Installment loans in Ontario

What is an installment loan?

An installment loan is a type of loan offered by online lenders that often come with shorter loan terms, smaller loan amounts and higher interest rates than the average personal loan. They also have more lenient requirements. Installment loans are unsecured, so you do not need to put up any collateral.

Features of installment loans in Ontario

• Term. Usually between 6 months and 5 years.
• Interest rates. Often between 8% and 47%, based on personal factors such as your credit score and income.
• Amounts. Up to $10,000, in most cases.

Much like payday loans, installment loans are designed to attract borrowers with bad credit.

How do you get installment loans in Ontario?

Installment loans in Ontario work just like any other loan. After you choose a lender, fill out an application for financing and specify how much you want to borrow. You’ll need to meet certain criteria to qualify in most cases, but there are some installment loans for bad credit in Ontario that may let you apply with a low income or no credit check. Getting an installment loan is quick. It usually takes around 24 to 48 hours from start to finish.

Once you’re approved for an installment loan, you’ll pay it back in monthly installments over several months to a few years. The terms for your loan will be set by your lender, who will tell you how much you need to pay every month including interest.

Representative example: Marie gets an installment loan in Ontario

Marie, who lives in Ottawa, needs to replace the hot water tank in her basement. She applies for several installment loans in Ontario and ends up with a loan for $10,000 to cover her expenses. She gets an interest rate of 15.4% and wants to repay the loan in 24 months. This is what her financing will look like:

What do you need to qualify for an installment loan?

Whether you’re looking to get installment loans in Ontario or online, they tend to have the same eligibility requirements. In general, to qualify for an installment loan you’ll need proof of income, which can include full or part time employment, disability, EI or pension payments. You’ll also need an active bank account and valid government-issued ID.

You usually need to prove that you have a decent credit score to qualify for installment loans by submitting to a credit check. There are dedicated installment loans for bad credit in Ontario too, so even if you have a poor credit score you may still be able to qualify. Lastly, you will need to be a Canadian citizen or permanent resident who is the age of majority in your province or territory, so either 18 or 19 years of old.

Installment loans for bad credit in Ontario

You may be able to qualify for an installment loan even if you have bad credit if you’re willing to pay higher interest rates. Your rates won’t typically be as high as with payday loans and you’ll get a bit longer to pay off your debt (usually a few months to years).

The downside is that you’ll pay interest for longer with this type of loan, which means that you may pay more in the long run if you agree to exorbitant rates. This is why you should compare several lenders to find the best terms for your loan.

How can I get installment loans for bad credit in Ontario?

You can apply for bad credit installment loans in Ontario by searching specifically for loans with bad credit lenders, including some listed above. Installment loans for bad credit in Ontario usually come with less strict eligibility requirements to qualify, but they are often much more expensive. This is because your lender will want to mitigate the risk they take in lending to you by making more money on your loan (in keeping with a higher risk equals higher reward business model).

Can I get no credit check installment loans in Ontario?

While it’s possible to get no credit check installment loans in Ontario, most lenders will require a credit check to decide whether or not to approve your application. If a lender in Ontario does advertise no credit check installment loans, it will base its approval decision on other factors like your income and overall financial stability to assess if you can repay the loan. Watch out for higher interest rates if you are approved.

Are installment loans better than payday loans?

Installment loans can often be a better financial choice than payday loans, since they come with far smaller APRs compared to payday loans. The only thing to keep in mind is that installment loans come with longer loan terms than payday loans. So it’s possible that the total amount of interest you’ll pay on a long loan term could end up being close to the cost of a payday loan. That’s why you should try to keep your installment loan term as short as you can afford to in order to keep the overall cost down.

You can see a comparison of the features of payday loans and bad credit installment loans in the table below.

How installment loans can help Ontarians

There are several reasons why getting installment loans might be the right move for Ontarians. Here are some of the key benefits of getting an installment loan:

• Help with unexpected expenses. Instalment loans can help Ontarians looking for help with unexpected expenses like car repairs, home repairs or medical bills.
• Possibly lower interest. Depending on the interest rate you qualify for, an installment loan interest rate might end up being lower than some other common types of debt. For example, most credit cards have interest rates around 20%, while installment loan lenders sometimes offer rates as low as 8%.
• Easy application. Apply online within minutes. Some online installment loan lenders in Ontario can give personal loan pre-approval within minutes.
• Quick approval and funding. You can get approval and funding within 24 to 48 hours.
• Flexible eligibility criteria. Getting online installment loans in Ontario with bad credit is possible, primarily because lending requirements are slightly more relaxed. “No credit check” online installment loans generally don’t make hard inquiries on your credit score, but you’ll need to demonstrate how you’ll be able to repay the loan back.
• More manageable repayments structure. Unlike payday loans that you have to repay by your next payday, you can take longer to repay your installment loan. Most lenders even give you the ability to choose between making payments once or twice a month for several months to years.

