Compare cheap personal loans
Want to get a loan without overspending on rates and fees? Find out how to get a cheap personal loan.
Updated . What changed?
If you’re in the market for a personal loan, one of the most important features to consider is the cost of the loan. In this guide, we take you through what to look for when it comes to cheap personal loans and what to consider before you apply.
What's in this guide?
Compare cheap personal loans
How to compare cheap personal loans
The best way to find out the true cost of a loan is to calculate the APR.
- APR. The Annual Percentage Rate (APR) incorporates the fees as well as the interest rate to show you the true cost of the loan. Comparing APR’s across different loans is the best way to find the cheapest loan.
It’s also important to consider:
- Interest rate. Interest rates are only one important element that can impact the cost of a loan. Make sure you’re getting a competitive loan by shopping around.
- Upfront and ongoing fees. These fees will likely be added onto your principal loan amount and will therefore affect your repayments and the interest you have to pay.
Types of cheap loans
- Secured personal loans. While secured loans usually come with more competitive rates and terms, you’ll need to offer up an asset as collateral for the loan. Because the lender has collateral on the loan, it will tend to offer lower rates.
- Auto title loans. If you have a car, motorbike, boat or recreational vehicle, you can apply for an auto title loan. In this scenario, the vehicle title is used to secure the loan, which means you will usually have to outright own the vehicle. You will repay the loan in installments, and you can look forward to a competitive interest rate because you’re providing collateral.
- Unsecured personal loans. Usually unsecured loans come with a comparatively higher interest rate. But if you don’t have suitable collateral, you can still shop around to lock in a competitive price.
- Peer-to-peer loans. Generally sought by those with higher credit scores, these loans are financed by individual investors, or “peers”. You can apply online for these types of loans and one or a few investors will decide whether to fund your loan. Your credit score directly impacts the interest rate you’re offered, but the rates will be much lower than payday loans.
This depends on the type of loan you’re looking to apply for. For example, a secured personal loan will usually have lower rates than an unsecured personal loan, since you’re ensuring the loan has collateral.
A low-interest personal loan can range from as low as 4% to 12%. To qualify for a low-interest rate, you will need to have a good to excellent credit score of 650-900.
Besides the interest rate, fees and APR, you can consider the following:
- Repayment flexibility. Check whether you’ll be able to make additional or early repayments without facing fees.
- Loan terms. The shorter the loan term, the higher your repayments will be. However, your loan cost will be cheaper, because you’ll pay less in interest over time.
- Type of interest rate. Your loan can either be fixed or variable, and both of these rates will come with different features.
- Loan amount. Check what the minimum and maximum borrowing amounts are and if they meet your needs.
Eligibility requirements may vary between lenders, however, you will usually need to meet the following criteria:
- Be 18 years of age or the age of majority in your province or territory
- Be a Canadian citizen or a permanent resident with a valid Canadian address
- Have proof of a steady income
- Have a debt-to-income ratio of less than 43%
- Meet any minimum income or credit score requirements
- Have a working bank account in your name
If you find you don’t meet all the eligibility criteria on your own, you could consider a joint application personal loan to increase your chances of approval.
After you’ve done your research and found a personal loan you’d like to apply for, you can apply online by navigating to the lender’s online application form. You can usually apply online in less than 10 minutes if you have the necessary information handy. While the specific information you’ll be required to submit will differ between lenders, it’ll usually include:
- Personal details including your name, contact details, social insurance number and proof of your identity
- Details of your employment including your income and type of employment
- Financial details including your assets and debts