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Low interest loans in Canada

Are your finances in good shape? Find lenders that offer low interest personal loans in Canada.

If you have a good to excellent credit score, you can apply for low interest loans in Canada. The application for low interest loans is more involved, but if you’re approved, you’ll put more money down on your principal and save over the life of your loan.

Compare personal loans with low interest

1 - 3 of 3
Name Product Interest Rate Loan Amount Loan Term Requirements Link
LoanConnect Personal Loan
Secured from 1.90%, Unsecured 6.99%-46.96%
$500 - $50,000
3 - 120 months
Requirements: min. credit score 300
Go to site
More Info
Fill out one application with this broker and get pre-approved by different lenders in 5 minutes.
Loans Canada Personal Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
$300 - $50,000
3 - 60 months
Requirements: min. credit score 300
Go to site
More Info
A broker with the largest lender network in Canada. Fill out one application and get matched for free with lenders.
Mogo Personal Loan
9.90% - 46.96%
$200 - $35,000
6 - 60 months
Requirements: min. income $13,000/year, min. credit score 500
Go to site
More Info
Get a free quote without affecting your credit score and get an unsecured loan the same day. 100-day money-back guarantee: If you're not happy with your loan, pay back the principal and get the 100 days of paid interest and fees back.

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Overall representative example
If you borrowed $20,000 over a 5-year term at 9.50% APR (variable), you would make 60 monthly payments of $420.04 and pay $25,202.23 overall, which includes interest of $5,202.23. The overall cost for comparison is 9.50% APR representative.

What is a personal loan with low interest?

What’s considered a low interest rate? According to the Bank of Canada, the average rate for personal loan plans in 2021 were between 5.43% and 6.88%. This combines fixed and variable rates and does not differentiate between loans with collateral (including auto loans) and loans without collateral. Based on the latest information available from the Bank of Canada, the average interest rate is 6.72%. You may end up paying more than that once your personal variables are factored in.

Personal loan rates will depend on your situation

An unsecured personal loan with low interest will usually have a rate that sits between 6% and 12% for fixed interest rates, but it really depends on a borrower’s credit score and other personal factors. What may be considered low for one borrower may not be low for another. If your finances are strong and you’re willing to provide collateral such as your house, you could score a rate as low as around 2%, according to some lenders. But keep in mind that very few people can qualify for the absolute lowest rate.

Why can’t I qualify for the lowest rate with a lender?

It’s difficult to get the lowest advertised rate with any lender because this rate is usually reserved for “ideal” borrowers. This includes those that have high incomes, own multiple assets and have little debt. While it still pays to apply for an advertised rate that interests you, be prepared for rate adjustments once all of your personal variables have been factored in.

What types of lenders have low interest loans in Canada?

The following types of lenders offer low interest loans for good to excellent credit:

  • Banks. Banks have strict eligibility requirements for personal loans, but they offer competitive interest rates.
  • Credit unions. Credit unions offer low rates that are equal to or better than the banks. However, you’ll need to apply for a membership with the credit union.
  • Peer-to-peer lenders. An online peer-to-peer lending platform like goPeer can reduce operating costs and pass on the savings to the borrower.
  • Online lenders. These lenders have higher rates on average than banks and credit unions, but they put less weight on your credit score, and there are some online lenders that can offer low interest loans that are on the same level or better than the traditional lenders.
  • Online broker. An online broker such as Loans Canada or LoanConnect can help you quickly prequalify with multiple lenders to help you find the lowest rate you can get with its partner lenders.

What types of loans have low interest rates in Canada?

