Best Bad Credit Loans Canada 2023: Apply Now to Get Approved

Did you know that over 5 million Canadians have bad credit? It means that millions of people have been rejected by banks when applying for a loan, even if they needed the money urgently for an emergency such as paying for medical bills. 

Because this is such a big problem, a selected group of lenders have stepped up to confront this problem and bring a solution to millions of Canadians like you who cannot get a loan. This is why they’ve created a special product: bad credit loans. 

Even if your score is less than 560 points, you can qualify for a loan at our recommended lenders. Now come with us to check out our ranking, so you can apply for your loan right now.

Ranking of the Top 5 Bad Credit Loans in Canada

Check out our ranking below to apply for your bad credit loan through our recommended lenders now:

• 1. Spring Financial: Best Overall Bad Credit Loans Canada
• 2. LoanConnect: Best for Big Bad Credit Loans
• 3. Loans Canada: Highest Approval Rate for Bad Credit
• 4. Prets Quebec: Best Bad Credit Loans in Quebec
• 5. Compare Hub: Best for Finding the Lowest Interest Rate

Simply click the name of your preferred lender to start the application process - it will only take you 5 minutes and you’ll find out what offers you have available now.

If you need more information and details about each one of our recommended lenders before you can make a final decision, then check out our individual reviews below.

1. Spring Financial: Best Overall Bad Credit Loans in Canada

Spring Financial Loans Canada is the #1 choice for bad credit loans because it offers fast loans for up to $35,000 even if you have extremely bad credit. Thanks to their easy eligibility requirements, instant approval and same-day disbursement, it’s the best choice for any type of bad credit loan, especially if you need the money urgently. 

2. LoanConnect: Best for Big Bad Credit Loans

If you need a loan for a high amount of money, then LoanConnect is the best choice for finding your ideal offer. Because it will allow you to borrow as much as $50,000 even with extremely bad credit, it’s our #1 recommendation for big loans. 

3. Loans Canada: Biggest Variety of Bad Credit Loans

If you want to explore different types of bad credit loans be it personal loans, payday loans, car loans or home equity loans, then Loans Canada is the best option for you. Since it offers all of these products and even more, you will easily find the best loan for you at the most competitive interest rate in the market. 

4. Prets Quebec: Best Bad Credit Loans in Quebec

If you live in Quebec and you need a loan for bad credit, then Prets Quebec will be the best option for you. For starters, it has an active office in Quebec, its website is in French and it offers instant approval and same day disbursement to Quebec residents. 

5. Compare Hub: Best for Finding the Lowest Interest Rate

If you’re shopping for the lowest possible interest rate, which is a concern when you have bad credit, then Compare Hub is the best choice for you. It will allow you to quickly compare a wide variety of offers, so you can pick the one with the lowest interest rate and the best terms and conditions. 

Be it for a small, short-term loan or a big loan that you want to repay over several months, Compare Hub will help you to find the best offer available for you in Canada.|

How to Apply for a Loan for Bad Credit in Canada

If you’re ready to take out your loan but you don’t know how to send your application, then here you have the steps to follow:

• Choose a lender for bad credit in Canada from our ranking
• Visit their official website
• Enter how much you want to borrow
• Enter your preferred loan term
• Fill out the application form with all the requested information
• Send your application
• Wait for approval
• Receive the money in your bank account if you’ve been approved

It’s very easy to apply for an online loan for bad credit through our recommended lenders - so don’t lose time and send your application now. 

If you want more information about the application process, then we recommend reading the next section about eligibility requirements. You will find out more about the standards you need to meet as well as some documentation and proofs. 

The Eligibility Requirements for Bad Credit Loans Canada

If you want to find out if you will qualify for a bad credit loan, then here you have all the eligibility requirements you will have to meet. 

