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Am I eligible for a personal loan?

Here are the five main factors lenders consider when reviewing your loan application.

Applying for a personal loan is taking a big financial step. Whether it’s secured or unsecured, fixed rate or variable, for $3,000 or $30,000 — you’ll likely need to meet some general eligibility criteria to qualify.

Our guide discusses the general requirements set by most lenders when they determine if you’re eligible for a loan. While every lender is different and there’s no guarantee you’ll be approved for a loan, making your application as flawless as possible is a good start to finding a loan that works for you — and you may be approved for.

What are the five main factors lenders consider?

Every loan application is different, but many lenders want to make sure these five areas are strong before they approve your loan request.

1. Income

Nearly every lender will require that you earn a steady income. This is to ensure you have the ability to make the minimum monthly repayments set by your loan contract. While some will allow any income amount, larger loans may require that you make a certain minimum amount before you can apply.

2. Employment

This differs among lenders. If they have an employment requirement, you may need to work full-time in order to be considered. If you’re employed part-time or are self-employed, you’ll still have loan options, though they may be fewer than those offered to people with traditional forms of employment.

If you’re unemployed, many lenders accept applicants who receive government benefits or investment income as a form of income, but you’ll still need to demonstrate you can afford to repay the loan while on those benefits or income.

Your job title might be more important than you think

In addition to making sure that you’re employed, some lenders might ask about your job title. They do this for a couple of reasons. Some lenders cross-reference your job title with your salary as a protection against fraud.

However, lenders also might use your job title to predict how likely you are to default on your loan repayments —and this can affect your interest rate. As an example, an engineer with the same application as a lawyer might qualify for a lower rate because engineers have a higher rate of on-time loan repayments.

3. Credit history

A good or excellent credit score with a solid history — one that has no major dings for missed payments or loan default — is the easiest way for lenders to know that you’re a trustworthy applicant, especially if you’re applying at a bank. If your credit score is fair or poor, there are still loan options for you to consider, however there will be less options available than someone who has good or excellent credit.

4. Loan security

There is a major difference between secured and unsecured loans. When you apply for a secured loan, like an auto title loan or a mortgage, you’re providing collateral in the event that you default. When you apply for an unsecured loan, one that has no collateral attached, your credit score becomes the main deciding factor.

5. Assets, debts and expenses

You’ll be asked to list your assets, debts and expenses on your application. Lenders use your debt and income to calculate your debt-to-income ratio (DTI). A higher income may boost your application whereas debts, such as credit cards, lines of credit or other loans, can hinder your application. Expenses are always estimated, but lenders generally have a good idea when you’re under or overestimating based on the data of other customers.

Think you’ll qualify? Here are the top online lenders to compare today

Name Product Min. Loan Amount Max. Loan Amount APR Fees Loan Term Min. Credit Score
$500
$20,000
26.99% - 39.99%. Varies by loan type and province
Varies by province
6 months - 5 years
550
Fairstone offers small to medium personal loans up to $20,000.
$5000
$30,000
19.99% - 23.99%. Varies by loan type and province
Varies by province
3 - 10 years
550
Fairstone offers secured personal loans up to $30,000.
$2,000
$35,000
5.9% - 45.9%
NSF fee - $20 to $48
2-5 years
540
Mogo offers loans up to $35,000 on flexible terms.
$2,000
$10,000
18.9% - 54.9%
None
1-5 years
550
An established online lender with loans up to $10,000. Now accepting applicants on El and Social Assistance.
$5,000
$35,000
From 5.15%
None
1-5 years
N/A
Motusbank offers personal loans up to $35,000 for all Canadian residents excluding Quebec.
$5,000
$35,000
From 5.65%
None
N/A
N/A
Motusbank offers line of credit loans up to your approved limit for Canadian residents excluding Quebec.
$1,000
$15,000
46.93%
None
Term of loan will vary by product
N/A
Borrow up to $15,000, based on your income and credit history, with a personal line of credit from LendDirect.
$2000
$10,000
43% (British Columbia and Ontario) and 34.9% (Quebec)
None
1-5 years
N/A
LendingMate offers loans to Canadians with poor credit with no credit checks.
$1,600
$25,000
9.47% - 20.07%. Varies by loan size (excluding Quebec)
Origination fee: $250 - $1,000 depending on loan size
3-5 years
N/A
A loan that you repay before gettּing access to the funds. Enjoy no upfront fees and a low interest rate.
$100 (in store), $500 (online)
$10,000
46.93%
Vary across provinces/territories
6 months - 5 years
N/A
Cash Money offers installment loans up to $10,000 for BC, AB, SK, ON and NS residents.
$100 (in store), $500 (online)
$10,000
46.93%
Vary across provinces/territories
6 months - 5 years
N/A
Cash Money offers line of credit loans up to $10,000 for BC, AB, SK, ON and NS residents.

Compare up to 4 providers

Quick tips to get your personal loan approved

If you’re unsure about your eligibility, consider these tips to help give your personal loan application a boost:

  • Open a chequing account with the lender you’re applying with. If you’re applying with a bank or a credit union and don’t need a loan right away, establishing a banking history with the lender can help you get financing in the future.
  • Lower your debt-to-income ratio. Lenders generally want to see a DTI of less than 40%. You can lower yours by bringing in more money each month and paying down your outstanding balances.
  • Have a steady source of income. Lenders may not want to take the chance of giving you a loan if you’ve been employed for less than three months or if you don’t make the same amount each month. No matter how secure you think your job is, lenders may not see your short employment history that way.

Seven tips to increase your chances of approval

Bottom line

Remember that no personal loan is ever guaranteed, so use the guide above to ensure you’re giving yourself the best chance of approval you can by submitting a strong application.

Before applying for a loan, be sure to compare your loan options to find the right lender that fits your needs.

Frequently asked questions

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