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What can you use a personal loan for?

Learn about the most common ways to use a personal loan and how to compare your loan options.

Taking out a personal loan can help you consolidate your debt, pay for a vacation or help you finish those renovations on your house. With plenty of financing options on the market today, it can be difficult to determine when you should consider a personal loan and when should you consider an alternative form of financing — like a payday loan or a new credit card.

Learn more about common personal loan uses in our guide below and find out if financing your purchase or expense with a personal loan is a good idea.

How can I use a personal loan?

Let’s take a look at some of the top ways people use their personal loans.

PurposeCan you fund this with a personal loan?What to consider
Buying a carYesIf the vehicle is eligible, you can use it as collateral to get a secured car loan, which usually scores you lower rates. Unsecured personal loans are also an option.
Debt consolidationYesYou can use a personal loan to consolidate debt. Alternatively, you could consider a balance transfer credit card.
Home improvementYesAs well as a personal loan for home improvement, you can also consider a line of credit on your home, which is referred to as a HELOC.
Dental billsYesWhile your dentist may offer discounts and your insurance might cover some, you might be able to finance the unpaid portion by using a personal loan.
VacationYesThere are lenders that will you give you an unsecured personal loan to pay for a vacation.
WeddingYesSome lenders will lend you money to finance the cost of your wedding.
Pet careYesA personal loan can help you pay for unexpected costs that come with being a pet owner, like veterinary bills.
Boat or jet skiYesLenders impose maximum loan amounts that might not cover the total cost of your boat or jet ski. You may have the option of using the boat or jet ski as collateral for a secured loan with a lower interest rate.
Going greenYesMany lenders are willing to help you foot the cost of becoming energy efficient by offering loans you can use to buy solar panels.
BusinessIt dependsLenders have different criteria for approving loans for business purposes. Learn more about getting a personal loan for business use or check out our guide on business loans.

Will my loan purpose affect my application?

How you use your loan can affect your application. For example, if you’re applying for debt consolidation, you may already appear to be higher risk than someone who’s buying an asset, such as a car, or someone who’s investing in their property by doing renovations.

However, it depends on how the lender assesses your application’s risk. Ultimately, your eligibility will come down to whether you meet the lender’s application criteria and whether you can afford the loan repayments.
7 tips to improve your chances of approval for a personal loan

Personal loans you can apply for

Name Product Interest Rate Loan Amount Loan Term Requirements Credit Score Link
LoanConnect Personal Loan
Secured from 1.90%, Unsecured from 5.75%-46.96%
$500 - $50,000
3 - 120 months
Currents debts must total less than 60% of income
Min. credit score: 300
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An online broker who helps inform clients towards better finances. Get pre-approved by different lenders for unsecured or secured loans in 5 minutes with any credit score.
Spring Financial Personal Loan
17.99% - 46.96%
$500 - $15,000
9 - 48 months
Min. income of $1,800 /month, 3+ months employed
Min. credit score: 400
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An online lender offering unsecured personal loans and credit builder loans. Those filing for bankruptcy or a consumer proposal can also apply. If you're not eligible for an unsecured loan, you may be offered a loan to help rebuild your credit.
FlexMoney Personal Loan
18.90% - 46.93%
$500 - $15,000
6 - 60 months
Min. income of $2,000 /month, 3+ months employed
Min. credit score: 500
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An online lender offering flexible unsecured loans. Apply in less than 10 minutes and if approved, receive financing in as little as 24 hours. Pay off your loan at any time.
SkyCap Financial Personal Loan
12.99% - 39.99%
$500 - $10,000
9 - 36 months
Min. income of $1,200 /month, stable employment
Min. credit score: 550
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An online lender offering unsecured personal loans to borrowers with a wide range of credit scores. Apply in less than 5 minutes and if approved, receive financing in as little as 24 hours.
Loans Canada Personal Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
$300 - $50,000
3 - 60 months
No min. income or employment requirements
Min. credit score: 300
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An online broker with the largest lender network in Canada. Get matched for free with lenders offering both unsecured and secured loans through one quick application regardless of your financial situation.
OFFER
Mogo Personal Loan
9.90% - 46.96%
$200 - $35,000
6 - 60 months
Min. income of $13,000 /year
Min. credit score: 500


Mogo offers a 100-day money-back guarantee. If you're not happy with your loan, pay back the principal and get your 100 days of paid interest and fees back.
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An online lender who aims for a hassle-free process through same-day unsecured loan approval and funding. Get a loan fast and track your credit score for free.
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%
$500 - $25,000
6 - 60 months
Able to make monthly repayments on your loan
Min. credit score: 560
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An online lender with a team dedicated to professional service. Get a quote for an unsecured loan without impacting your credit score. Receive funds within as little as 24 hours. No prepayment fees.
Fairstone Personal Loan (Secured)
19.99% - 23.99%
$5,000 - $50,000
60 - 120 months
Must be a homeowner
Min. credit score: 560
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Use your home equity to get a secured loan up to $50,000 with flexible repayment options and a long loan term. Get a quote without impacting your credit score.
Loan Away Personal Loan
19.90% - 45.90%
$1,000 - $5,000
6 - 36 months
No min. income or employment requirements
Min. credit score: 300
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A lender that approves unsecured loans in as little as 20 minutes. Get affordable monthly repayments with any credit score.
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What would you like to finance?

What other credit options do I have to consider?

While a personal loan is a viable option for the above scenarios, you also have other financing options to consider. These include:

  • Home equity loans. If you’re undertaking home renovations, using the equity from your home can also be an option. Work out the costs of this as well as a personal loan to see which one would be a better option. You can also use your home equity as collateral to get a secured personal loan, which you can usually use for any legitimate purpose.
  • Business loans. If you require a large loan for business purposes, you can compare business lenders offering financing in large amounts. Using a business loan to fund your business is safer than using a personal loan, the latter of which you’d be responsible to pay back should your business fail.
  • Credit cards. These can be a good source of ongoing credit and can come with high limits – between $500 and $100,000 – that you can use when you don’t have money on hand.
  • Balance transfer credit card. If you have debt across a few credit cards or even a few personal loans, you can consider a balance transfer credit card. Unlike a personal loan, you will be able to find a promotional offer that allows you to pay low or 0% interest on the debt for an extended period of time, usually between three and 12 months.

How to compare personal loans

Consider the following features when comparing personal loan options:

  • Loan amount. Check what the minimum and maximum borrowing amounts are and if they meet your needs.
  • Loan terms. Some lenders offer shorter loan terms than others. This affects the monthly repayment amount. A shorter term will mean higher repayments, but a cheaper loan cost overall.
  • Upfront and ongoing fees. These fees will be added onto your principal loan amount and will therefore affect your repayments and the interest you have to pay.
  • Type of interest rate. Your loan can either be fixed or variable, and both of these rates will come with different features and benefits.
  • APR. The Annual Percentage Rate incorporates the fees as well as the interest rate to show you the true cost of the loan.
  • Repayment flexibility. Check whether you’ll be able to make additional repayments or pay off the entire loan amount early without facing extra fees.
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