Basic Eligibility Requirements

Here you have a list with all the basic eligibility requirements that you will have to meet in order to get approved for your loan:

• Being at least 18 years old
• Having a steady and verifiable source of income
• Having an active phone number and email
• Having an active bank account

To meet these requirements, you’ll have to supply the lender with information such as income proof and a government-issued ID. Evidently, you need an active bank account to receive the loan sum in case you’re approved by the lender for bad credit.

Income Requirements

You need to prove that your income is enough to cover the total cost of the loan, and hence that you’re highly likely to repay the loan on time. The income requirements will vary depending on the amount you want to borrow and the lender you’ve selected, but here you have a table with the minimum income requirements that most lenders use:

This is the bare minimum you need to earn before deductions to increase your chances of getting approved by our recommended bad credit lenders. 

Debt to Income Ratio (DTI)

It’s also important to show that a significant percentage of your income can be used to repay new debt, in this case a loan for bad credit. Therefore, your debt to income ratio must be equal or lower than 42%, because it will show to the lender that you won’t have problems repaying the loan on the due dates. 

This is one of the most important factors because it will show the lender if you’re capable of taking on new debt and repaying it on time. If your DTI exceeds 42%, then it means that your current debt is already too high, and hence the chances of default are higher, which will lead the lender to reject your application.

If you recognize that your DTI is too high, then you should work on reducing it by paying off current debt or reducing the percentage you use of your credit line.

Why Choose Our Recommended Bad Credit Loans in Canada

If you want to see why our recommended bad credit lenders are the very best in the market in Canada, then here you have all the benefits you’ll enjoy when applying for a loan through our selected companies.

Carefully Selected from All the Options in the Market

There are thousands of lenders in Canada that offer bad credit loans, but not all of them are good. Many of them charge predatory interest rates and fees, and always hide “secret” terms in the contracts that will have devastating effects on your finances and wellbeing.

This is why we’ve built a team of professionals to analyze all the lenders that offer bad credit loans in Canada, to only pick the ones that meet the following standards:

• Only lenders that have been approved and licensed by entities such as the The Autorite des Marches Financiers (Quebec)
• Fair and competitive interest rates and fees
• High approval rate for customers with bad credit
• High loan amounts and flexible loan terms
• Clear and transparent contracts with no “hidden” clauses or terms

After investing hundreds of hours of hard work, we’ve been able to identify the top 5 lenders that meet these standards to the degree of perfection. Now you can take out a loan for bad credit with the lowest interest rate and under favorable terms and conditions thanks to our recommended lenders.

Lowest Interest Rates and Fees for Bad Credit Loans in Canada

Because we only work with licensed and regulated lenders, they all stick to the limits for interest rates established by entities such as The Autorite des Marches Financiers in Quebec. Therefore, you will be able to take out a loan for bad credit with a low interest rate that won’t hurt your finances. 

Highest Approval Rate in Canada

You already know that your bad credit is a problem, and you don’t need another lender to remind you about it. And this is why we’ve only selected lenders that won’t use your credit score as a decisive factor when evaluating your application. Hence, our recommended lenders will offer you the highest approval rate for bad credit loans in Canada, making it possible for you to get the money you need in the majority of cases.

High Loan Amounts

Be it that you only need to borrow $100 or over $10,000 - our recommended lenders will help you to find your ideal offer for bad credit. You can use these loans for small expenses as well as for big projects that require $5000, $10,000, $20,000 or even more - all while getting the best possible interest rate for your own case.

Flexible Loan Terms

We all have different needs, and hence our recommended lenders will bring you different loan terms to choose from. Be it that you need a loan for only a couple of months or if you prefer to repay it over 24+ months, our recommended lenders will bring you an offer that will meet your requirements. 

Express Approval and Disbursement

If you need money fast, then you’ll be happy to know that our recommended bad credit lenders will be able to help you. Thanks to their instant approval system and same day disbursement, you can obtain the money you need in record time, regardless of how much money you need to borrow be it $100, $500, $5,000 or more.

