Online Loans Canada

When a sudden need for money that you don’t have comes up, it can leave some of us in a bit of a panic. The need can be for many different reasons, but when it’s an emergency and you don’t have the funds on hand, 

GoodCheddar offers a way to compare your options for online loans in Canada to find lenders that might otherwise be missed. Not all options are equal, especially with online loans, and sometimes it can be worthwhile to find what your choices might be.

Before you get started, it’s important to know some basics about online loans and give yourself a primer or small education before getting started. This can help you to avoid mistakes and understand some basics that can help.

Online Loans Canada

For those looking to borrow there are a few options for online loans in Canada. Since your ability to qualify for a loan typically depends on your credit profile, history, score and similar, this usually determines your options when it comes time to borrow.

The type of loan you can get approved for plays a role in the terms and rates that could be available to you. The higher your credit score, the more likely you might qualify for borrowing terms and rates that are more in your favour. 

Personal Loans – to be eligible and qualify for personal loans online, you often require a good to excellent credit score. Personal loans are a type of unsecured loan that are repaid through regularly scheduled installments (payments). They often have a term from 24 to 60 months and their interest rate will vary.

Installment Loans – to qualify for installment loans typically requires a fair to good credit score. Some lenders may accept those with poor to fair at times. An installment loan also has regularly scheduled installments or payments and is considered another type of personal loan. This type of loan usually has a term from 6 to 24 months and their interest rate or APR will vary.

Payday Loans – this type of loan has the highest interest rates, lowest requirements, and usually the easiest to qualify for. While they don’t have guaranteed approval, it’s close. Applicants with a bad credit score often still find lenders to work with. This should be reserved as a final option after others have been explored. 

Due to high interest rates, it’s often advised to avoid payday loans if possible. While online payday loans are easier to get, the full amount due comes on your next payday. This can create a debt cycle which can be difficult to get out of for some. 

How to Get Loans Online

Applying for loans is often the easy part. It’s what you might qualify or get approved for is often another story. The type of loan that you could be eligible for has a direct connection to what sort of terms and rates you might get. 

Since most lenders rely on the credit score of Canadians to help determine things like creditworthiness, risk and similar, having a good credit score will help with a loan application. While requirements may vary from one lender to the next, some of the most common criteria often includes being a Canadian citizen or resident that’s at least 18 years of age (varies by province) and having a bank account and a steady source of verifiable income.

RELATED: What Credit Score is Needed for an Online Loan 

Bad Credit Loans Online

When looking for loans online, even having bad credit can be an option with some lenders. Being aware of your credit score and what most lenders consider to be bad credit can help you with finding out what you might qualify for and the most likely interest rate that your loan might charge if you were to consider borrowing. Most people with bad credit seeking online loans are aware that they would have few options and are prepared to pay higher interest rates when they really need the money and don’t have any savings. Since online bad credit loans can be more costly it is important to only request as much as necessary since it is a costly way to borrow.

Applying for Online Loans

There are a few things you want to consider when looking at online loans:

Loan Amount – how much you request can affect whether you get approved

Interest Rate – also known as cost of borrowing, your credit score can influence the rate

Loan Term – a loan term can impact both the monthly payments and overall interest of the loan

Other Fees – from origination to pre-penalty fees, you will find these in your agreement if any

Since having a good credit score has a significant influence towards the rates and terms you might be offered, it’s important to know your score and how it affects your eligibility before you start comparing online loans. 

A recent study by the Financial Resilience Institute suggests that 78% of Canadians have some level of financial vulnerability. This is often related to a lack of any kind of savings or emergency fund to fall back on when unexpected expenses occur. About a third of Canadians have an emergency fund or financial cushion for such needs, with many living from one paycheque to the next and having trouble getting ahead with their finances. 

Finding the Right Online Loan

The following suggestions can help to find your best options when comparing online loans:

– Review the APR (annualized percentage rate) and not just the interest rate

– Check the eligibility requirements since not all lenders are the same

– Look for any other fees or penalties that might be part of the borrowing terms

– Be aware that longer terms mean that it may cost more and you will likely pay more interest 

When shopping for online loans, one of the most important things to consider is that it also needs to comfortably fit within your budget and you can afford the monthly payments. 

If taking out a loan will make your finances ‘uncomfortable’ and not work with your budget and expenses, this would be one of those moments that might require longer loan terms to be considered. While a longer term may have higher borrowing costs in interest over the longer term, having affordable monthly payments that don’t cause stress are also important. You should try to avoid the promise from guaranteed approval lenders with high interest rates that can create issues for you.

Interest Rates for Online Loans

Since your credit score is often the main factor for what type of interest rate (or loan) you might be eligible for, let’s take a look at how that might be factored into your options.

The following provides an idea of what rates you could qualify for based on your credit rating:

Credit Score Rating Sample Interest Rate
300 – 559 Very Poor 18% to 47%
560 – 659 Poor 15% to 35%
660 – 724 Fair 7% to 20%
725 – 759 Good 6% to 15%
760 – 900 Excellent 5% to 11%

A higher score can provide more preferable interest rates when borrowing along with other bonuses, offers and rewards when it comes to personal finance. The average credit score in Canada is about 660, and many banks require a rating of good (725+) or better to qualify. 

This is just a couple reasons why online loans continue to grow in popularity in Canada, and due to bank alternatives offering faster options with lower eligibility requirements it will probably continue for the foreseeable future. 

Read more about online loans in Canada and other provinces like Ontario, Quebec, Alberta, BC and more.

Recommended Reading:

Installment Loans vs Personal Loans 

Installment Loans vs Payday Loans 

What to Know When Applying for Online Loans 

 

© 2023 GoodCheddar. All rights reserved.

 

Privacy | Terms | Advertiser Disclosure

 

Disclaimer: GoodCheddar is a loan comparison website, not a lender. GoodCheddar works with financial service providers that adhere to Canadian laws and regulations. For complete and current information on any specific product, please visit the merchant website. While GoodCheddar is independent, we may receive compensation for featured placement of their products or services from our partners, or if you click on certain links posted on our website. This compensation may impact how, where and in what order products appear. We endeavour to ensure that any information provided on this website is current and accurate, but it is your responsibility to confirm any information with the product or service provider and read the information they can provide. If you are unsure you should get independent advice before you apply for any product or commit to any plan. This site is directed at, and made available to, persons in Canada.