Take control of your finances with a personal loan to cover a large expense, renovate your home, consolidate debt and more. But before you get started, hone up on the borrowing process to ensure you find the best deal available to you.
Compare personal loans
How to apply for a personal loan
1. Figure out how much money you need
Crunch some numbers to figure out how much you need to borrow and how much you can afford to pay back each month. Also, compare different types of loans to find the one that suits your needs best.
2. Shop around
Look for lenders that offer the type of loan you need with eligibility requirements you can meet. Then, compare factors like rates, fees and terms.
If the lender offers it, fill out a quick pre-application with a few different lenders to learn which rates and terms you might get. Prequalifying usually doesn’t affect your credit.
4. Finish the application
After you decide on a lender, follow the steps to complete the full application and submit documents like pay stubs to verify your income.
How top online personal loan providers stack up
Online lenders can get you a loan as soon as the next business day, thanks to algorithm-based underwriting. Here’s how some top providers stack up:
Best for low interest rates: LoanConnect Personal Loan
Min. Loan Amount
Max. Loan Amount
Interest Rate Type
Minimum Loan Term
Maximum Loan Term
Top personal loan guides
What rates can I expect on a personal loan?
Personal loan rates typically range from 4% to 36%. The rate you get depends on the following factors:
- Credit score. You need near-perfect credit to qualify for the lowest advertised rate.
- Income. Lenders will likely check if you have enough regular cash flow to easily afford your monthly repayments.
- Debts. The lowest rates go to borrowers with a debt-to-income ratio (DTI) below 20%.
- Collateral. Securing your loan makes it less risky to the lender and gets you lower rates.
- Loan amount and term. Some lenders may offer different rates depending on how much you want to borrow and how long you need to repay.
The cost of your loan depends on the loan term and your rate. Most lenders’ annual percentage rate (APR) tells you how much you’ll pay in interest and fees over one year. This makes it easier to compare the cost of loans with the same term. From rate Compare personal loans from a range of lenders and borrow up to $50,000 through this online broker.
What goes into a personal loan APR?
The APR often includes an origination fee, which lenders charge after you sign your loan contract. But it doesn’t include penalties like late fees, nonsufficient funds (NSF) fees or prepayment penalties – which can all be avoided by paying your loan back on time and in full.
LoanConnect Personal Loan
Most lenders’ annual percentage rate (APR) tells you how much you’ll pay in interest and fees over one year. This makes it easier to compare the cost of loans with the same term.
Compare personal loans from a range of lenders and borrow up to $50,000 through this online broker.
How to find the right personal loans lender
Ask yourself the following questions when comparing lenders:
- Does it offer what I need? Check if the amount you need falls into a lender’s range and if it offers the type of loan you’re looking for.
- Am I eligible? Make sure you meet the lender’s minimum credit score, income, age and other requirements before you apply.
- What’s the APR? This gives you a quick snapshot of the loan’s total cost per year.
- How long will I be in debt? Look at the loan terms available to make sure you’ll be out of debt in time to meet other financial goals, like buying a house or a car.
- Will repayments fit my budget? Use the available loan terms and APR to figure out how much you might owe each month.
- Are there any fees? Many lenders charge up to a 5% origination fee, which they take out of or add to the loan balance. This affects how much you need to borrow and your monthly cost.
- Is it legit? Read customer reviews to look out for personal loan scams and red flags, and make sure its website is secure.
Where can I get a personal loan?
You have a variety of personal loan providers to pick from. However, you’ll typically have more loan options if you have stronger credit. Depending on the type of provider you choose, you can apply for a personal loan in person at a store, online or over the phone.
Direct online lenders
Online lenders have more flexible lending criteria and offer a straightforward application process. If approved, your loan amount can be deposited into your bank account as soon as the next business day — but it may take up to a week.
Brokers and connection services
Brokers and connection services work slightly differently but have the same goal: to pair you with a lender that will approve you. Brokers have you fill out a preliminary application and sometimes charge a fee for their service (while others will get paid by the lender they pair you with). Connection services are automated and don’t make lending decisions themselves.
Getting a loan from a bank might be the traditional choice, but it’s not the fastest. Banks tend to have stricter approval criteria and longer turnaround time. The benefit of borrowing with your bank is that some banks offer discounts to people who have an existing account and they usually have competitive rates.
If familiarity is important to you, consider taking out a personal loan at a credit union. Credit unions tend to evaluate your financial history with the institution, adding a layer of flexibility to approval. Similar to banks, credit unions tend to offer competitive rates but usually have longer approval and turnaround times than online lenders.
Relatively new to the financial market, peer-to-peer lenders operate as marketplaces that bring borrowers and investors together. A peer-to-peer loan is funded by a pool of individual investors online. Although the process of applying is a lot like that of a traditional loan, the turnaround time is often much longer.
What are the requirements for a personal loan?
There’s a personal loan for almost any type of borrower. But you have to meet the following criteria to qualify with most lenders:
- Good credit. The credit score cutoff is often around 650 — and usually higher if you want a low rate. That said, some lenders will cater to bad credit borrowers.
- Steady income. You typically need to bring in a certain amount of income each month. While some lenders may require you to be employed, others will accept other forms of income such as pensions and government benefits.
- Employment. Some lenders will only work with borrowers who are employed full time, while others will cater to part-time, self-employed and retired borrowers.
- Low debt-to-income (DTI) ratio. Most lenders require your monthly expenses to be no more than 43% of your monthly income – though the lower the better.
- Canadian citizen or resident. If you’re not a citizen or a permanent resident, your options will be limited to the few lenders that work with nonresidents.
- Age of majority. You’ll need to be at least 18 years of age, or the age of majority in your province or territory of residence.
What documents do I need?
Most lenders ask to see these three documents at a minimum:
- Proof of your identity. You’ll be required to submit a driver’s license, passport or other government-issued ID.
- Proof of income. This includes pay stubs, proof of benefits/pension, tax returns or bank statements.
- Proof of residence. You’ll need to show a utility bill in your name, mortgage payment or other verification of your address.
Can’t I just use my credit card?
You could, but personal loans typically have lower interest rates than credit cards. But if you need cash right away, a credit card is faster. You can also use credit cards for a wider variety of expenses.
Frequently asked questions about personal loans
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