  • Secured personal loans. Secured loans tend to have lower interest rates than unsecured loans since they involve collateral, such as your house or investments, which lowers the risk for the lender. If you don’t make your payments, the lender can repossess your asset. Secured personal loans are the most traditional way to take out a loan if you’re borrowing a large amount of money and/or looking to lower your interest rate.
  • Guarantor loans. If your credit score is not the best, guarantor loans may lower your interest rate if your guarantor’s finances are in great shape. However, your guarantor should understand that their credit score can go down if you don’t make your payments on time.
  • Home equity loans or lines of credit. Putting up your house as collateral can lower your interest rate. A home equity loan is the same as a secured personal loan with your house as collateral.
  • Variable rate personal loans. Personal loans with variable interest rates generally have lower starting rates than personal loans with fixed interest rates. If you get a variable rate personal loan, your interest rate will fluctuate with the markets. In the current environment, however, be prepared for your rate to increase if you get a variable rate personal loan now. The Bank of Canada increased its overnight rate in March, April and June 2022, and economists predict more increases this year.

Compare personal loan interest rates in Canada

To find low interest loans in Canada, compare interest rate ranges based on the type of lender, loan (secured or unsecured) and interest rate (fixed or variable).

Loan providerInterest ratesLender typeMinimum credit score
Picture not describedFixed rate, secured and unsecured: 1.9%–46.96%Online broker300Go to site
Picture not describedFixed rate, unsecured: 8.00% - 33.92%P2P lender600Learn more
Picture not describedFixed rate, unsecured: 9.90% - 46.96%Online lender500Go to site
Picture not described
  • Fixed rate, secured: 8.59%
  • Fixed rate, unsecured: 9.09%
  • Variable rate, secured 7.74%
  • Variable rate, unsecured 8.24%
Credit unionTypically 650-660Learn more
National Bank logo
  • Fixed rate, unsecured: 9.65% - 11.30%
  • Variable rate, unsecured: 8.70% - 10.20%
BankTypically 650-660Read review

Details last verified in June 2022

Compare more personal loan interest rates in Canada

How to find the best personal loan with low interest

There are several steps you can take to get the best low interest personal loan for your needs.

Make yourself look like an ideal borrower

If you have a good credit score, a solid credit history of making on-time payments, a good job, and you’ve had a steady employment and housing situation for several years, these will all signal to the lender that you’re a stable and reliable person who is less likely to default on payments.

Increase your credit score

You may want to improve your credit score first, especially if you have missed some recent payments, before applying for a personal loan if you’re keen to score a low interest rate.

Pay down your debts

If you can, pay down your other debts before you apply for low interest loans to bring down your debt-to-income ratio. Lenders will want to take a look at how much monthly income you have and how much monthly debt payments you have.

Get a copy of your credit report and fix any errors

You may have errors on your credit report that are bringing down your credit score. You can correct these errors by ordering a free copy of your report from Equifax or TransUnion and filing a dispute. The process will take several weeks, but it can improve your credit score.

Consider a secured loan

Getting a secured loan offsets the risk for the lender and can help you qualify for a lower rate. But make sure you can manage the repayments.

Ask about collateral

If you’re interested in a secured personal loan, ask lenders what types of collateral they accept. Home equity is the most common asset to use, but lenders may be open to other types of collateral.

Look into relationship discounts

Your current bank might offer rate discounts to their chequing account customers.

Research personal loan interest rates

Become familiar with personal loan interest rates in Canada from different types of lenders so you have a good idea of what rates you’ll encounter. Keep in mind that loan interest rate ranges can change if the Bank of Canada’s prime rate changes.

Ask about the annual percentage rate (APR)

Ask lenders to break down the APR, which is your annual interest rate plus the fees you’ll need to pay to get the loan. It gives you a truer view of the cost of the loan. If the loan doesn’t have financing fees, the APR is the same as the annual interest rate.

Get personal loan pre-approval

Get personal loan pre-approval from banks, credit unions and online lenders so you can compare offers. Getting pre-approved is the first step of an application, and it is a basic review of your finances. Some lenders offer fast pre-approval, within minutes of applying, without impacting your credit score.

Look into repayment flexibility

If there’s a chance you can pay off your loan early or make extra payments, look for a lender that doesn’t charge for this perk (often called a “prepayment penalty”). Most lenders of personal loans do not charge this.

