Debt Consolidation Loans in Toronto

A debt consolidation loan allows consumers in Toronto to merge all of their outstanding debt payments - if they qualify - into one loan at a set interest rate. This approach makes managing your debt much easier. One monthly loan payment, paid at a lower interest rate, can help you save money over time.  

A debt consolidation loan can help you manage your debt and improve your financial health over time. If you’re considering a debt consolidation loan, you can sign up for Borrowell and compare loan options that you qualify for based on your credit score. 

The most common factors that affect your ability to qualify for a debt consolidation loan include:

• Having a good credit rating – a lower credit score will decrease your ability to secure a debt consolidation loan; in some cases, creditors in Toronto may qualify you for the loan, but at a much higher interest rate.

• Having a low debt service ratio - when reviewing your application, lenders will most likely take your debt service ratio into account. This is the percentage of your monthly gross income required to make all of your minimum debt payments, both secured and unsecured. If your ratio is too high (typically, over 35%), it may be more difficult to find lenders willing to approve you.

If you are considering a debt consolidation loan and have reviewed its advantages as a debt relief option, it is important to determine if you qualify and meet the requirements. While lenders in Toronto may each have different requirements, a general guideline is that credit scores over 660 have the best chance of getting approved.

If your credit score is below 660, there may still be debt consolidation loan options available. Sign up for Borrowell to see what loan options are available based on your credit score. Over 170,000 Toronto residents have signed up for Borrowell to check their credit score, compare loan options, and improve their long-term financial health to stay debt free. 

It is important to note that only unsecured debts can be consolidated; secured loans such as mortgages and car loans will not apply. It is also important to note that there are other debt relief options (e.g., credit counselling) if you do not qualify for a debt consolidation loan based on your financial situation.

Toronto residents can apply for a debt consolidation loan through most credit unions, major Canadian banks, and other online lenders. In-person applications may have longer processing times, whereas online applications may be quicker and might have more lenient qualification criteria.

If you’re not sure where to apply, the best thing to do is compare lenders online. You can sign up to Borrowell for free and easily compare debt consolidation loan options from trusted Canadian lenders with presence in Toronto.

If you’re not sure where to apply for a debt consolidation loan, the best thing to do is compare lenders online. 

You can sign up to Borrowell for free and easily compare debt consolidation loan options from trusted Canadian lenders. With the platform, you can compare interest rates, term lengths, and more, while seeing your likelihood of approval based on your free credit score. This will help you find the best lender and debt consolidation loan option that matches your credit profile.

You should be aware of how a debt consolidation loan can affect your credit score. Below are some of the main ways your credit score can be impacted, either positively or negatively:

• Debt consolidation loans may help your credit score if you make consistent, on-time payments. However, if you apply for multiple debt consolidation loans, your credit score may initially be impacted, as numerous credit inquiries over a short period can lower your score. 

• Your credit score can be impacted negatively if you do not manage your loan properly. For example, late payments can have a big impact on your score — even up to a 150-point decrease.

Ultimately, the amount of debt you have is one of the biggest factors into your credit score; your payment history, total balance, and the number of loans and lines of credit you have will all directly impact your credit score. 

Your credit score is made up of five main factors: 

• Payment history 

• Credit utilization (how much credit you use out of what is available) 

• Credit history 

• Credit mix 

• Credit inquiries 

Debt consolidation loans can help consumers take care of many different types of debt, including credit card debt, unsecured lines of credit, and unsecured personal loan debts.

Secured debt, where borrowers are required to put up assets as surety or collateral, typically does not qualify. Debt amounts that creditors deem excessive may not be eligible for a debt consolidation loan; in this situation, other debt relief programs – including credit counselling programs - may be helpful.

You can still get a debt consolidation loan with bad credit, but your options may be more limited. Maintaining a good credit rating and a balanced debt service ratio are the two most important factors when qualifying for a debt consolidation loan. Your income also plays a critical role in managing both considerations and in your ability to consistently make payments on time.

If you are worried about not being able to qualify for a debt consolidation loan due to bad credit, there are several other debt relief options you can consider. To begin, we recommend contacting a credit counselling organization near you to further evaluate your unique circumstances; simply talking to a credit counselling agency won't affect your credit score.

We also recommend signing up for Borrowell to see what loan options are available based on your current credit score, and to receive personalized tips on the best ways to improve your credit rating.

Interest rates for debt consolidation loans will depend on your individual financial situation, as well as the conditions set by each lender. Typically, banks and credit unions in Toronto will only lend people around 10% of their net worth (your assets minus your debts) on an unsecured basis. Many lenders have debt consolidation loan calculators that you can access online for quotes.

While Toronto is undoubtedly one of the most vibrant and diverse cities in the world, its cost of living is the highest in Canada. Housing prices have skyrocketed in the city over the last decade, and non-mortgage debt — including auto loans, high interest credit card debt, and home equity lines of credit — are also growing at a faster rate than in any other Canadian city. Given these factors, staying debt-free while balancing financial necessities can be extremely challenging in Toronto. 

With Borrowell, you can monitor your credit score for free and quickly compare the best debt consolidation loan options available based on your score. Many residents in Toronto, and its surrounding suburbs, have signed up for Borrowell to check their credit score, compare loan options, and improve their long-term financial health.

If you are unsure about your ability to qualify for a debt consolidation loan, there are other debt relief options available to you. There are ways to get out of debt on a low income. 

We recommend contacting a credit counselling organization near you to further evaluate your unique circumstances; simply talking to a credit counselling agency will not affect your credit score. Credit counselling agencies are staffed with certified counsellors who will support you in your journey to becoming debt free through an emphasis on financial education and an organized debt management plan.