How to get a $25,000 loan in Canada

If you’re looking for a $25,000 loan in Canada, there are plenty of options to choose from. Traditional lenders like banks and credit unions offer $25,000 personal loans, and some alternative lenders also offer this type of financing. To get approved for a personal loan of this size, however, you’ll need to be in a good financial position.

This guide covers where you can apply for a $25,000 loan, how to choose the right lender for you and how to increase your chances of approval.

Compare $25,000 loans

Types of $25,000 personal loans

When comparing personal loans, consider the type of loan you want. First, decide whether you need a secured or unsecured loan, then a fixed or variable interest rate:

Secured vs unsecured loans

• Secured $25,000 loans. With a secured personal loan, you offer an asset such as your home or car as collateral. While this allows you to access a lower interest rate, it also means you risk losing your asset if you default on the loan. The amount you can borrow will vary depending on how much your collateral is worth.
• Unsecured $25,000 loans. Unsecured personal loans don’t require collateral. You don’t have to worry about your asset being repossessed if you default on this type of loan, but interest rates are generally higher than secured loans. You can get a large unsecured personal loan if you have a good to excellent credit score and a high, stable income that can manage the new loan payments.

Fixed vs variable interest rates

• Fixed-rate loans. With a fixed-rate personal loan, you lock in an interest rate for the entire loan term. This gives you the peace of mind of being protected from interest rate rises, but you could miss out on savings if rates drop during the loan term.
• Variable-rate loans. As the name suggests, the interest rate on variable-rate personal loans can change throughout the loan term according to market conditions. If your variable rate goes up, more of your payment will go towards the interest.

Types of lenders for $25,000 personal loans

$25,000 loans are available from the following lenders:

• Banks. Bank personal loans are available from the Big Five as well as other banks operating in Canada. If you’ve got good or excellent credit, banks offer competitive interest rates. However, they also have strict eligibility requirements, so they will not be an option for borrowers with bad credit.
• Credit unions. Like banks, credit unions can offer $25,000 loans with competitive rates. You’ll usually need to sign up as a credit union member to take out a loan.
• Alternative lenders. These private personal loan lenders have less strict eligibility criteria than banks, so they’re worth considering if your credit score isn’t the strongest.
• Peer-to-peer lenders. P2P loans offer a slightly different approach to borrowing. Rather than approaching a lender for financing, you borrow money from other Canadians who loan out money as a form of investing. Competitive rates are available for borrowers with good credit, but it will be difficult to qualify if you have a bad credit score.

How to get the best $25,000 loan

There are several simple things you can do to ensure that you find the best $25,000 personal loan for your needs:

Check your credit score

Before you start comparing loans or think about submitting an application, find out what your credit score is. This will help you decide which lenders you’ll be best off considering for a loan and also whether there’s anything you can do to boost your credit score.

Pay down your debts

One of the key factors lenders consider when assessing loan applications is your debt-to-income ratio (DTI). This is the percentage of your monthly debt payments out of your gross monthly income. The lower the DTI, the better. Generally, traditional lenders want to see a DTI under 40%.

Provide collateral

Providing collateral such as your house or car will boost your chances of approval since you’ll be reducing the risk for the lender.

Take the time to compare loans

Consider the following factors as you search for the best $25,000 loans:

• Interest rates and fees. Remember to compare loans based on their annual percentage rate (APR), which includes fees to reflect the true cost of each loan.
• Loan term. The time you have to pay back your $25k loan can have a big impact on its overall cost. While a longer loan term can help make your monthly payment seem more manageable, it also means you’ll pay more in interest over the life of the loan. For example, a $25,000 loan with a 10% APR will cost $2,991 more to pay back over a seven-year loan term than it will over five years.
• Payment flexibility. Check whether you will make loan payments weekly, bi-weekly or monthly. It’s also important to check whether you can make additional payments at any time and whether you’ll be charged a fee for paying the loan off early.
• Eligibility requirements. Check whether there are any specific eligibility requirements you’ll need to meet, such as having a minimum credit score or minimum monthly income.
• Pre-approval. If a lender offers pre-approval on a personal loan, use this to get a fair idea of how much a loan will cost and compare it to what’s offered by other lenders.

