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Debt consolidation loans

Combine your debts into one easy payment and get out of debt quicker with a debt consolidation loan.

Debt consolidation loans let you merge all of your outstanding debts into one combined debt so that it’s easier to pay off. Consolidating debt can also help you get a lower interest rate, an extended term, more manageable payments or even a lower monthly payment overall.

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1 - 4 of 4
Name Product Interest Rate Loan Amount Loan Term Requirements Link
Loans Canada Debt Consolidation Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
$300 - $50,000
3 - 60 months
Requirements: min. credit score 300
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A broker with the largest lender network in Canada. Fill out one application and get matched for free with lenders.
LoanConnect Debt Consolidation Loan
5.99% - 47.42%
$500 - $35,000
12 - 60 months
Requirements: min. credit score 300
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A broker that matches borrowers to lenders offering debt consolidation loans. Get approved for multiple loan offers from different lenders.
SkyCap Financial Personal Loan
12.99% - 39.99%
$500 - $10,000
9 - 60 months
Requirements: min. income $1,600/month, stable employment, min. credit score 550, no bankruptcy
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Apply in less than 5 minutes for an unsecured loan and if approved, receive financing in as little as 24 hours.
Mogo Personal Loan
9.90% - 46.96%
$200 - $35,000
6 - 60 months
Requirements: min. income $13,000/year, min. credit score 500
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More Info
Get a free quote without affecting your credit score and get an unsecured loan the same day. 100-day money-back guarantee: If you're not happy with your loan, pay back the principal and get the 100 days of paid interest and fees back.

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How does consolidating debt with a personal loan work?

You can use debt consolidation loans to roll all of your existing debt into one easy-to-make payment. Your new loan may come with a longer term and/or lower payments, which can make your debt easier to manage. It should also come with a lower interest rate if you want to save money on the total cost of your debt over time.

  • Types of debt that you can consolidate

You can combine multiple forms of debt into a debt consolidation loan. These debts include credit cards, outstanding hydro or gas bills and personal loans.

  • Types of debt that you can’t consolidate

You won’t be able to consolidate mortgages, car loans, back taxes owed to the Canada Revenue Agency or student loans. However, you may be able to consolidate debts into your mortgage by refinancing your mortgage to cover your outstanding debts.

Types of debt consolidation loans in Canada

There are several types of debt consolidation loans in Canada that you can take out to combine your debts:

  • Unsecured loans. You’ll usually need a “good” credit score (above 650) to qualify for an unsecured loan. These loans typically come with higher interest rates than secured loans and your credit score will go down if you miss or default on payments.
  • Secured loans. Secured debt consolidation loans require you to secure your loan against an asset. For example, a home equity loan lets you borrow against the equity in your home but you risk losing your house if you can’t repay the debt.
  • Bad credit loans. You may be able to apply for bad credit debt consolidation loans if your credit score is below 600. Just be aware that these types of loans tend to come with very high interest rates and could leave you in a worse financial position overall.
  • Guarantor loans. If you can’t qualify for a bad credit loan, you may want to ask your family or friends to cosign a loan. This could help you get a better interest rate and you may qualify for a larger amount.

Should I get a debt consolidation loan?

It could make sense to get a debt consolidation loan in the following situations:

  1. You want better interest rates. You’ll likely qualify for better interest rates if your credit score has gone up since you last applied for loans or if you sign on with a cosigner.
  2. You’d like lower monthly payments. You can consolidate your debt over a longer term if you want to bring your monthly payments down.
  3. You’re struggling to keep up with many small debts. You may find it easier to manage a single loan payment instead of multiple smaller payments.

You’ll save an estimate of !

Before ConsolidationAfter Consolidation
Interest rate%9%
Year(s) to pay off~
Monthly payment$$
Total interest paid
Total balance paid

You currently have a total debt balance of $ with an average rate of %. By consolidating them into a new loan at 9% APR with a -year term, you’d pay approximately $ per month. Your estimated total savings would be .

Your total monthly payments is not enough to cover the interest. Your loan(s) will never be paid off.