What are the drawbacks of installment loans in Ontario

• Potentially high interest rates. Installment loans can have very high interest rates – as high as 47% – compared to conventional personal loans. You’ll qualify for a higher interest rate if your credit score is low or you have lower or inconsistent income. Watch out for long loan terms because you could end up paying more interest than the amount you borrow.
• Disreputable lenders. Be wary of which lender you choose and where you provide your personal and financial details online. If an installment loan offer from a particular lender looks too good to be true, there’s a good chance that it is.

How to compare installment loans in Ontario

When comparing options for installment loans in Ontario, it’s important to consider the following features so you can find the right loan for your budget and needs.

Amount borrowed

The amount you can borrow will depend on your credit history, how much income you make and how much your lender is willing to give you. Some lenders will give out as little as $500 while others will only lend larger amounts up to $10,000.

Interest rates

This is the most important factor to compare when you’re looking for installment loans in Ontario. Installment loan interest rates can range from 8% to as high as 47%. The interest rate you’re offered will be based on factors like your income and credit score. Shop around for a low interest rate since that can save you thousands of dollars over the course of your loan.

Length of term

You’ll need to figure out how long you want to take your installment loan out for. Some lenders in Ontario and online will provide shorter terms at around 6 months while others will give out longer term loans up to 5 years. If you’re confident you can afford the higher monthly payments, opting for a shorter loan term will save you money in interest. However, if your budget is already stretched, it may be worth opting for a longer loan term so you don’t risk missing any payments.

Repayment terms

Look for an installment loan lender in Ontario that offers flexible terms, including repayment assistance plans if you run into trouble and can’t honour the original terms of the loan for some reason. Check to see if there are any early repayment terms if you want the option to save on interest and repay your installment loan early.

Fees

Some lenders charge hidden fees when you make late payments or even for paying off your installment loan early. Find a lender in Ontario that’s transparent and ask to see a list of fees for services so you know exactly what you’re signing on to.

I got the installment loan. Now what?

Once you’ve signed up for an installment loan in Ontario, your next step is to begin your repayments. This usually involves setting up pre-authorized withdrawals from your bank account. From there, you’ll need to make payments until your loan is paid back in full with interest.

Bottom line

Installment loans in Ontario can be a good alternative for bad credit borrowers compares to higher interest types of credit like payday loans. That said, they usually come with higher interest rates, smaller amounts and shorter loan terms than regular personal loans. While they can be easier to qualify for compared to other types of loans, you’ll want to watch out for installment loan lenders in Ontario offering guaranteed approval.

Installment loans in Ontario are often used to pay for one-off expenses and are usually offered by online lenders. Learn more about installment loans in our full guide here, and compare lenders today to find the best fit for you.

Frequently asked questions about installment loans in Ontario

• Is a credit check required for an installment loan?

  Yes, a credit check is standard practice for lenders that provide installment loans in Ontario.

• Do installment loans hurt your credit?

  If a lender does a hard credit check while assessing your loan application, then yes, it may briefly hurt your credit score. However, your credit score could improve over time if you consistently make your repayments by the deadline.

• What is the easiest installment loan to get approved for?

  The easiest installment loan to get approved for will likely be from a free loan broker service, like Loans Canada or LoanConnect, which matches you with one of their partner lenders based on your unique financial situation. These brokers work with a large variety of lenders, including those with very lenient eligibility requirements.

• How do you qualify for an installment loan?

  Lenders vary in their eligibility requirements. Basic requirements include being a Canadian citizen or resident, being the age of majority, and meeting the minimum income and credit score.

• Are there any installment loans that accept child tax in Ontario?

  Yes, there are many installment loan lenders in Ontario that accept child tax including Spring Financial and Loanz. Read our guide to getting child tax loans to learn more.

• Can I get ODSP installment loans in Ontario?

  Yes, it's possible to find ODSP installment loans in Ontario. You're best bet if you're looking for an installment loan with ODSP is to apply with loan brokers like Loans Canada and LoanConnect.