Get clarity on principal vs. interest

Before signing anything, examine the payment schedule. Check how much of your payments is going towards the principal vs. interest. Are your initial payments reducing any of the principal, or are they all going towards the interest first? If you’re paying for the interest first, it doesn’t matter if you pay off your loan early you’ll still pay the full amount of interest.


Don’t focus solely on the interest rate. Find out if there are any extra charges to your low interest personal loan. Besides prepayment penalties, watch out for these charges:

  • NSF fee. If there are insufficient funds in your bank account, your lender may charge an NSF fee between $25 and $50. This is separate from the NSF fee your bank will charge.
  • Late fee. If you miss a payment due date, the lender may charge you a fixed dollar amount (around $15 to $40) or a percentage of the outstanding balance (around 5%).
  • Origination fee. This is built into the APR, and it’s a fee to process your loan that’s deducted from the loan amount. It’s around 1-5% of the loan amount.
  • Loan protection plan. This is a completely optional product. In the event of a death, illness or job loss, loan insurance will cover your repayments. If you decide to get this product, it’ll add to the cost of your loan.

Other perks

A perk you can look into is a trial period. For example, with a Mogo personal loan, you can return the principal within 100 days and get the interest and fees you paid back. Another perk to consider is how easy it is to manage your loan online. For example, can you sign up for an account where you can view your payment history, track your loan balance, track deadlines and make payments?

Top picks for low interest personal loans

If you’re curious about where you can apply for low interest loans in Canada, here’s a look at our top picks:

Picture not described

Key features. goPeer strives to offer the most competitive interest rates to Canadians with good to excellent credit. It is the first regulated consumer P2P lending platform in Canada. The interest rate for unsecured personal loans starts at 8%.

Eligibility requirements. You must have a minimum credit score of 600, minimum annual income of $15,000 and be a Canadian resident for 3+ years.

Learn more

Picture not described

Key features. LoanConnect is an online broker. Interest rate starts at 1.9% for secured loans and 6.99% for unsecured loans. You can search its lender network for free without affecting your credit score.

Eligibility requirements. You must be of the age of majority in your province of residence and a Canadian resident. You must also show that you make enough money each month to repay your loan on time.

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Do I qualify for a personal loan with low interest?

Requirements for low interest loans vary among lenders, but generally, you’ll need to meet the following:

  • You must be at least 18 years old or the age of majority in your province or territory.
  • You’ll need to be a Canadian citizen or a permanent resident with a valid Canadian address and 2 valid pieces of government-issued ID.
  • You must demonstrate that you can pay off your loan by showing recent pay stubs, your most recent T4, personal tax return, list of assets and list of liabilities.
  • You’ll need to have an active bank account.

How to apply for low interest personal loans

You can apply for low interest loans in Canada by following the steps below:

  1. Visit your lender’s website to fill in an online application.
  2. Input your personal information, such as your full name, date of birth, address, phone number, email, job title, monthly income and debts.
  3. Submit your application and wait for a decision.
  4. If the lender wants to proceed with your application and you do too, submit documents to verify your identity and income.
  5. Get an official loan offer.
  6. Review and sign your contract.

How do lenders determine my loan interest rate?

Your lender will offer you an interest rate based on your financial history. This can include factors such as the following:

  • Your credit score. Your lender will pull your credit report to make sure that you don’t have a history of defaulting on loans. To get competitive interest rates, you typically need a score above 660 and several years of on-time debt payments.
  • Your debt-to-income ratio (DTI). Your lender will want to make sure that your monthly debts are no more than 40% of your monthly income, but to get a low interest personal loan, you should have a DTI under 20%.
  • Your debt-to-assets ratio. Your lender will also calculate what your assets are worth in comparison to your debt to find out if you own more than what you owe. This helps them decide how likely you are to pay off your debts.
  • Non-conventional factors. Lenders may also consider less conventional factors such as your work history, job title and even how many times you’ve changed your address in the past couple of years.