What is debt consolidation and how does it work?

When should I not apply for a debt consolidation loan?

It’s best to avoid debt consolidation loans in the following situations:

  1. Your interest rates will go up. Avoid consolidating debt at a higher rate than what you’re paying now (which could happen if you’re applying with a lower credit score).
  2. You have a good relationship with your current lender. You may want to avoid switching to a new lender if your current lender gives you leniency with your debts.
  3. You might default on repayment. It could make sense to explore other options such as credit counselling or debt settlement if you risk defaulting on your consolidated loan.

How to compare debt consolidation loans in Canada

Consider the following factors when you compare debt consolidation loans in Canada:

  • APR. The annual percentage rate shows the total cost of borrowing (interest + fees). Compare several APRs to find the least expensive option.
  • Loan amounts. Find a lender who’s willing to lend you enough money so that you can pay off all of your outstanding debts at once.
  • Fees. Aim to borrow from lenders that don’t charge extra fees such as origination fees, early repayment penalties or late/returned payment fees.
  • Term. Find a loan term that gives you monthly payments you can afford but is short enough to prevent you from paying unnecessary interest.
  • Eligibility requirements. Make sure you meet eligibility requirements such as age, residency and income requirements before you choose a loan.
  • Borrower reviews. Check a lender’s reviews if applying for online debt consolidation loans in Canada to make sure your lender has a good reputation.

How much should debt consolidation loan in Canada cost me?

Debt consolidation loans in Canada shouldn’t cost you anything as long as you avoid lenders that charge hidden fees such as origination fees or early repayment fees. You should also aim for a lender that will give you a lower interest rate than you’re already paying on your debts if you want to save money on your loan.

How much can I save with a debt consolidation loan?

You may be able to save hundreds or even thousands of dollars with a debt consolidation loan. The overall amount you save will depend on your debt load and personal circumstances.

Debt Consolidation Loan Savings Calculator

Calculate how much you could save by consolidating your debt with a personal loan:

Your current balances
1)Debt amountInterest rate
2)Debt amountInterest rate
3)Debt amountInterest rate
Total monthly payments
Add another balance
New loan terms
Loan length in years

Fill out the form and click “Calculate” to see your estimated savings and new monthly payment.


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Representative example: Tracking savings on a debt consolidation loan

Let’s say that you have 1 credit card and 2 personal loans to pay off over a span of 5 years. This is what your current debts might look like:

FeaturePersonal loan 1Personal loan 2Credit cardTotal for separate debts
Amount owing$6,000$4,600$4,000$14,600 left owing
APR (interest + fees)16%13%19.99%From 13% to 19.99%
Monthly payments$145.91$104.66$105.95$356.52 per month
Total interest over loan term$2,754.50$1,679.85$2,357.20$6,791.55 in interest over 5 years

Now we’ll put the total of your separate debts next to the total you’ll pay for a consolidated loan with 10% interest in the table below. You can compare them side by side to see how much money you’ll save by consolidating your debt.

FeatureTotal for separate debtsTotal for consolidated loan
Amount$14,600 left owing$14,600 left owing
APRFrom 13% to 19.99%10%
Payments$356.52 per month$310.21 per month
Total interest$6,791.55 in interest over 5 years$4,012.41 in interest over 5 years

As you can see, you’ll pay lower interest and get lower monthly payments if you consolidate your loans at a lower interest rate.

How can I get a lower interest rate on debt consolidation loans in Canada?

Consider these tips to get a better rate when consolidating your debt with a loan:

  1. Shop around. Compare at least 3-4 lenders to find the one that will give you the cheapest rates. Look at loans from banks, private lenders and loan brokers.
  2. Improve your credit score. Work on building your credit score and apply when your score increases (especially if it goes above 660).
  3. Pay down your debt. Try to keep your debt-to-income ratio under 20% to get the best rates and terms.
  4. Get pre-approved. Pre-qualify with multiple lenders to get an idea of which lenders will give you money you need at the lowest interest rates.
  5. Secure your loan or get a cosigner. Use collateral to secure your loan or ask a cosigner with good credit to back your loan if you want to qualify for better rates.

