6 debt consolidation solutions in Ontario

Consolidating your debt can help make your finances more manageable. We break down the different options for debt consolidation in Ontario, including consolidation loans, balance transfer credit cards, debt management programs and debt settlement services. Learn more about which option could be the best fit for you.

1. Unsecured debt consolidation loan

An unsecured debt consolidation loan lets you borrow money based on your credit score without any need for collateral. It comes with higher rates than a secured debt consolidation loan.

Compare unsecured debt consolidation loans in Ontario

Loan provider	Loan details	Eligibility requirements
	Loan amount: $300 – $50,000 Loan term: 3 - 60 months Interest rate: 6.99% - 46.96%	Steady source of income	Go to site Read review
	Loan amount: $500 – $50,000 Loan term: 3 - 120 months Interest rate: 6.99% - 46.96%	Currents debts must total less than 60% of income	Go to site Read review
	Loan amount: $500 – $35,000 Loan term: 6 - 60 months Interest rate: 9.99% - 46.96%	Min. income of $1,800 /month, 3+ months employed	Go to site Read review
	Loan amount: $5,000 – $50,000 Loan term: 12 - 84 months Interest rate: 6.99% - 32.00%	Min. credit score 650, min. income $50,000/year, no history of bankruptcies	Go to site Read review
	Loan amount: $500 – $10,000 Loan term: 9 - 60 months Interest rate: 19.99% - 39.99%	Min. income of $1,666.67/month, full time employment/pension	Go to site Read review
	Loan amount: $1,000 – $35,000 Loan term: 36 - 60 months Interest rate: 8.99% - 34.99%	Recommended income of $40,000 /year, no payday loan debt, min. credit score of 650	Go to site Read review
	Loan amount: $200 – $35,000 Loan term: 6 - 60 months Interest rate: 9.90% - 46.96%	Min. income of $13,000 /year	Go to site Read review
	Loan amount: $5,000 – $25,000 Loan term: 30 - 60 months Interest rate: 24.99% - 29.99%	Min. credit score of 580, $5,000+ in debt, min. income of $30,000 annual	Read review
	Loan amount: $5,000 – $50,000 Loan term: 36 - 60 months Interest rate: 5.99% - 18.99%	min. credit score 680, min. income $3,750/month	Read review
	Loan amount: N/A Loan term: 6 - 60 months Interest rate: 9.65% - 13.70%	Must be employed or have a source of income and good to excellent credit	Read review
	Loan amount: Not disclosed Loan term: Not disclosed Interest rate: 10.24% – 9.74%	Have a steady source of income and good to excellent credit

Features of unsecured debt consolidation loans in Ontario

• How much it costs. Rates start at 9.75% for good to excellent credit. You may pay up to 46.96% with bad credit. You could be charged late payment fees and NSF fees.
• Best for. It’s best for people with good credit who don’t have an asset to secure their debt.
• How it affects credit score. On-time payments will increase your credit score. Late payments or defaulting will lower your credit score.
• Pros. It comes with an easy application and flexible loan amounts. No assets are required for this loan. You can use funds to pay off any type of unsecured debt, such as credit cards, unsecured loans and utility bills.
• Cons. It comes with higher interest rates than secured loans. It is difficult to qualify with bad credit.

Best debt consolidation loans in Canada

2. Secured debt consolidation loan

Secure your loan with an asset such as your home or investments to get lower interest rates. Secured debt consolidation loans rely less on your credit score to qualify. Just be aware that your asset can be repossessed if you default.

A home equity loan is one of the most common secured debt consolidation loans in Ontario. Home equity is your house’s appraised value minus your mortgage balance.

Compare secured debt consolidation loans in Ontario

Loan provider	Loan details	Eligibility requirements
	Loan amount: $300 – $50,000 Loan term: 3 - 60 months Interest rate: 6.99% - 46.96%	Steady source of income	Go to site Read review
	Loan amount: $500 – $50,000 Loan term: 3 - 120 months Interest rate: 6.99% - 46.96%	Currents debts must total less than 60% of income	Go to site Read review
	Loan amount: $5,000 – $50,000 Loan term: 36 - 120 months Interest rate: 19.99% - 24.49%	Must be a homeowner	Go to site Read review
	Loan amount: Not disclosed Loan term: Not disclosed Interest rate: 9.74% – 9.24%	Have a valid source of income, good to excellent credit and an asset for collateral

Features of secured debt consolidation loans in Ontario

• How much it costs. It starts at 6.99%. You could also owe appraisal fees, title search fees, prepayment fees, late fees and NSF fees.
• Best for. It’s good for people with a valuable asset they can use as collateral to get a competitive rate.
• How it affects credit score. On-time payments will increase your credit score. Late payments or defaulting will lower your credit.
• Pros. It comes with lower rates than unsecured loans and comes with higher loan amounts on average. You have a better chance of approval if you have bad credit.
• Cons. You could lose your asset if you default. The amount you get approved for is typically tied to your asset’s value.

