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Bad credit loans in Ontario
Looking for bad credit loans in Ontario? Find out where to apply, how much you can borrow and how much it can cost you.
If you’re having trouble qualifying for a personal loan, there are plenty of lenders offering bad credit loans in Ontario. Instead of focusing on your credit score, these loan providers typically shift the focus to your income and ability to repay your loan. Here’s a look at the different kinds of bad credit loans in Ontario and how they work.
Popular bad credit loans in Ontario
|Provider||Bad credit loan in Ontario||Loan amount||Loan term||Interest rate or fee||Apply online|
|Loans Canada Personal Loan||$300 – $50,000||3 - 60 months||2.00% to 46.96%|
|Spring Financial Personal Loan||$500 – $15,000||9 - 48 months||17.99% - 46.96%|
|GoDay Payday Loan||$100 – $1,500||Up to 62 days||$15 per $100 borrowed|
|Money Mart Payday Loan||$120 – $1,500||1 - 62 days||$15 per $100 borrowed|
|Fairstone Secured Personal Loan||$5,000 – $50,000||36 - 120 months||19.99% to 23.99%|
|LoanConnect Personal Loan||$500 – $50,000||3 - 120 months||Secured from 1.90%, Unsecured 5.75%-46.96%|
Am I eligible for a bad credit loan in Ontario?
While requirements will vary from lender to lender, you will usually need to meet the following to apply for a bad credit loan:
- Be at least 18 years old.
- Be a Canadian citizen or a permanent resident with a valid Ontario address.
- Have a valid bank account.
- Have proof of regular income to keep up with monthly payments.
Keep in mind, unsecured loans typically have minimum credit score requirements while secured loans have collateral requirements, such as proof of home equity or a car title.
What is considered bad credit?
In Canada, credit scores range from 300 to 900. While credit reporting bureaus, such as Equifax Canada, tend to categorize bad credit as anywhere between 300 to 560, many lenders consider any scores that are below 600 to be bad. It’s at this threshold that you may have difficulty qualifying for conventional loans or credit cards. When you do qualify for a bad credit loan in Ontario, you could get stuck with higher interest rates and fees. That’s why it’s important to carefully compare your options before agreeing to any loan.
Types of bad credit loans available in Ontario
Generally, borrowers can choose from 3 types of bad credit loans in Ontario: unsecured personal loans, payday loans and secured loans. Each type of loan comes with their own restrictions on loan amount and eligibility requirements beyond credit score, like income and employment.
The table below summarizes the typical loan terms for each bad credit loan option in Ontario.
|Bad credit loans in Ontario||Loan amount||Loan term||Interest rate|
|Unsecured personal loans||500 – $15,000||6 – 60 months||18% – 47%|
|Payday loans||$100 – $1,500||Your next payday, up to 62 days||$15 per $100 borrowed|
|Secured personal loans||Varies based on the collateral’s value||3 months – 10 years||2% – 29%|
Option 1: Unsecured personal loans for bad credit in Ontario
Unsecured personal loans are a common way for borrowers to get funding, whether they have excellent credit or bad credit. With these loans, you don’t need to provide any collateral. Check out our curated list below of personal loan providers offering bad credit loans in Ontario.
Features of unsecured personal loans for bad credit in Ontario
- Flexible loan sizes. Ontarians can apply for as little as $500 or as much as $15,000 if you have bad credit, depending on your income, credit score, current debts and the lender you decide to go with.
- Flexible loan terms. Loan terms range from 6 to 60 months months.
- Interest rates. Interest rates tend to range from 18% to 47%, depending on your credit and other factors.
- Variety of lenders. While banks and credit unions offer unsecured personal loans, bad credit loans are typically on offer from online lenders.
- No collateral. You won’t need to secure your loan with an asset.
- Fast, easy application. If you’re applying for these loans with an online lender, you can get approved and receive your funds within 1-2 business days without ever stepping foot into a physical location.
Installment loans for bad credit in Ontario
Installment loans, which are offered by online lenders, are a type of unsecured personal loan available in Ontario with more lenient eligibility requirements – often including lower credit score requirements. Installment loan credit score requirements tend to range from 300-560, so they are viable options for bad credit borrowers. However, because of this flexibility, the interest rates are higher. Installment loan amounts typically cap at $15,000 if you don’t have good credit.
Check out our full guide to installment loans to learn more.
Option 2: Payday loans for bad credit in Ontario
Payday loans are a bad credit loan option in Ontario for those looking to borrow up to $1,500. The maximum borrowing fee in Ontario is $15 for every $100 borrowed, which makes payday loans a relatively expensive financing option. That’s why they’re generally used as a last resort once all other options have been exhausted.
