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?

You can use funds from a personal loans for almost anything. Common reasons include:

• Covering moving expenses
• Financing home renovations
• Consolidating high-interest debt
• Paying for a wedding or vacation
• Managing unexpected costs

This flexibility sets personal loans apart from other borrowing options like mortgages, auto loans, or student loans, which can only be used for specific purposes. 

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: These loans are backed by an asset, such as your car or home, as collateral for the loan. They give 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: These loans don’t 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: These loans can be secured or unsecured, but instead of a fixed rate, the interest fluctuates in line with prime rates, which follow the Bank of Canada’s target interest rate.
• Debt consolidation loans: These loans are used specifically to help combine and restructure your debt, so you make lower-interest payments to one creditor instead of having multiple debts. While payments may be easier to manage, 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.

Eligibility requirements vary by lender, but most will consider the following factors:

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 your total cost of borrowing, including the interest rate and any mandatory fees 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 — 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, but a longer term increases the total interest you’ll pay.

These upfront fees (0.5%–8% of your loan) either reduce the amount you receive or get added to your balance. 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).

How do I get a personal loan?

Once you know you meet the basic requirements, the next step is to go through the application process. Here’s what the typical process looks like:

1. Compare lenders: Look at interest rates, APRs, loan amounts, repayment terms, and fees. Consider both traditional banks and online lenders to see where you can get the best balance of cost and flexibility.
2. Check your eligibility: Review the lender’s requirements for income, credit score, and debt-to-income ratio. This can help you avoid applying to lenders where you’re unlikely to qualify.
3. Prepare your documents and apply: Applications are usually completed online, in person, or by phone. You’ll typically need government-issued ID, recent pay stubs or tax returns, and banking information.
4. Wait for approval: Online lenders may give you an answer within minutes, while banks and credit unions often take a few business days to review your file. Some may call to verify details before final approval.
5. Receive your funds: If approved, the money is usually deposited directly into your bank account. In the case of debt consolidation loans, the lender may send the funds straight to your creditors.

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
• A home equity line of credit for lower rates if you own a homes

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