The interest rates of personal loans in Canada vary based on many factors such as your credit score, income, current debts, type of lender, loan amount, loan term and collateral. Find out what interest rates a borrower may encounter based on these factors and compare personal loans from multiple lenders in Canada.
What is the average personal loan rate in Canada?
The average personal loan rate is 9.59%, according to Statistics Canada. The personal loan rate you’ll be offered will depend on your financial situation.
The maximum personal loan rate lenders are allowed to charge you is the equivalent of 47% APR. However, there are plans by the federal government to lower this to 35% APR in 2024. Learn more in our updates below.
Below is an outline of key events related to the government’s aim to lower the criminal rate in Canada.
April 2024 (ongoing): The federal government considers the feedback it has received from the consultation.
October 2023 to January 2024: The government runs a consultation for all interested members of the public to give their input on further lowering the maximum rate, adding more revisions to the payday loan exemption, access to low-cost small loans and protecting Canadians from unfair marketing tactics and high fees.
March 2023: The federal government publishes its 2023 budget, its annual plan to develop Canada’s economy. In this plan it announces its intention to make changes to the Criminal Code to lower the criminal rate of interest from 47% APR to 35% APR. It also announces its intention to lower the maximum fee for payday loans to $14 for every $100 borrowed.
Average personal loan rates in Canada
There was a notable increase in the average personal loan interest rate in 2022 compared to previous years. The Bank of Canada increased its benchmark rate seven times in 2022 and three times in 2023, which resulted in lenders also increasing the personal loan rates they charge their borrowers. So far in 2024, The Bank of Canada has held the rate steady.
What are the current personal loan rates in Canada?
Current personal loan rates in Canada are 6.99% to 46.96%. Personal loan rates depend on your credit score, collateral and other factors.
The first Bank of Canada rate announcement of 2023 occurred on January 25. The central bank raised its benchmark interest rate by one-quarter of a percentage point, bringing it to 4.5%. This was the eighth rate hike in less than 12 months.
After the rate hike on January 25, the Bank of Canada announced it would pause rate hikes conditionally to assess the impact of its increases on the economy. In the rate announcements that followed on March 8 and April 12, the central bank held steady, but on June 7 and July 12, the bank raised the rate by a quarter percentage point each, bringing the rate to 5%. On September 6, the bank held steady but stated it could increase the rate further as needed. On October 25 and December 6, it held steady.
The first rate announcement of 2024 occurred on January 24. The bank held the rate at 5%, citing inflation as a concern.
How this relates to personal loans
If you get a variable-rate personal loan, your interest rate will go up, down or stay the same depending on what the Bank of Canada does. If your rate goes up, your monthly payment will generally stay the same, but more will go towards paying the interest vs principal, and it may take you longer to pay off your loan. If you get a fixed-rate personal loan, your interest rate will stay the same throughout the life of the loan.
The Bank of Canada’s rate also influences the personal loan interest rates that lenders charge their customers.
How do I find the best personal loan rates in Canada?
You can find the lowest personal loan rates in Canada by ensuring your finances are in great shape before you apply and comparing offers from multiple lenders. You’ll need a good to excellent credit score, a solid history of on-time payments and your monthly debt payments should be less than 40% of your gross monthly income.
Banks, credit unions and select online lenders offer the best personal loan rates in Canada. To compare offers, get personal loan pre-approval from your top choices.
What is considered a good interest rate on a personal loan for you will depend heavily on your credit score. If you have an excellent credit score, you may be able to qualify for an interest rate as low as 6.99%. If you have a poor credit score, you may qualify for rates as low as 18% and as high as 46.96%.
What are the personal loan interest rates of banks?
Most banks do not disclose their personal loan rates, but you can expect to see rates from 7.2% to 20%. Below is a sample of bank loan interest rates:
ATB: This bank is currently offering 7.20% - 14.20%.
The big banks like RBC, BMO, TD, CIBC and Scotiabank generally do not disclose their bank loan interest rates for personal loans. However, keep an eye on TD’s and RBC’s websites, because they’ve previously shown promotional offers for their personal loan interest rates.
Bank interest rates are competitive for personal loans because banks have a stricter approval process. Applying to a bank takes longer and involves tougher eligibility requirements, but the bank loan interest rates you’ll encounter will be lower compared to other types of lenders.
Who will get approved for bank loan interest rates?
You’re eligible for bank loan interest rates if you can demonstrate to banks that you’re a low risk borrower who can manage the loan payments. Banks look at many factors when deciding on what personal loan rates to offer you, such as credit score, income and debt-to-income ratio (DTI). We break down those factors below.
What factors affect personal loan interest rates?
Personal loan interest rates in Canada will depend on many factors, including:
Credit score. You need good to excellent credit to qualify for favourable rates.
Income. Lenders will check if you have enough regular income coming in to afford your monthly repayments.
Debts. Lenders want to see a debt-to-income ratio (DTI) under 40%, but the lowest personal loan interest rates go to borrowers with a DTI below 20%.
Collateral. Securing your loan lowers the risk for the lender, which gets you lower rates.
Loan amount and term. Lenders will offer different personal loan rates depending on how much you want to borrow and how long you need to repay.
Type of interest rate. Banks, credit unions and online lenders offer fixed personal loan interest rates. Credit unions and banks are the main providers of variable rates.
Bad credit vs good credit: How does it impact my rate?
Your credit score has a direct influence on your personal loan interest rate.
Higher scores. Scores of 660 or higher usually mean you’ll get lower rates.
Lower scores. Scores below 660 usually mean higher rates.
Loan interest rates by credit score
Consult the table below to get an idea of personal loan rates in Canada based on credit score. Keep in mind these rates are for illustrative purposes only, and your personal loan rate will depend on other factors besides your credit score.