⚠️ Warning: Be cautious with payday loansPayday loans are expensive. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). Consider alternatives instead of a payday loan:
- Local resources. Government programs and nonprofits offer free financial services and help with food, utilities and rent.
- Debt relief companies. There are services to help you reduce your debt payments.
- Payment extensions. Talk with bill providers about longer payment plans or due-date extensions.
- Side jobs. Sell unwanted items online, sign up for food delivery and more.
Maximum borrowing costs per provinceAlways refer to your contract for exact repayment amounts and costs as they may vary from our results.
|Province||Maximum allowable cost of borrowing|
|Alberta, British Columbia, New Brunswick, Ontario & Prince Edward Island||$15 per $100 borrowed|
|Manitoba & Saskatchewan||$17 per $100 borrowed|
|Nova Scotia||$19 per $100 borrowed|
|Newfoundland and Labrador||$21 per $100 borrowed|
|Northwest Territories, Nunavut & the Yukon||$60 per $100 borrowed|
|Quebec||Limit of 35% annual interest rate (AIR)|
Features of payday loans in Ontario
Tread carefully with payday loans in Ontario, which are some of the most expensive types of financing you’ll come across. Key features include the following:
- A cap of $1,500 on loan amounts. In Ontario, you can only borrow a maximum of $1,500 per payday loan or up to 50% of your take-home pay. You cannot take out more than 1 payday loan at a time, and you also cannot roll over payday loans to extend the term.
- Terms of up to 62 days. Payday loans get their name because you’re typically required to pay back the loan by your next payday up to 62 days later.
- Some of the steepest interest rates for borrowing. By law, payday lenders in Ontario cannot charge more than $15 in fees for every $100 borrowed. Overall, the annual percentage rate (APR) on payday loans is very high, often between 390% and 780%.
- Quickest way to access cash. Most payday lenders will provide you with a decision on the spot or within 60 seconds. If you clear identity and income verification, you could receive funds immediately after approval.
Option 3: Secured personal loans for bad credit in Ontario
A secured personal loan is a loan that’s guaranteed against an asset you own. Secured loans are suited to bad credit borrowers in Ontario because lenders will be able to recoup their losses if you default on your loan by seizing the collateral. Since it’s less risky for lenders, they tend to have looser eligibility requirements. Two common types of secured loans for bad credit are vehicle title loans (your car as collateral) and home equity loans (your home as collateral).
Vehicle title loan
Vehicle title loans are loans secured to the title of your vehicle. You can still drive your car while you’re repaying the loan, but your car is used as collateral. Your car must be paid off.
- All credit types accepted. Vehicle title loan providers accept borrowers with bad credit and some might not even check your credit when you apply – though you might want to assess the risks of no credit check loans.
- Receive up to 25% to 50% of the value of the car in financing. Once you’ve applied, you may have to take your vehicle to a physical location to get it appraised, so your lender has a clear idea of its market value. These loans usually cap out at $50,000.
- High interest rates. Interest on a car title loan typically ranges from 9% – 49% APR.
Home equity loans in Ontario
If you own your home and have built up some equity in it, you can use that equity as a guarantee on your next loan.
- Lengthier application process. When you apply, you will need to provide details of your mortgage, home equity and your personal financial position. These steps will delay your access to funding compared to other lending options.
- Your home is on the line. If you default on your home equity loan, the lender will recoup its losses by taking ownership of that equity.
What Ontarians should ask before applying for bad credit loans
Before opting in to bad credit loans in Ontario, asking the following questions can ensure you lock in a good rate on the right types of loan for your specific needs.
What is the APR for bad credit loans in Ontario?
The APR shows how much the loan would cost in a year. It is the annual interest rate plus other fees to finance the loan. If a loan doesn’t have other fees, the APR is the same as the annual interest rate. Looking at the APR is key because it shows you the true cost of a loan and helps you compare different types of loans. Here are some example APR ranges for different types of bad credit loans you can find in Ontario:
- Unsecured personal loans: 18% – 47%
- Secured personal loans: 2% – 29%
- Vehicle title loans: 9% – 49%
- Home equity loans: 10% – 29%
- Payday loans: Around 300% or more
The exact rate you’re offered will depend on the lender you choose and your financial situation.
How long do I have to repay the bad credit loan, and when do I need to repay it?
Bad credit loan terms in Ontario range from as quick as 1 week to as long as 5 years, depending on the type of loan you get. The advantage of longer loan terms is lower monthly payments, but you’ll end up paying more in interest over time. If you end up getting a bad credit personal loan, you may be able to choose from weekly, fortnightly or monthly repayments. If you get a payday loan, the full amount of the loan will usually be automatically withdrawn from your account when your next paycheque is deposited.
Do bad credit loans in Ontario come with any extra fees?
