Question 1

What is a personal loan?

Accepted Answer

A personal loan is an unsecured loan that you can use for almost any purpose - debt consolidation, home improvements, medical bills, or major purchases. Unlike a mortgage or auto loan, personal loans don't require collateral. You receive a lump sum and repay it in fixed monthly installments over a set term, typically 12-72 months.

Question 2

How much can I borrow with a personal loan in Canada?

Accepted Answer

Through 365 Loans, personal loan amounts typically range from $500 to $5,000. The amount you qualify for depends on your credit score, income, debt-to-income ratio, and the lender's policies.

Question 3

What can I use a personal loan for?

Accepted Answer

Personal loans are versatile and can be used for debt consolidation, home improvements, medical expenses, wedding costs, moving expenses, emergency repairs, large purchases, or any other legal purpose. Some lenders may have restrictions, so always check the terms.

Question 4

How long does it take to get a personal loan?

Accepted Answer

Online lenders can approve and fund loans in as little as 1-2 business days. Traditional banks and credit unions may take 3-7 days. The timeline depends on how quickly you submit documents and the lender's verification process.

Question 5

Are personal loans safe?

Accepted Answer

Yes, personal loans from reputable lenders are safe. Always verify the lender is licensed, read reviews, and understand all terms before signing. Avoid lenders who guarantee approval without checking credit or ask for upfront fees.

Question 6

What credit score do I need for a personal loan?

Accepted Answer

While requirements vary by lender, most traditional lenders prefer a credit score of 670 or higher for the best rates. However, many lenders work with borrowers who have scores as low as 580-600. Some specialized lenders even work with scores below 580, though rates will be higher.

Question 7

Can I get a personal loan with bad credit?

Accepted Answer

Yes, many lenders specialize in bad credit personal loans. While you may face higher interest rates and lower loan amounts, options exist for credit scores below 600. Consider credit unions, online lenders, or secured personal loans to improve your chances of approval.

Question 8

What documents do I need to apply?

Accepted Answer

Typically you'll need: proof of identity (driver's license or passport), proof of income (pay stubs, tax returns, or bank statements), proof of address (utility bill or lease), and your Social Insurance Number. Some lenders may request additional documentation.

Question 9

Can I get a personal loan if I'm self-employed?

Accepted Answer

Yes, self-employed individuals can qualify for personal loans. You may need to provide additional documentation like tax returns, bank statements, or business financial statements to verify your income. Some lenders specialize in loans for self-employed borrowers.

Question 10

What income do I need to qualify for a loan in Canada?

Accepted Answer

Most lenders require a minimum annual income of $15,000-$20,000 CAD. However, requirements vary by lender and loan amount. Your debt-to-income ratio matters more than income alone.

Question 11

Can I get a loan if I'm new to the country?

Accepted Answer

Newcomers to Canada may qualify for personal loans, though options are more limited. Some lenders have specific programs for newcomers. Building credit history through a secured credit card first can help.

Question 12

What interest rates can I expect?

Accepted Answer

Personal loan interest rates in Canada typically range from 6.99% to 35% APR. 35% APR is the maximum permitted in Canada under section 347 of the Criminal Code (effective January 1, 2025), and we only refer to lenders operating within that cap. Your rate depends on your credit score, income, loan amount, and term length. Those with excellent credit (750+) usually qualify for the lowest rates.

Question 13

Are personal loan rates fixed or variable?

Accepted Answer

Most personal loans have fixed interest rates, meaning your rate and monthly payment stay the same throughout the loan term. Some lenders offer variable-rate options, which may start lower but can increase over time. Fixed rates offer more predictability for budgeting.

Question 14

What loan terms are available?

Accepted Answer

Personal loan terms typically range from 12 to 72 months (1-6 years). Shorter terms mean higher monthly payments but less total interest paid. Longer terms reduce monthly payments but increase the total cost of the loan. Choose based on your budget and goals.

Question 15

Are there any fees I should know about?

Accepted Answer

Common fees include origination fees (0-8% of loan amount), late payment fees, and prepayment penalties (though many lenders don't charge these). Always review the loan agreement carefully and ask about all potential fees before signing.

Question 16

What's the difference between APR and interest rate?