Pros and cons of using debt consolidation loans


  • Easy to manage. Bundling your debts together in one place can relieve the hassle that comes with managing multiple repayments.
  • Potential for savings. You may be able to save money on interest if you manage to get a lower rate on your new loan.
  • Quicker to pay back. You’ll be able to pay your debts back faster if you choose a shorter term or you get a lower interest rate.


  • May come with added costs. You may need to pay origination or early repayment fees with certain debt consolidation loans, which could increase your loan cost.
  • Not guaranteed to save you money. You won’t save money by consolidating your debt if your interest rate is higher for your new loan.
  • Could stimulate further spending. You may be inclined to spend more than you should if you have extra room on your credit cards or more cash flow due to paying off debts.

Do I qualify for online debt consolidation loans in Canada?

You’ll usually need to meet the following criteria to apply for online debt consolidation loans in Canada:

  1. Be a Canadian citizen or permanent resident who is the age of majority in your province (usually 18 or 19 years old).
  2. Have a decent credit rating if you want to qualify for lower interest rates, though you may qualify with bad credit in some circumstances.
  3. Make an adequate income to afford your monthly repayments.
  4. Have debts that are eligible for consolidation
  5. Have a debt-to-income ratio (DTI) that’s under 43%.

How to apply for online debt consolidation loans in Canada

  1. Fill out an application. Apply for online debt consolidation loans in Canada with your lender (or by visiting your bank if you’d prefer to get a loan in person).
  2. Input your personal details. Provide personal information such as your full name, address and phone number, along with information about your finances.
  3. Verify your eligibility. Show proof that you meet eligibility criteria by providing proof of identification, income and debt load.
  4. Agree to a credit check. Give your lender permission to check your credit score.
  5. Wait for approval. Once you’re approved, review and sign the contract.

Can I get debt consolidation loans with bad credit?

You may be able to get online debt consolidation loans in Canada with bad credit, but you should expect to pay higher interest rates. In this case, you’ll want to find out how much you’re currently paying in interest on your loans. Make sure that you don’t end up with higher rates by consolidating your debt since this will increase your overall costs and add to your debt.

Find out more about bad credit debt consolidation loans

What are my other options to consolidate debt?

There are a number of other ways you can consolidate or bring down your debt:

  • Snowball debt management plan. Pay off your smallest debt first, then roll those payments onto your next smallest debt to cut down on the number of loan payments you need to make.
  • Pay off highest interest debts first. Focus any extra funds you have onto your highest interest debts first to cut down on your overall costs (for example, pay off credit cards before putting extra money onto a lower interest loan).
  • Balance transfer credit card. Consolidate your credit card debt onto a balance transfer credit card to get a low interest introductory rate in your first 6 to 10 months so that you can put more of your money towards paying off your principal balance.
  • Debt relief. Consider looking at credit counseling services or a debt relief company to learn how to better manage your debt or lower your monthly payments. Just make sure the agency you work with is legitimate and won’t try to charge you extra fees.
  • Borrow money from family or friends. Consider asking your family or friends to give you a loan to consolidate your debt. You should only do this if you have the funds to pay them back and you aren’t worried about damaging the relationship if you run into issues.
  • Bankruptcy or insolvency. As a last resort, you can look into submitting a consumer proposal or filing for bankruptcy. Just be aware that these options can significantly damage your credit score and you should explore all other alternatives first.

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1 - 1 of 1
Name Product Costs Requirements
Varies (depends on the company you're connected with)
Have at least $10,000 in unsecured debt and a hardship that is preventing you from paying your creditors
A nationwide service that can help you find a solution to reduce your debt payments by up to 50%. Request a free consultation with a trained debt relief specialist.

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Bottom line

Debt consolidation loans can help you consolidate multiple debts into one single monthly repayment, potentially with lower interest rates or monthly payments, and can help you get out of debt faster. Make sure you learn about how much you could save and what you need to apply before comparing your options and the alternatives you can explore if you don’t qualify for financing.

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