There comes a time in everyone’s life where the unpredictable happens. Whether its an unexpected car breakdown, an emergency bill, or simply running short on the monthly budget, these small situations can create major financial problems.
Although credit cards may be able to bridge small gaps, their high interest rates and uncompromising payments can create even more problems down the line. When the worst comes to pass, it might be time to consider a personal loan.
If you need to shop for a personal loan, where should you start? We did the research to find the best personal loans for Canada in 2020. If tough times should necessitate a personal loan, consider these five lenders first.
Although Borrowell presents as a personal finance resource, they also offer personal loans. At a starting interest rate of 5.9%, Borrowell may be the lowest rate for a loan of up to $35,000.
To qualify with Borrowell, members must be a Canadian citizen or resident at or above the age of consent in their province with an annual income of at least $20,000. Applicants must have a credit score of 660 or better with no bankruptcies or current delinquencies, and hold a valid bank account with a Canadian bank.
During the application process, members will need to provide either their last two paystubs or their NOA from their last two tax returns. From there, they will need to verify both their identity through Equifax, as well as their bank account through VersaPay. If applicants don’t accept their loan offer within seven days, they will have to re-apply. After approval, loans pay out as soon as one day, and repayment is taken through monthly automated payments.
Available in every province but Nova Scotia and Quebec, SkyCap Financial offers some of the best terms for personal loans. With a starting interest rate of 12.99% for a personal loan of up to $10,000, those in need have the options they need to get financial help today, without overpaying in the long run.
In order to qualify for a personal loan, applicants must be a Canadian resident 18 or older, have a net income of at least $1,200 per month, and have some form of stable income (Child Tax Credit only, Employment Insurance, Social Assistance or seasonal work don’t count). You can’t be in bankruptcy, credit counseling, consumer proposal, or debt consolidation programs.
To apply, you will need your government issued photo ID, your last two paystubs, 90 days of bank records, a bill from the past two months and a voided cheque. If approved, you can get the money as soon as 24 hours deposited straight into your bank account. Terms range from nine months, all the way to 36 months.
One of the most popular choices, FerratumMoney advertises hassle-free loans of up to $15,000, repayable for up to five years. In 10 minutes, applicants can get approved for a loan starting at 18.99% interest with no origination fees, and get money direct deposited to their account quickly.
To qualify for a FerratumMoney loan, you must be at least 20 with a monthly minimum income of $2,500, and full-time employment for at least 90 days before the application date. Your credit score will also come into play: If your score is below 660, you may not qualify.
Although FerratumMoney says loans are dispersed immediately, it can take up to 24 hours for the money to show up. Repayment terms can last up to five years. Currently, loans are only available to residents of six provinces: Alberta, British Columbia, New Brunswick, Nova Scotia, Newfoundland and Ontario.
A relatively new player in the personal loan space, ConsumerCapital Canada offers personal loans of up to $12,500, with interest rates ranging from 19.99% to 34.99%. According to their website, the loan process isn’t automated – instead, analysts review each loan to determine how much applicants qualify for and if it fits into their budget.
To qualify for a loan, you must make at least $20,000 annually, without any bankruptcies or consumer proposals on your account. You must also be at or older than the age of majority in your province. During the application, ConsumerCapital Canada will request your government ID, proof of income, and a void cheque from your bank.
If you are approved, you can get your loan in as fast as 24 hours. Payments are made monthly, directly drawn from your account. As of the time of writing, ConsumerCapital Canada loans are not available to residents of Quebec, Northwest Territory, Nunavut, or the Yukon.
Arguably the most flexible of all personal loan lenders, Fairstone’s history dates back to 1923 and is Canada’s largest non-bank lender. Applicants can ask for anywhere between $500 and $30,000, with a starting interest rate of 19.99%. Despite the higher interest, loan terms range anywhere between six months to 10 years, depending on what works best for your budget!
Applicants must meet their minimum provincial requirements to start the process. Loan applications are available through Fairstone’s website, or at any of their 225 branches across the country. Financial considerations include proof of current income, proof of housing, and a government ID.
To get the best rates, consider putting up collateral to get a secured loan. Interest rates on secured loans start at 19.99%, while unsecured loan interest starts at 26.99%.
What to Consider When Applying for the Best Personal Loans in Canada
While it’s never easy applying for a personal loan, it can provide a lifeline in the event of an emergency. But before you sign on the line, there are three points everyone should consider.
First, those with good credit may be able to get better terms from a local bank credit card or line of credit. By working with your bank, you may be able to negotiate an interest rate below 19.99%.
Second, consider how much you can pay back every month. Getting a loan that you can’t afford can only lead to default and bankruptcy, creating an even worse situation. Before signing a promissory note, get your monthly payments in writing. If you can’t afford the monthly payments, don’t get the loan.
Finally, be sure to find out if there’s an early repayment penalty. Some loans allow you to make more than the monthly payment, allowing you to get out of debt faster. If you can make more than the minimum, getting a loan with no early repayment penalties gives you the best advantage.