3. Balance transfer credit card

Move your debts from several different credit cards onto a balance transfer card with a lower interest rate. Balance transfer cards come with a very low promo offer and rates tend to increase after 6–10 months. You’ll typically pay a fee to transfer your balances.

Compare balance transfer credit cards in Ontario

Features of balance transfer credit cards

• How much it costs. The promotional rate is between 0% and 3.5%. After the promo, rates range from 8.99% to 19.99%. You could pay additional fees ranging from 1% to 3% of the amount transferred.
• Best for. It’s good for people with good or bad credit who are dealing exclusively with credit card debt.
• How it affects credit score. On-time payments will improve your credit score, while late or missed payments will lower it.
• Pros. It comes with lower interest rates. You may be able to pay it off faster since less of the payment goes to interest. Many come with no annual fee.
• Cons. It could have high balance transfer fees, and missed payments could incur higher interest rates. There are no same-bank transfers, and the promo offer will expire.

4. Debt management program

With a debt management program, financial experts review your budget and negotiate with your creditors to consolidate your unsecured debts into one monthly payment, with little to no interest. These services are typically provided by credit counsellors and debt management firms.

You’ll still repay everything you owe, but your payments should be more affordable.

Organizations that help with credit counselling in Ontario

These programs are usually non-profit, but you may have to pay fees for certain services.

Non-profit	Overview
	Has helped over 850,000 Canadians reduce or eliminate their debt since 1996. Basic services are free of charge. You may have to pay for lawyers or other services as you progress through your debt management plan.
	Has helped over 500,000 Canadians get out of credit card debt over the past 15 years Free financial education resources and outreach programs Positive reviews on Trustpilot Go to site

Features of debt management programs in Ontario

• How much it costs. It’s free with a credit counselling organization, but you may have to pay for lawyers or other services as you progress through your debt management plan. You’ll typically pay a set-up fee and a monthly maintenance fee with a for-profit firm.
• Best for. It’s good for people with a low credit score and struggling to keep up with debt payments.
• How it affects credit score. Entering a debt management program will significantly lower your credit score, on the same level as a consumer proposal. It will be erased from your credit report two years after you complete the program.
• Pros. It consolidates your debts without getting an additional loan and lowers your interest rates or extends your payment period. It stops punitive action by creditors.
• Cons. It doesn’t cover secured debts like mortgages or auto loans. You may have to pay set-up or monthly maintenance fees. You’ll need to close any credit cards you include in your debt management plan. You won’t qualify for new loans while in a debt management program.

5. Debt settlement

Credit counsellors or debt settlement firms negotiate on your behalf with your creditors. You’ll pay off your debt in one lump sum that’s lower than your remaining debts. Unlike a debt management plan, you only repay a portion of what you owe. This can be a risky debt consolidation option because results are not guaranteed.

Organizations that help with debt settlement in Ontario

Company	Overview
	Online website that connects you with services offering debt settlement in Ontario No cost to get matched with providers Doesn’t provide debt consolidation services or loans directly Go to site
	Has helped over 850,000 Canadians reduce or eliminate their debt since 1996. Financial experts negotiate with your creditors to offer a one-time lump-sum payment to settle your debts. Accredited non-profit so basic services are free of charge.

Features of debt settlement in Ontario

• How much it costs. Consultations are free but you could pay thousands of dollars in fees to set up your debt agreement, depending on how much you owe. A private for-profit debt settlement company may charge you high fees even if it’s unsuccessful in negotiating with your creditors.
• Best for. It’s good for people who are experiencing financial hardship, don’t want to go through a debt management plan or consumer proposal, and have a reputable organization to work with.
• How it affects credit score. Debt settlement will significantly lower your credit score, on the same level as a consumer proposal. It will stay on your credit report for six years after you complete the program.
• Pros. If you work with a reputable organization, you repay a fraction of what you owe.
• Cons. Creditors can refuse to settle your debts, and you may pay high fees. A debt settlement company may advise you to stop paying your debts, which can result in legal action by your creditors. There could also be tax implications.