Credit score
Interest rate
760-900 (excellent)
6.99% to 11%
725-759 (very good)
7.5% to 15%
660-724 (good)
8% to 20%
560 – 659 (fair)
15% to 35%
300 – 559 (poor)
18% to 47%
How does the type of lender affect personal loan interest rates in Canada?
Generally, credit unions, banks and select online lenders offer the most competitive interest rates if you have a good to excellent credit score.
Type of lender
Interest rates
Big banks
Personal loan interest rates are competitive if you have good to excellent credit. You will have difficulty getting approved with bad credit.
Credit unions
Personal loan rates are competitive if you have good to excellent credit. Rates are better than or equal to bank personal loan rates. You will have difficulty getting approved with bad credit.
Online lenders
Interest rates vary widely depending on the lender. Online lenders typically have higher personal loan interest rates than banks and credit unions. Some online lenders offer reasonable rates starting below 10% for good credit while others charge much more. It’s easier to qualify with bad credit if you’re willing to pay higher rates.
Peer-to-peer lenders
Personal loan interest rates from P2P lenders can be competitive if you have good to excellent credit. P2P lenders don’t have physical stores and can therefore pass on those savings to the borrower. With this method, you borrow from other Canadians through a platform rather than a financial institution. A P2P platform like goPeer will require a minimum credit score of 600 to apply, but you’ll need a much higher credit score to get the lowest rates.
How does loan term affect personal loan rates?
Your loan term can also influence how much interest you pay over time.
Longer terms. You’ll typically pay more interest for longer term loans since you’re paying an annual interest rate over a larger number of years. Learn more about long term loans.
Shorter terms. You’ll pay a lower amount of interest over the duration of your loan with shorter terms (though your actual interest rate may be higher). Learn more about short term loans.
Representative example: Jimmy compares a short and long term
Jimmy has a credit score of 710 and wants to get a $10,000 personal loan to refinish his basement. He compares the personal loan interest rates for two loans with different terms and interest rates to determine which one is a better fit.
Feature
Loan 1
Loan 2
Amount
$10,000
$10,000
Term
3 years
5 years
Interest rates
8.2% ($1,314 over 3 years)
7.3% ($1,966 over 5 years)
Fees
2% origination fee ($200)
2% origination fee ($200)
Monthly payments
$314.29
$199.43
Total amount borrowed
$11,514
$12,166
While the longer term loan has a lower interest rate upfront, Jimmy chooses the shorter term loan (which has a higher upfront rate) since it will cost him less in interest over time.
Calculate your personal loan monthly payment
Calculate how much you could expect to pay each month
Your personal loan interest rates may also fluctuate based on whether you take out a secured or unsecured loan:
Secured loan.Secured personal loans let you use valuable assets such as your home or vehicle as collateral to secure lower interest rates.
Unsecured loan.Unsecured personal loans rely on your credit score, income and debts to determine your eligibility to borrow money. They often come with higher interest rates than secured loans, especially if your credit score is below 660.
Fees to consider on top of rates
You may need to pay additional fees on top of personal loan interest rates with some lenders. Look for the following fees when applying for a loan:
Origination fee. You may encounter an origination fee of 0% to 5% of your loan amount. This is a fee to process your loan, and it is usually deducted from your loan amount.
Late fee. Lenders may charge charge a late fee that’s a percentage of the outstanding payment or a fixed dollar amount.
Non-sufficient funds fee (NSF). You’ll pay this common fee if a payment bounces. This is in addition to the fee your bank will charge for insufficient funds. Lenders typically charge $25 to $50.
Prepayment fee. This is a fee to pay off your loan early. It’s not common for unsecured personal loans but common for loans secured by real estate.
Surety or broker fee. You may encounter this if you apply for a short-term installment loan. It’s added to your loan payments and can be in the hundreds.
Personal loan interest rates vs APR: What’s the difference?
The key difference between interest rate and APR boils down to the fees you get charged.
Interest rates. Your interest rate represents the amount you pay to borrow money from your lender. This amount doesn’t include any fees you’ll need to pay to get your loan.
Annual percentage rate (APR). Your APR is your interest rate plus any fees you must pay to take out the loan. APR is often used to show the true cost of your loan and may be higher than your interest rates alone. The maximum APR you can be charged for a personal loan in Canada is 60% (effective annual interest), which works out to 47% APR.
Bottom line
Personal loan interest rates vary widely based on factors such as your lender, loan amount, term length and personal financial situation. Compare a range of lenders to get the best rate for you.
Banks offer large amounts for personal loans. For example, you can borrow up to $50,000 from TD and up to $200,000 from CIBC. How much you'll get approved for will depend on your financial situation.
The current Bank of Canada lending rate is 5%. The prime rate for banks and credit unions is 7.2%. Expect to pay more for your personal loan interest rate.
You can qualify for a low interest personal loan if you have a good to excellent credit score above 660 and have a debt-to-income ratio below 40%.
Personal loan rates are higher now because the Bank of Canada increased its rate seven times in 2022 and three times in 2023, which consequently increased the cost of borrowing for lenders and their customers.
It'll be difficult to get a low interest loan with a bad credit score. This is because lenders see borrowers with bad credit as higher risk of defaulting. They offset this risk by charging higher rates. Learn more about the best bad credit loans in Canada.
Leanne Escobal is a publisher for Finder. She has over 11 years of experience in financial services, specializing in content and marketing. Leanne has completed the Canadian securities course (CSC®) as well as the personal lending and mortgages course by the Canadian Securities Institute. She has a Bachelor of Arts (Honours) in English literature and creative writing from Western University.
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