Fees can add unnecessary costs, driving up your debt load and the amount of time it takes to pay off the loan. Look out for these fees:
- NSF fee (common). The lender may charge a NSF fee of $25 to $50 any time you miss a loan payment. This is in addition to the NSF fee your bank will charge for insufficient funds. This is common for personal loans and payday loans.
- Late payment fee (common). This is a common fee for personal loans and payday loans.
- Early repayment penalty (not common). This is not common for personal loans. For payday loans, lenders in Ontario are not allowed to charge this.
- Origination fee (not common). This is a fee to process your loan, and it’s usually deducted from the loan amount. This is not common for personal loans, and payday lenders in Ontario cannot charge this.
- Loan insurance. This is 100% optional for personal loans, and you shouldn’t feel obligated to get it. If you do decide to get it, you pay for it when you receive your loan, not before. For payday loans, lenders in Ontario cannot offer or provide loan insurance in connection with the payday loan agreement.
Can I afford a bad credit loan?
With a clear picture of how much you intend to borrow and how long it’ll take to repay this sum, determine whether your budget can shoulder this monthly debt. You can use our personal loan monthly payment calculator below to find out how much a bad credit loan might cost you.
Do bad credit lenders in Ontario have other eligibility requirements?
Yes, even bad credit lenders have their own minimum eligibility criteria, like a minimum monthly income or minimum credit score. For example, some lenders require you to be making a minimum of at least $1,000 per month, or have minimum credit score of 560. Some lenders don’t accept certain forms of income, such as employment insurance or disability income, or they don’t operate in Ontario. If you don’t meet the requirements of one lender, look around at other options since requirements can vary quite a bit between providers.
Is this lender legit?
Sketchy lenders prey on those who are desperately seeking funding and are in a bad credit situation. Do your due diligence by reading the company’s website and contact details, poring over customer reviews and checking for adequate accreditations. To help you out, we’ve compiled lists of legit bad credit lenders in Ontario here so you can easily compare your options.
What is the cost of a bad credit loan in Ontario?
The total cost of a bad credit loan you take out in Ontario will vary, depending on the type of loan, loan amount, loan term, the interest rate you’ve secured and any other fees. Below is an example of how much a typical $1,000 unsecured loan, payday loan and vehicle title loan might cost a borrower.
|Loan amount||Interest rate||Loan term||Total loan cost||Interest charged|
|Unsecured personal loan||$1,000||46.93%||6 months||$1,141.25||$141.25|
|Payday loan||$1,000||$15 for every $100||14 days||$1,150||$150|
|Vehicle title loan||$1,000||35%||12 months||$1,199.56||199.56|
Personal loan calculator
Find out your potential monthly payments on bad credit personal loans available in Ontario with this calculator.
Personal loan monthly payment calculatorCalculate how much you could expect to pay each month on a bad credit personal loan in Ontario.
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Tips for taking out bad credit loans in Ontario
While these tips won’t guarantee you’ll be approved for a bad credit loan in Ontario, they can help increase your chances:
- Don’t rush. Don’t rush into signing a contract without knowing the terms of your loan. Also, if you can wait at least 6 months, take steps to rebuild your credit first. Ultimately, improving your score means lower rates in the future and a better chance of being approved for loans.
- Avoid any lenders that pressure you into signing or ask for upfront payment. Borrowers in a desperate financial situation tend to be targeted more with personal loan scams and payday loan scams, so do your research before applying. A legitimate lender should not ask you to pay any funds upfront. You should also be aware that loan insurance is never required.
- Know the provincial regulations if you’re taking out a payday loan. In Ontario, payday lenders must follow rules outlined in the Payday Loans Act (2008). They can’t charge more than $15 in fees for every $100 borrowed, loans max out at $1,500 and borrowers can’t take out more than 50% of their income.
How to apply for a bad credit loan in Ontario
If you’re ready to apply for a bad credit loan, follow these steps for a seamless process:
- Choose the type of bad credit loan. Your first decision is to choose which route you’d like to take to get your funding from unsecured or secured loans to payday loans.
- Compare lenders and check eligibility requirements. Zero in on Ontario lenders that accept borrowers with your credit score or use a broker to help you find a provider. Decide on which features are most important to you, including speed, loan amounts, interest rate and flexibility with repayments. You can easily compare your options above.
- Apply. Prequalify for a personal loan by filling out a quick online form or asking for a quote. Prequalifying for a bad credit personal loan gives you an estimate of the interest rate, origination fee (if any), loan amounts and terms you might be eligible for.
- Get verified. Once you’re approved, proceed with the lender of your choice. You’ll need to complete the application by providing documentation like government-issued identification, pay stubs and notice of assessments.
- Review the contract and sign. Read over your loan agreement, taking factors such as your loan amount, interest rate and fees into account.
Frequently asked questions about bad credit loans in Ontario
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