6. Consumer proposal

Consumer proposals are a formal, legally binding process administered by a legal firm called a Licensed Insolvency Trustee (LIT). The LIT works with you to develop an offer to pay creditors a percentage of what you owe or extend the time you have to pay off the debts (or both). These agreements cannot include secured debts like a mortgage or auto loan.

Companies that help with consumer proposals in Ontario

Company	Overview
	Online website that connects you with services offering debt consolidation in Ontario No cost to get matched with providers Doesn’t provide debt consolidation services or loans directly Go to site
	Helps with credit counselling, bankruptcy and consumer proposals Open since 1999, it has helped over 60,000 Ontario residents get out of debt Free consultation, but fees are undisclosed 99% creditor acceptance rate for consumer proposals
	Helps with credit counselling, bankruptcy and consumer/corporate proposals 40+ years of expertise, and online and in-person service are available in 10 languages Free consultation, but fees are undisclosed Over 6,000 consumer proposals filed, with a 99% creditor acceptance rate
	Helps with credit counselling, bankruptcy and consumer proposals 30+ years of expertise with over 100,000 clients served Free phone consultations, undisclosed fees Open 7 days a week with 34 locations across Ontario

Features of consumer proposals in Ontario

• How much it costs. Consultations are free, but your consumer proposal will include fees starting at $1,500.
• Best for. It’s best for people experiencing financial hardship and have exhausted their options.
• How it affects credit score. Entering a consumer proposal will significantly lower your credit score. It’ll stay on your credit report for three years after your final payment.
• Pros. It reduces your overall loan amount or extends your payment period. Experts work with creditors on your behalf, and it stops punitive action by creditors. There’s also no interest. It’s a formal, legally binding agreement, unlike a debt settlement.
• Cons. It doesn’t cover secured debts. Missed payments can cancel your agreement. You won’t qualify for new loans while in a consumer proposal.

How to choose the right debt consolidation option for you

Think about these questions to help choose the right debt consolidation in Ontario:

• What kind of debt do you have? If you have exclusively credit card debt, a balance transfer card might be the best option. If you have a mix of unsecured debts, consider a debt consolidation loan.
• Do you qualify for financing? Are you struggling to get approved for a debt consolidation loan or balance transfer card? Try to qualify with a few providers, and if you’re not successful, you may need to turn to the more serious options – debt management, debt settlement or consumer proposal.
• How big is your debt? The more serious options need at least $10,000 in unsecured debt. If you have less than that, consider a debt consolidation loan.
• Can you still afford your debt? If you’re still able to make payments on time, a debt consolidation loan could be a good fit. If you’re facing legitimate financial hardship, consider a debt management program, debt settlement or consumer proposal.
• Do you have an asset to secure your loan? Secured debt consolidation loans let you secure your loan with collateral such as your house or vehicle to get lower rates. Just be aware that your asset can be repossessed if you default on your payments.
• How much do you want to pay? You’ll end up paying fees (or interest rates) with most forms of debt consolidation. To avoid paying too much, your best option is to ask about fees ahead of time to get the best rate or go with a non-profit credit counselling service.
• Can you live with a lower credit score? Some types of debt consolidation in Ontario can severely damage your credit. Avoid debt settlement, debt management plans and consumer proposals if you need to maintain a good credit score in the next several years.

Frequently asked questions

• How do I consolidate debt in Ontario?

  There are several options to consolidate debt in Ontario. To maintain your credit score, consider a debt consolidation loan or balance transfer credit card. If you're unable to qualify for a loan, think about establishing a debt management plan with a non-profit credit counselling firm. To reduce your overall payments, your options are debt settlement or a consumer proposal.

• What are the interest rates of debt consolidation loans in Ontario?

  Interest rates for debt consolidation in Ontario typically run between 6.99% and 32%. However, some may reach as high as 46.96% if you have bad credit. The rates you get for your loan will depend on personal factors such as your credit score, income, debt-to-income ratio and whether you can secure your loan with an asset such as your house or vehicle.

• Am I eligible for debt consolidation in Ontario?

  Your eligibility for debt consolidation in Ontario will vary by lender, so it depends on who you go with. For example, some lenders may have minimum credit score or income requirements while others are more flexible. At a minimum, all lenders will require you to be a Canadian citizen or resident and the age of majority in your province to qualify.