Types of Bad Credit Loans in Canada

There are different types of bad credit loans at your disposal in Canada, and here you will find more information about each one to choose the best one for your own needs and goals.

Personal Loans

These are the most popular bad credit loans in Canada because you can borrow a considerably high sum of money ($100 to $50,000) and you can repay it over several months, usually ranging from 3 to 60 months. These loans can be either secured or unsecured, which means that they can be backed up by collateral such as a home title or not. 

Personal loans are usually repaid in monthly installments, which are monthly payments of the same amount that you have to make on each due date until the loan is fully repaid. This is why you can find these loans under the name of installment for bad credit as well.

Our recommended lenders can help you to find an ideal personal loan offer for bad credit, be it secured or unsecured. And since they’re approved automatically and disbursed as soon as the same day, they’re an efficient way to get money fast.

Bad Credit Car Loans

If you need a loan to buy a car, then a car loan for bad credit will be the most appropriate choice for your situation. You can use them to buy a new or used car, and since our recommended lenders offer plenty of flexibility in regards to the loan amount and loan term, you can use these loans to buy any type of car, be it something economical or a luxury vehicle. 

Mortgage Loans for Bad Credit

If you need money to buy a home or property, then you need to focus on mortgage loans for bad credit. Since our recommended lenders and brokers can connect you with B Lenders and private lenders, you’ll find it easy to get the funding you need even if you have extremely bad credit. 

Payday Loans

If you need anywhere from $100 to $500 for the short term, then a payday loan can be an excellent choice when you have a low credit score. It’s easy to qualify for a payday loan even if you have extremely bad credit, only keep in mind that the interest rate will be significantly higher. We have reviewed the Best Payday Loan Options Here

Understanding Bad Credit Loans Canada: Interest Rate, Fees and Loan Term

It’s important to understand how bad credit loans work before you apply for one, and this is why we’ve built this special section. Here you will learn all about the interest rate, fees and loan terms for this special type of financing.

Interest Rate for Bad Credit Loans

Since loans for bad credit are a high risk product, they will be more expensive than traditional personal loans for customers with a good credit score. For example, most bad credit loans will charge anywhere from 15% to 50% in interest rate, whereas a typical personal loan for a client with excellent credit would be more affordable with an interest rate of 5-10%.

Some of our recommendations will offer you a low interest rate even if your credit is extremely bad. For example, Compare Hub will allow you to compare different offers to find out which one can offer you the best interest rate. 

However, if you don’t want to spend your time comparing bad credit loan offers, then you should choose Viva Payday Loans Canada, because it can offer you a low interest rate right off the bat regardless of how much you decide to borrow, be it just $100 or $5,000. See this list for the best bad credit options

Fees for Bad Credit Loans

Here you have a list with all the fees that you might have to pay in addition to the interest rate when taking out a bad credit loan:

• Origination Fee: This fee is the price for processing the application and it’s more common when taking out a payday loan, as opposed to personal loans that don’t usually charge this fee. It’s calculated based on a specific percentage of the loan sum, for example 5% of $2,000, which would be $100
• Application Fee: As its name clearly implies, it’s a fee that you have to pay for simply presenting your loan application, and it can range from $20 to $100. This is a sign that you might be dealing with a bad lender or broker, because reputable companies such as our recommended lenders will never charge such a fee
• Early Payment Fees: If you repay the loan before the due date, then it’s considered an early payment and some lenders might punish this by charging you extra fees. These are usually charged to closed loans, however our recommended lenders will not add these clauses to your contract, so you can administer your debt the way you wish.
• Late Payment Fees: If you miss your payment dates, then the lender will charge you late payment fees. And when it comes to bad credit loans, these can get expensive quickly due to the higher interest rate

We’ve done our best to only select lenders that will charge minimal fees, so you can reduce the total cost of your bad credit loan. 

For example, our recommended lenders will not charge you an application fee or an early payment fee, which we consider abusive practices that you should never accept from any lender. 

