Get a Personal Loan in Ontario

To be eligible for personal loans in Ontario from lenders like banks or credit unions, you should have the following in place:

• You should be employed and earn more than your minimum expenses

• You should have a strong track record of making your existing debt payments

• You should have a good credit score of between 660-900

If you don't have one of these prerequisites, you may not qualify for a personal loan from a traditional lender. For example, if you have a good income but you are carrying a lot of credit card debt, your options are to fix the issue or work with a non-traditional lender that may have different requirements. 

If your credit score is below 660, there are still personal loan options available. Sign up for Borrowell to see what loan options are available based on your credit score

To apply for personal loans in Ontario, you'll need the following documentation:

• Proof of identity such as a driver's license

• Social insurance number

• Employment status, possibly including a letter from your employer

• Home address, phone number, and email address

A bank account capable of setting up automatic deposits

Every lender has different credit score criteria. Many lenders in Ontario, such as banks or credit unions, will look for a credit score of 660 or higher. Depending on the lender you chose, a score below that may still result in approval, but with a higher interest rate. 

If you are denied, you can work to improve your credit score or find a different lender that specializes in lending to Ontarians with a lower credit score. Platforms like Borrowell can give you a free credit score, provide tips to improve your credit score, and offer loan recommendations from trusted lenders based on your credit score. Sign up for Borrowell today to get started.

Some non-traditional lenders in Ontario will approve you for personal loans without a credit check, but it's essential to check the interest rates these lenders are offering. These lenders will often charge higher interest rates to offset the increased risk of lending to Ontarians with unknown credit scores or bad credit.

Checking your credit score before applying for personal loans tells you in advance whether you are likely to qualify, or whether you should spend some time improving your credit score before applying for a personal loan. Checking your credit score with Borrowell is free, and it doesn’t have a negative impact on your score, so there is no downside.

Unsecured loans do not require you to put up any assets as collateral (like your home or your car). When you apply for an unsecured loan in Ontario, you'll provide your lender with a variety of information about your financial situation, such as your credit score and credit history. From there, your lender will determine whether you are a good candidate for a loan, and will extend you the loan with the expectation that you will pay it back. 

There is no collateral or asset that your lender can seize if you do not pay back your debt, which is what makes it an unsecured loan. Once you receive your loan, you'll begin paying the loan back at a set payment per month or in weekly, or biweekly installments. Depending on the size of the loan it could take several months or years to pay back your loan.

How much you can get depends on the lender you choose and your ability to pay your loan back. Borrowers with higher credit scores are seen as lower risk and will qualify for higher amounts. Many lenders in Ontario offer personal loans up to $35,000 - $50,000. 

To avoid accumulating too much debt, we recommend that you only borrow as much money as you need. Taking large amounts of credit through loans can increase your credit utilization rate.

After your personal loan has been deposited into your bank account, you'll start making payments to pay it back. Most lenders will set up a pre-authorized debit agreement, which allows them to withdraw your payments directly from your chequing account. These payments can be withdrawn weekly, biweekly, or monthly. Most lenders will also offer a way for you to make extra payments, whether by mailing a physical cheque or setting up your lender as a bill pay in your online banking system.

The most significant fee you'll pay when getting a personal loan is the interest on your loan. Your interest rate is expressed as an annual percentage rate and is charged as a percentage of your total loan balance.

Many lenders also charge a loan origination fee on their personal loans, which covers the work the lender does to approve and set up your new loan. A loan origination fee could be a flat rate of several hundred dollars or charged as a percentage of your total loan amount. Some lenders require this fee to be paid upfront, while others will add it to your total loan amount. 

Finally, most lenders charge penalties if you miss a payment. The penalty could be a flat rate charge or an increase in your interest rate. Missed payments can impact your credit score, so you want to make sure you can at least make minimum payments on each due date.

The interest rates on personal loans in Ontario can vary from lender to lender, and the interest rate you'll qualify for depends on your financial situation. That said, personal loans in Ontario can have interest rates as low as 4.5%, averaging between 6% - 12%, and if you have poor credit, as high as 20%.

