Compare $25,000 loans
Learn how to find competitive interest rates and flexible payment options on a $25,000 personal loan.
If you’re looking for a $25,000 loan in Canada, there are plenty of options to choose from. $25,000 personal loans are available from traditional lenders like banks and credit unions, but alternative online lenders also offer this type of financing.
The interest rate you get will vary depending on the lender you choose and your own personal financial situation, so keep reading to find out how to find the best $25,000 loan for your needs.
Compare $25,000 loans
Types of $25,000 personal loans
When you’re comparing personal loans, you’ll need to consider the type of loan you want. The first thing you need to decide is whether you’re looking for a secured or unsecured loan, then a fixed or variable interest rate:
Secured vs unsecured loans
- Secured $25,000 loans. With a secured personal loan, you offer an asset such as your home or car as collateral. While this allows you to access a lower interest rate, it also means you risk losing your asset if you default on the loan. The amount you can borrow will vary depending on how much your collateral is worth.
- Unsecured $25,000 loans. Unsecured personal loans don’t require collateral, but you’ll need to complete a credit check before you can get approved. You don’t have to worry about your asset being repossessed if you default on this type of loan, but interest rates are higher than on secured loans. If you’ve got excellent credit, loans of up to $50,000 are available.
Fixed vs variable interest rates
- Fixed-rate loans. With a fixed-rate personal loan, you lock in an interest rate for the entire loan term. This gives you the peace of mind of having a fixed monthly payment and protects you against interest rate rises, but you could miss out on savings if rates drop during the loan term. Most lenders offer terms of up to five years, but some offer seven- or even 10-year terms.
- Variable-rate loans. As the name suggests, the interest rate on variable-rate personal loans can change throughout the loan term according to market conditions. So while the rate could go down and reduce your monthly payment, there’s also the chance that it will go up and increase your regular payment. The initial interest rate on this type of loan is typically lower than on a fixed-rate loan.
Types of lenders for $25,000 personal loans
$25,000 loans are available from a wide range of lenders. Here are the main options you’ll need to consider and compare:
- Banks. Bank personal loans are available from the Big Five as well as various other banks that operate in Canada. If you’ve got good or excellent credit, banks offer competitive interest rates of anywhere between 6% and 15%. However, they also tend to have strict eligibility requirements, so they may not be an option for borrowers with bad credit.
- Credit unions. Credit unions tend to offer slightly smaller loan amounts than major banks, but they can also provide slightly more flexible payment schedules. You’ll usually need to sign up as a credit union member to take out a loan, and low interest rates are available if you have excellent credit.
- Online and alternative lenders. These private personal loan lenders have less strict eligibility criteria than banks, so they’re worth considering if you have bad credit. Rates of less than 10% are available if you’ve got good credit, but borrowers with bad credit could be looking at rates as high as 46.96%. You’ll also need to do your research to make sure you’re dealing with a legitimate lender.
- Peer-to-peer lenders. P2P loans offer a slightly different approach to borrowing. Rather than approaching a lender for financing, you borrow money from other Canadians who loan out money as a form of investing. Competitive rates are available for borrowers with good credit, but it could be difficult to qualify if you have a bad credit score.
How to find and get approved for the best $25,000 loan
There are several simple things you can do to ensure that you find the best $25,000 personal loan for your needs:
Check your credit score
Before you start comparing loans or think about submitting an application, find out what your credit score is. This will help you decide which lenders you’ll be best off considering for a loan and also whether there’s anything you can do to boost your credit score.
Pay down your debts
One of the key factors lenders consider when assessing loan applications is your debt-to-income ratio. You’ll typically access lower interest rates with a ratio of less than 20%, so paying off any outstanding debts before applying for new credit can make a big financial difference in the long run.
Consider a cosigner
If you have bad credit, finding a guarantor with an excellent credit score for your loan can help you access better rates and larger loan amounts. However, the guarantor will need to repay the money you borrow if you default on the cosigned personal loan.