Loan Term for Poor Credit Loans in Canada

The loan term for a bad credit loan in Canada will vary depending on the type of loan you choose. For example, you’ll be able to take out a payday loan for 7 to 31 days, whereas you can repay a personal loan over 6-60 months. And when it comes to mortgage loans for bad credit, you can opt for an even lengthier loan term.

It’s also important to mention that if your debt-to-income ratio is high, let’s suppose that it’s 42%, then opting for a personal loan with a lengthier loan term will increase your chances of approval. Because it will be easier for you to manage the debt.

Credit Score and Credit Checks for Bad Credit Loans

If you want to learn more about credit score and credit checks, and their importance when it comes to bad credit loans, then this section will bring you all the information you need.

What is Bad Credit in Canada?

Bad credit in Canada is simply a low credit score, and in order to fully understand it, it’s mandatory to learn more about how credit scoring works in Canada and the different levels or categories. 

The credit score in Canada ranges from 300 to 900 points, and it’s divided in the following categories:

• Excellent: 900-760 points
• Very Good: 759-725 points
• Good: 724-661 points
• Fair: 660-560 points
• Poor: 559-300 points

If your credit score falls in the category of Fair or Poor, then it will be considered as bad credit by most lenders. These scores are calculated by the two main credit bureaus in Canada, Equifax and TransUnion. 

A bad credit score means that a customer is highly likely to miss payments or to default on repaying the loan. This is why most banks will reject a bad credit loan application, but our lenders will use other factors to judge your creditworthiness such as the quality of your income source and your debt to income ratio.

Is a Credit Check Necessary?

It will depend on the lender, but they will usually need to perform a credit check to find out what your credit score is, to use it when calculating the interest rate and fees of your loan. However, it will be a soft credit check that won’t hurt your credit score. 

It’s important to highlight that your credit score won’t be used as a factor for calculating your creditworthiness - because since these loans are especially designed for clients with bad credit, our recommended lenders will only focus on verifying if you’re capable of repaying the loan.

Pros and Cons of Bad Credit Loans in Canada

Taking out a loan is an important decision, and hence you need to compare the pros and cons before doing it. Our insightful comparison will help you in doing this, so you can see if taking out a bad credit loan is the best decision you can make today.

The Pros of Bad Credit Loans

First, let’s analyze all the benefits that you will enjoy by taking out a bad credit loan from our recommended lenders:

• Get approved even if you have extremely bad credit
• Idea for emergencies thanks to instantaneous approval and same day disbursement
• Suitable for any situation thanks to the generous loan amounts that range from $100 to $50,000
• Flexible loan terms from 1 month up to 60+ months
• You can use the money as you wish
• Ideal for rebuilding your credit

The Cons of Bad Credit Loans

Even though the benefits are impressive, it’s also smart to factor in the cons in order to see if it’s a good idea to take out this type of loan:

• High income requirements
• Expensive late payment fees

Verdict: Should You Take Out a Loan for Bad Credit in Canada?

Yes, if your credit score is less than 560 points then most banks will reject your applications, and hence lenders specialized on offering loans for bad credit will be your best choice in this situation. Especially if you take a loan from any of our recommended lenders, because this way you will obtain the lowest possible interest rate and the best terms and conditions for you as a borrower.

Alternatives to Bad Credit Loans Canada

If you want to explore other options beyond bad credit loans, then here you have the best alternatives.

Credit Card Cash Advance

If you have an active credit card, then you can use it to borrow a cash advance. It’s simply turning a specific percentage or amount of your credit line into cash that you can use as you please, making it one of the best types of loans for bad credit that you can take out. 

Only be aware that the interest rate can be much higher than that of a regular personal loan, but the advantages here are that approval is almost guaranteed and the disbursement is instantaneous.