Accepted Answer

The interest rate is the cost of borrowing the principal, while APR (Annual Percentage Rate) includes both the interest rate and additional fees. APR gives you a more complete picture of the loan's total cost.

Question 17

How long does the application process take?

Accepted Answer

Online applications typically take 5-15 minutes to complete. Approval decisions can come within minutes to a few business days, depending on the lender. Once approved, funds are usually deposited within 1-5 business days, with some lenders offering same-day or next-day funding.

Question 18

Will applying affect my credit score?

Accepted Answer

Most lenders offer a pre-qualification check with a soft credit inquiry, which doesn't affect your score. However, when you formally apply and the lender does a hard credit check, your score may temporarily drop by a few points. Multiple hard inquiries within a short period (14-45 days) for rate shopping are typically counted as one inquiry.

Question 19

Can I apply with a co-signer?

Accepted Answer

Yes, many lenders allow co-signers, which can help you qualify for a loan or get better rates. The co-signer must have good credit and agrees to repay the loan if you can't. Keep in mind this puts the co-signer's credit at risk if payments are missed.

Question 20

What happens after I apply?

Accepted Answer

After applying, the lender reviews your application and may request additional documents. Once approved, you'll receive a loan offer to review. If you accept, you'll sign the agreement and funds will be deposited into your bank account.

Question 21

Can I apply for multiple loans at once?

Accepted Answer

Yes, you can pre-qualify with multiple lenders to compare offers without affecting your credit. However, only formally apply for one loan at a time, as multiple hard inquiries can impact your score.

Question 22

How do I make payments on my personal loan?

Accepted Answer

Most lenders offer multiple payment options including automatic bank drafts, online payments, mobile app payments, phone payments, and mail-in checks. Setting up automatic payments may qualify you for a rate discount with some lenders.

Question 23

Can I pay off my loan early?

Accepted Answer

Many lenders allow early payoff without penalties, but some may charge prepayment fees. Paying off your loan early can save you money on interest. Always check your loan agreement for prepayment terms before making extra payments.

Question 24

What happens if I miss a payment?

Accepted Answer

Missing a payment typically results in late fees and can negatively impact your credit score. Contact your lender immediately if you're having trouble making payments - many offer hardship programs or payment deferrals. Consistent late payments can lead to default and collections.

Question 25

Can I change my payment due date?

Accepted Answer

Many lenders allow you to change your payment due date once during the loan term. Contact your lender to request a date that aligns with your pay schedule.

Question 26

What if I can't afford my payments?

Accepted Answer

Contact your lender immediately to discuss options like payment plans, forbearance, or loan modification. Ignoring the problem will only make it worse. Many lenders have hardship programs available.

Question 27

Personal loan vs credit card: Which is better?

Accepted Answer

Personal loans are generally better for larger, one-time expenses with their lower fixed rates and set payoff date. Credit cards work well for smaller purchases you can pay off monthly. For debt consolidation, personal loans usually offer lower rates than credit cards.

Question 28

Personal loan vs home equity loan: What's the difference?

Accepted Answer

Personal loans are unsecured and don't require collateral, while home equity loans use your home as security. Home equity loans typically offer lower rates but put your home at risk. Personal loans are faster to obtain and don't require home ownership.

Question 29

Should I get a personal loan or a line of credit?

Accepted Answer

Personal loans provide a lump sum with fixed payments, ideal for one-time expenses. Lines of credit offer flexible borrowing and repayment, better for ongoing or unpredictable expenses. Choose based on your specific needs.

Question 30

Are online lenders or banks better for personal loans?

Accepted Answer

Online lenders often offer faster approval and funding, competitive rates, and more flexible requirements. Banks may offer lower rates for existing customers with excellent credit. Compare offers from both to find the best deal.

Question 31

Should I use a credit union for my personal loan?

Accepted Answer

Credit unions often offer lower rates and more personalized service than banks. However, you must be a member to apply. If you're eligible, it's worth comparing credit union rates to other lenders.

Frequently Asked Questions — Canada

General

Eligibility

Rates & Terms

Application

Repayment

Comparison

Still Have Questions?

Helpful Resources

Apply for Your Personal Loan Today