Work out how much you can afford to pay
Now it’s time to open the calculator app on your phone and work out the size of the monthly payment you can afford. Remember, you’ll need to also budget for all your normal living expenses as well as leave room to cover those unexpected bills that sometimes arise.
The next step is to compare $25,000 loans from a range of lenders. Take time to consider the following:
- Interest rates and fees. Remember to compare loans based on their annual percentage rate (APR), which includes fees to reflect the true cost of each loan.
- Loan term. The time you have to pay back your $25k loan can have a big impact on its overall cost. While a longer loan term can help make your monthly payment seem more manageable, it also means you’ll pay more in interest over the life of the loan. For example, a $25,000 loan with a 10% APR will cost $2,991 more to pay back over a seven-year loan term than it will over five years.
- Payment flexibility. Check whether you will make loan payments weekly, fortnightly or monthly. It’s also important to check whether you can make additional payments at any time and whether you’ll be charged a fee for paying the loan off early.
- Eligibility requirements. Check whether there are any specific eligibility requirements you’ll need to meet, such as having a minimum credit score or minimum monthly income.
- Pre-approval. If a lender offers pre-approval, use this to get a fair idea of how much a loan will cost and compare it to what’s offered by other lenders.
Research lenders carefully
Finally, it’s also important to make sure you’re dealing with a legitimate lender, particularly if you’re dealing with a lender that offers bad credit personal loans. Make sure any lender you consider is properly registered in your province, and steer clear of lenders that offer guaranteed approval or terms that just sound too good to be true. Find out more about how to protect yourself in our guide to personal loan scams.
Am I eligible for a personal loan of this size?
If you’re considering applying for a $25,000 personal loan, the main thing to remember is that you’ll need good to excellent credit. So if you have a credit score below 660, you may need to consider other options such as improving your credit or applying for a cosigner loan if you want to qualify for a personal loan of this size.
Other eligibility requirements vary between lenders, but you’ll generally need to meet the following criteria:
- Be at least 18 years of age or the age of majority where you live
- Be a Canadian citizen or permanent resident
- Be employed and have a steady source of income
- Meet debt-to-income ratio requirements
What is the monthly payment on a $25,000 loan over five years?
There are several factors that affect the cost of repaying a $25,000 loan, with the interest rate and loan term both crucial to the size of your monthly payments.
To give you an idea of the sort of monthly payment you can expect, let’s look at the example of a $25,000 loan over five years with two different APRs: 6.99% and 10.15%.
As you can see in the table below, the higher interest rate increases the monthly payment on your loan by $38. Over the full loan term, you’ll end up paying $2,286 extra in interest. That’s why it’s important to shop around for a competitive rate.
|Loan amount||APR||Monthly payment||Total payments|
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Use the calculator below to work out the monthly payment amount on your $25,000 loan.
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Can I get a $25,000 loan with bad credit?
If your credit score is far from perfect, you’ll need to compare personal loans for bad credit. Lenders that offer bad credit loans will focus on your income rather than your credit score to determine your ability to pay back the money you borrow.
Unfortunately, it’s very difficult to get a $25,000 loan with bad credit. As a general guide, the maximum amount you’ll be allowed to borrow, and only from some lenders, is around $10,000 to $15,000, while you’ll also need to accept higher interest rates.
If that’s not enough for your needs, you may need to take steps to improve your credit score before you can consider applying for a $25,000 loan.
Steps to apply for a $25,000 personal loan
Once you’ve compared your options and decided on the best lender and $25,000 loan for you, it’s easy to apply online by completing a handful of simple steps:
- Head to the lender’s website and start a personal loan application.
- Provide your name, date of birth, address and contact details.
- Provide financial information such as your income, debt and assets.
- Provide proof of ID (such as a passport or driver’s licence) and proof of income (such as pay stubs or bank statements).
- Submit to a credit check.
- Review all the details you’ve provided and submit your loan application.
Frequently asked questions
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