RRSP

If you have an RRSP account with enough funds in it, then you can borrow money from it instead of applying for a bad credit loan. Even though it seems like a good idea, this option has plenty of downsides:

• Withholding Taxes: Your financial institutions will have to retain anywhere from 5% up to 30% of your RRSP withdrawal due to withholding taxes
• Income Taxes: The final amount that you’ve received from your RRSP withdrawal will be included in your taxable income, which unfortunately means that you will have to pay additional income taxes on it. Depending on the size of the withdrawal, it can damage your overall finances because it can move you up in the taxation brackets, making you pay even more taxes in general
• Investments: RRSP withdrawal will damage the performance of your investments in the future, which is unfortunately an unavoidable consequence just like having to pay income taxes.

In the end, it makes a lot more sense to take out a personal loan that will even bring you the opportunity to make deductions on your taxes. Because an RRSP can end up being more expensive than a bad credit loan, and it will even damage the performance of your investments.

Home Equity Loans

If you’re a homeowner and you have a low credit score but you don’t want to take out a bad credit loan, then a home equity loan might be your best choice. The interest rate and fees will be lower, but the tradeoff here is that you can only opt for a maximum of 80% loan-to-value, and some lenders might even allow you to borrow less than that. 

You will find different options under this category such as…

• Reverse Mortgage for Bad Credit: If you’re 55 years old or older, then you can opt for a reverse mortgage, which is the best choice from all the home equity loans for bad that you will find in Canada. Because you can borrow high sums of money up to 80% loan-to-value, and you’ll have to repay the loan only when you sell the property
• Second Mortgage Loan for Bad Credit: As its name clearly tells you, it’s an additional mortgage loan. It works like a regular installment loan where you receive a specific sum of money and you have to repay it over several months in equal monthly installments, but the disadvantage is that the maximum loan-to-value is likely to be severely restricted
• HELOC: Think of it as a mortgage credit line with high limits that you can use to borrow money as necessary. You only have to pay interest on the sums of money that you decide to borrow, making it the most versatile option from this category if you need a loan for bad credit

F.A.Q

Because our goal is to help you find your ideal loan for bad credit, here you have the answers to the most frequently asked questions. This information will provide extra assistance so you can make the best decision.

Where can I find $5,000 bad credit loans Canada?

Our recommended lenders can approve you for a $5,000 loan for bad credit in Canada. As long as you meet the basic eligibility requirements as well as the income and debt-to-income ratio standards, then our lenders will approve your application and proceed to disburse the loan money.

Are bad credit loans the same as loans for poor credit in Canada?

Yes, bad credit loans are the same as loans for poor credit in Canada. They all refer to a low credit score, which is 560 points or lower, something that will make it harder for you to qualify for conventional personal loans. However, our recommended bad credit lenders will approve your application even if your credit score is only 300 points.

Can you get approved for an urgent loan for bad credit in Canada?

Yes, since our recommended bad credit lenders can approve your loan automatically, you can expect to receive the loan money in your bank account the same day. Only make sure to send your application early in the day to increase your chances of same day disbursement. 

How long will it take to get the bad credit loan money in my bank account?

Our recommended bad credit lenders will usually disburse the money the same day, which can range from 1 to 8 hours. However, in some situations the disbursement process can take up to 1 business day, especially when they need to verify additional documentation.

Can you borrow $10,000 with a bad credit loan in Canada?

Yes, our recommended lenders can bring you a $10,000 bad credit loan in Canada if you meet the eligibility requirements such as having a sufficient and steady income source, as well as an acceptable debt-to-income ratio.

Can I get a loan for bad credit with instant approval?

Yes, our selected companies can approve your loan for bad credit instantly and proceed to disburse the loan the same day. This way you can use the money fast for any type of emergency or unexpected expense.

Do I have to pay upfront fees when applying for a bad credit loan in Canada?

No, our recommended lenders will never ask for an upfront payment before you’re approved and receive the loan money in your bank account. The application process is 100% free, and you’ll only have to pay the correspondent fees of your loan when it’s the due payment date.