      How to compare low interest personal loans in Canada

      There are a number of factors to consider when applying for low interest loans:

      • Interest rate. The main feature of low interest personal loans that makes sense to compare is interest rates. APRs can run as low as 2% and as high as 47%.
      • Loan amount. Personal loans from banks and credit unions start at around $3,000 to $5,000, while online lenders have loan amounts that start at $500 to $1,000. How much you can borrow depends on personal factors like your credit score, income, debts and collateral.
      • Loan term. Loan terms for low interest loans typically range from 6 to 60 months, though it can be longer if your house is collateral. Aim to have your loan for the least amount of time possible with repayments that you can afford since the longer you have your loan, the more you’ll pay in interest.
      • Processing time. Online lenders can typically get you financing within 24 to 48 hours, while banks and credit unions can take 1 to 4 weeks to process your application.
      • Ease of application. Some lenders allow you to apply completely online (e.g. online lenders), while others may require you to meet with a lending specialist (e.g. banks and credit unions). Banks and credit unions also require more paperwork, since they have stricter eligibility requirements.
      • Client service. Pay attention to customer reviews with a pattern of complaints. You may also want to avoid lenders that pressure you into signing or push you into buying additional products you don’t want, such as loan insurance.

                Low interest personal loans for bad credit

                Your credit score is the single most important factor that will determine your interest rate. Unfortunately, people with bad credit will have a difficult time getting a low interest personal loan. Lenders charge higher rates when you have bad credit because they’re taking on more risk to lend you money.

                There are, however, a few ways to lower your rate as much as possible:

                • Ask a guarantor to cosign your loan. If you have bad credit but a family member or friend with great credit is willing to act as a guarantor on your loan, you may get a lower interest rate. Just make sure your cosigner is aware of the responsibility they’re taking on in case you default on your loan. Learn more about cosigned loans.
                • Secure your loan. If you’re willing to secure your personal loan with an asset such as your car or your house, your lender may lower your interest rate since you’re reducing the risk for them.
                • Improve your credit score first. This may not be an option if your need is urgent, but if you can wait at least 6 months, try to rebuild your credit score. Stay on top of your monthly payments, avoid any late or missed payments and pay down as much of your existing debt as possible. This will make a world of difference before you make your case to lenders to borrow more money.
                • Compare options before applying. While you may think your options are limited, you should still comparison shop before deciding on the best loan for you. You may find varying interest rates or disparities in charges and fees between bad credit lenders in Canada.

                  Pros and cons of low interest loans

                  If you’re thinking of taking out a low interest personal loan, here’s a look at some of the pros:

                  • Save money. You’ll save money on interest payments with a lower rate, which means you’ll have more money to pay off your loan or buy whatever you want.
                  • Easy process. With the advent of online loans, it can take under 10 minutes to apply for a low personal loan from start to finish. You can start by applying online, and then you can keep track of the loan online as well. If you prefer to apply in person at a store, find a lender that has a physical branch location near you.
                  • Repayment flexibility. A number of lenders allow you to make repayments according to how frequently you get paid.
                  • Rebuild your credit. If you have less-than-perfect credit, a personal loan can rebuild your credit score as long as you stay committed to making your repayments on time.

                  Low interest personal loans also come with some downsides to be wary of:

                  • Difficult to qualify. You may have difficulty getting low interest rates unless you have a high credit score or are willing to put up an asset to secure your loan.
                  • Advertised rates don’t always pan out. Many of the lowest rates you see advertised online are reserved for borrowers with high income, low debts and strong credit scores.
                  • Scams are prevalent. If you find very low rates online that seem too good to be true, you may have reason to be suspicious and should do more research before handing over your personal information.
                  • Adding more debt to your name. If your goal is to be debt-free, a personal loan may dig you deeper into the red.

                  Bottom line

                  Low interest personal loans can help you save money and repay your loan faster. The main downside is that they’re reserved for borrowers with strong credit or assets to borrow against. Before signing up for a low interest loan, be sure to compare offers from multiple lenders.

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