There are four primary types of personal loans in Ontario. The first is an installment loan. Installment personal loans can be secured by an asset like your car or home equity or can be unsecured, where the lender uses your financial details to determine whether to lend to you. When you qualify for an installment loan, the entire amount is deposited into your account, and you can spend it as needed. You'll pay back the loan on a regular schedule of payments over a period of time.

Another type of personal loan is a line of credit. A line of credit has a similar interest rate to an installment loan, and may also be secured or unsecured. The main difference lies in how the funds are dispersed and the payment schedule. When you apply for a line of credit, you'll be approved for your credit limit, but you will not receive funds right away. A line of credit is part of a family of debt called "revolving credit," which means the entire amount of the credit limit is available for you to withdraw when you need it. You do not need to withdraw the full amount. You are responsible for making monthly payments on only the amount you borrow, and only that amount is charged interest.

The third type of personal loan is a credit card. You might not think of a credit card as a personal loan, but it does require an agreement between the cardholder and lender to borrow money and pay it back within a reasonable time frame. Credit cards are most often unsecured and have interest rates in the range of 19.99% - 24.99%. Like a line of credit, a credit card belongs to the revolving credit family, so you only make payments on the amount you've used, and interest is only charged on that amount as well.

Finally, there is a fourth type of personal loan called a payday loan. Payday loans are short-term (usually two weeks) unsecured personal loans for amounts up to $1,500. Payday loans have very high interest rates in the range of 500-600%, so they should be viewed as a last resort option for borrowers.

When applying for a personal loan in Ontario, you want to present the best financial situation possible. That means having a good credit score, a long and stable employment and credit history, and minimal debt. If you've recently moved to Ontario and don't have these necessities in place yet or have bad credit, it may be smart to spend some time improving your credit score and paying off debt first.

If you’re not sure whether now’s a good time to apply for a loan based on your credit score, use Borrowell to check your credit score for free. From there, you can see what personal loans you would qualify for based on your credit score. You’ll also receive tips on how to improve your credit score so you can qualify for loans with lower interest rates in the future.

The Financial Services Regulatory Authority of Ontario registers all federally incorporated personal loans and trust companies wishing to conduct business in Ontario. The FSRA also enforces the acts and regulations that govern these companies.

You can use a personal loan for anything, but common reasons to apply for a personal loan include:

• Debt consolidation

• Post-secondary education

• Emergencies like car repairs

• Renovations to improve your home equity

• Purchasing a vehicle

• Taking a vacation

Banks and credit unions have strong reputations, but their qualification criteria for loans can be strict. Online lenders and alternative lenders are still trustworthy choices if you’re working towards improving your credit score. 

When choosing an online or lesser known lender to work with, use a loan comparison site like Borrowell to find the right lender for you. The personal loan providers listed on the Borrowell marketplace are trusted partners with a strong track record of customer service. Borrowell only provides you with loan recommendations from trusted lenders that fit your credit profile. 

Finally, do your due diligence and research by reading user reviews to ensure your lender of choice is a good fit.

Personal loans are an excellent tool to achieve your financial goals. Still, they can be expensive due to interest rates, so choosing an alternative may be better for your short-term financial goals. Choices include saving money in an emergency fund, accessing your home equity, or borrowing money from family and friends. If you need a small amount of money, consider selling some of your possessions to access cash quickly.

Employment income is one of the critical factors in determining your creditworthiness, which means unemployment will eliminate many potential lenders. Some lenders will still work with you, but they will need evidence that you can repay them. Evidence could be having a co-signer secure the loan for you or proving you have sufficient cash reserves to make your monthly payments.

Personal loans in Ontario are available from a wide variety of lenders, from traditional banks and credit unions to online lenders. Borrowell can streamline your search process by giving you your credit score for free and only providing you with loan recommendations from trusted lenders based on your current credit score. This simple process can help you quickly find the right loan product that fits your needs. Sign up with Borrowell to get started.