a private lender is trustworthy and not a predatory lender. 

Peer-to-peer (P2P) lenders: This involves borrowing money from other people, often via anonymized online platforms such as goPeer or the /r/Borrow subreddit on Reddit. Eligibility requirements are often lower, but you’ll also be able to borrow less. Peer-to-peer lending is unregulated in Canada.

Lenders have a list of requirements as part of the application process. You can expect to be asked about some or all of these things: 

It ranges from immediately from an online lender, up to 24 hours for a peer-to-peer lender, and from a few business days to several weeks from a bank or credit union. 

As when applying for any kind of financial product, it’s important to do your homework. Before applying, make sure you look at:

This is the interest rate you’ll pay on the loan. The higher the APR, the more you’ll pay in interest. 

Note: On January 1, 2025, Canada’s criminal rate of interest was lowered from a 60% EAR (effective annual rate) — roughly equivalent to a 48% APR (annual percentage rate) — to 35% APR. This means it is an offence for lenders to receive or collect interest at a rate higher than 35% APR.

If your rate is fixed, you’ll pay the same amount per month over the period of your loan term. That’s great for budgeting purposes. Variable rates fluctuate based on the interest rate set by the Bank of Canada. If it goes up, so will your monthly payments and vice versa if the rates drop. That can make it difficult to budget. 

Also, when looking at loans, check to see if they offer any repayment flexibility. If you have a good financial month, you might want to pay back a little extra. See if that’s possible without paying any penalties – some personal loans may allow accelerated or lump sum prepayments, while others may not. You can also consider borrowing via a line of credit for more flexibility on repayments.

Some lenders have a lower cap on their loans such as $500, while others lend thousands. Know how much you want to borrow when you start comparing lenders. If you're trying to consolidate a relatively small amount of debt, a balance transfer might be a good alternative.

As we mentioned before, the length of a personal loan can range from months to years. You might have a longer term if you’re borrowing a large sum of money. 

Fees can add up or take away from the amount you get. Make sure you ask or read about the fees that come when you borrow money. 

You might need the money as soon as possible, so pick a lender that will respond quickly (with the best APR and repayment terms, of course).

Alternatives to personal loans

Personal loans aren’t your only choice when sourcing for funds. You can also consider the following:

• A line of credit for ongoing access to funds
• A balance transfer for consolidating debt

The best option depends on the interest rates and terms offered, the reason you’re borrowing money, and the sum you need.