According to Finder Canada’s January 2024 consumer insights survey, the top three factors that matters most to borrowers when getting a personal loan are the (1) interest rate, (2) monthly payment and (3) fees.

Research lenders carefully

Finally, it’s also important to make sure you’re dealing with a legitimate lender, particularly if you’re dealing with a lender that offers bad credit personal loans. Make sure any lender you consider is properly registered in your province, and steer clear of lenders that offer guaranteed approval or terms that just sound too good to be true. Find out more about how to protect yourself in our guide to personal loan scams.

Am I eligible for a personal loan of this size?

If you’re considering applying for a $25,000 personal loan, the main thing to remember is that you’ll need good to excellent credit. So if you have a credit score below 660, you may need to consider other options such as improving your credit or applying for a lower amount.

Other eligibility requirements vary between lenders, but you’ll generally need to meet the following criteria:

• Be at least 18 years of age or the age of majority where you live
• Be a Canadian citizen or permanent resident
• Be employed and have a steady source of income
• Meet debt-to-income ratio requirements

What is the monthly payment on a $25,000 loan over 5 years?

There are several factors that affect the cost of repaying a $25,000 loan, with the interest rate and loan term both crucial to the size of your monthly payments.

To give you an idea of the sort of monthly payment you can expect, let’s look at the example of a $25,000 loan over five years with two different APRs: 6.99% and 10.15%.

As you can see in the table below, the higher interest rate increases the monthly payment on your loan by $38. Over the full loan term, you’ll end up paying $2,286 extra in interest. That’s why it’s important to shop around for a competitive rate.

Loan amount	APR	Monthly payment	Total payments
$25,000	6.99%	$495	$29,695
$25,000	10.15%	$533	$31,981

Calculate payments on your $25,000 personal loan

Use the calculator below to work out the monthly payment amount on your $25,000 loan.

Can I get a $25,000 loan with bad credit?

If your credit score is far from perfect, explore personal loans for bad credit. Lenders that offer bad credit loans will focus on your income and debts rather than your credit score to determine your ability to pay back the money you borrow.

Unfortunately, it’s very difficult to get a $25,000 loan with bad credit. As a general guide, the maximum amount you’ll be allowed to borrow, and only from some lenders, is around $10,000 to $15,000, while you’ll also need to accept higher interest rates.

If that’s not enough for your needs, you may need to take steps to improve your credit score before you can consider applying for a $25,000 loan.

Must read: Best bad credit loans in Canada

Steps to apply for a $25,000 personal loan

Once you’ve compared your options and decided on the best lender and $25,000 loan for you, it’s easy to apply online by completing a handful of simple steps:

1. Head to the lender’s website and start a personal loan application.
2. Provide your name, date of birth, address and contact details.
3. Provide financial information such as your income, debt and assets.
4. Provide proof of ID (such as a passport or driver’s licence) and proof of income (such as pay stubs or bank statements).
5. Submit to a credit check.
6. Review all the details you’ve provided and submit your loan application.

Frequently asked questions

• Will a $25,000 personal loan affect my credit score?

  Yes. Applying for a $25,000 personal loan typically involves a hard credit check, which can lower your credit score. If you miss payments or default on your loan, this will have a negative impact on your score too. However, making on-time repayments and paying off the loan on schedule can increase your credit score.

• Can I get a $25,000 loan with no credit check?

  You will likely need to undergo a credit check to qualify for a $25,000 loan. If you come across a lender that claims to provide $25,000 loans with no credit checks, this is a red flag that may indicate a disreputable lender.

• What are the interest rates of a $25,000 loan?

  Interest rates vary between lenders and are based on factors such as your credit score, income and whether you offer collateral for the loan.

• What can you use a $25,000 personal loan for?

  There are generally no restrictions on what you can use the $25,000 loan for unless you specifically apply for financing to consolidate debt. Some lenders may not let you use the money you borrow for business purposes.