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10 best debt consolidation loans for bad credit

Find out where you can apply to lower your monthly payments and get some room in your budget.

If you’re struggling with multiple debts and your credit score has taken a hit from missed payments, you may be looking into consolidating your debts. Debt consolidation loans for bad credit do exist, but due to your credit score it’s unfortunately unlikely that you’ll get a lower rate than what you’re currently paying. However, lenders may be willing to provide you with a longer loan term. This means you’ll have a lower monthly payment, but you’ll pay more interest overall.

In this guide we cover where you can apply for the best debt consolidation loans in Canada with bad credit and what to consider before getting one.

Best debt consolidation loans for bad credit

How do debt consolidation loans for bad credit work?

With debt consolidation loans for bad credit, you apply for a loan that you’ll use to pay off existing multiple debts. You or your consolidation lender will use the loan to pay off your creditors, and you’ll then make loan repayments to that one lender.

You can consolidate many types of unsecured debt, such as credit cards, store cards, medical debts and unsecured personal loans. The loan you use to consolidate these debts, meanwhile, can be unsecured or secured. If you have bad credit, you’ll increase your chances of approval if you secure the loan with collateral.

Should I consolidate debt if I have poor credit?

This depends on your personal financial situation and habits. Let’s say you want to consolidate credit card debt. Since credit cards typically have interest rates at around 20%, ideally you’ll want the interest on any consolidation loan to be lower than that. Unfortunately, interest rates on debt consolidations loans for bad credit tend to be higher than 20%, which means you could end up paying more for debt consolidation than if you just continued paying your credit cards.

It may be worth getting a bad credit debt consolidation loan if you need a single lower monthly payment and you have a concrete plan for how you’ll manage your budget with the “extra” room your consolidation loan will provide you. You’ll need to be financially disciplined to stay the course of on-time monthly payments. Before applying for a consolidation loan with bad credit, consider getting free credit counselling first to make sure it’s the right step for you. There are services offered by non-profits like Credit Counselling Canada.

If you’re certain a debt consolidation loan is best for you, below are top providers who work with people with bad credit.

How we found the best debt consolidation loans for bad credit

To find the best bad credit debt consolidation loans, Finder experts collected more than 70 points of data for more than 60 lenders operating in Canada. Finder used this data to create a proprietary weighting formula that scores each lender based on rates, fees, terms, loan amounts, application process, funding speed, customer support, and reputation, among other features. Keep in mind, that the products listed are based on providers available through Finder and online in the Canadian loans marketplace. These loans are not representative of the entire market. Read more about the Finder personal loan ratings and review methodology.

464+

hours invested

112

lenders vetted

4,608

data points analyzed

1. Loans Canada

Loans Canada Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
Go to site
$300 – $50,000
Loan amount
6.99% – 46.96%
APR
3 - 60 months
Term
Loans Canada is an online broker partnered with over 60 lenders. Fill out one application and get your matches for free. Full Review

Why it's one of the best

  • Search a large lender network. Loans Canada works with over 60 verified lenders to help you find a loan you can use for debt consolidation.
  • Get approved. Only see lenders that match your profile.
  • Work with an established company. Loans Canada has been in business since 2012. It has BBB accreditation with an A+ rating.
  • Easy online application
  • Quick deposits
  • High loan amounts
  • No collateral required to secure your bad credit loan
  • High rates for bad credit
  • No online quotes provided
  • Limited to its network
Loan amount $300 – $50,000
APR 6.99% – 46.96%
Term 3 - 60 months
Min. credit score 300
Fees No application, origination or brokerage fees
Turnaround time Receive funds within as little as 24 hours.
Serviced provinces All of Canada

Finalist — Best Personal Loan Search Platform category

Loans Canada earned the Finalist award in the Best Personal Loan Search Platform category in the Finder: Personal Loans Customer Satisfaction Awards 2023. Loans Canada scored 75.15% in the overall customer satisfaction score and secured a spot in Canada’s Top 15 Best-Rated personal loan providers in 2023.

2. LoanConnect

LoanConnect Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
Go to site
$500 – $50,000
Loan amount
8.99% – 46.96%
APR
3 - 120 months
Term
LoanConnect maintains a large database of lenders and matches you with several debt consolidation loan offers based on your unique profile. Full Review

Why it's one of the best

  • Save time. Your application will be cast wide and you'll get your results right after you apply.
  • Easily compare offers. Compare offers from multiple lenders and log in regularly to see if new offers are available.
  • Choose between secured and unsecured loans. Find a secured bad credit loan if you have an eligible asset or get a loan with no collateral.
  • Pre-approval in five minutes
  • Many bad credit loan options
  • BBB-accredited with an A+ rating
  • Fast funding
  • Not a direct lender
  • High rates for bad credit
  • Miss out on offers from lenders not partnered with LoanConnect
Loan amount $500 – $50,000
APR 8.99% – 46.96%
Term 3 - 120 months
Min. credit score 300
Fees No application, origination or brokerage fees
Turnaround time Receive funds within as little as 24 hours.
Serviced provinces All provinces

Most Recommended

LoanConnect made it to the Top 15 Most Recommended personal loan providers in the Finder: Personal Loans Customer Satisfaction Awards 2023.

3. Spring

Spring Financial Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
Go to site
$500 – $35,000
Loan amount
10.8% – 46.99%
APR
6 - 60 months
Term
Spring Financial offers fast approval and funding. If you don't qualify for a bad credit debt consolidation loan, however, it'll offer you its credit builder loan. With this loan, you won't access the loan funds until after you've made all your payments on time. Full Review

Why it's one of the best

  • Get a loan from an established lender. Spring Financial has been providing bad credit loans in Canada since 2015 and has over 200 employees with headquarters in Vancouver, BC.
  • Improve your credit score. Spring Financial reports payments to the credit bureaus so you can increase your credit score.
  • Get quick funding. If you provide the required documents on time, you can get your bad credit loan the same day you apply.
  • 100% online
  • Fast funding via e-Transfer
  • No prepayment penalties
  • High rates for bad credit
  • C- BBB rating, received complaints about the credit builder loan
Loan amount $500 – $35,000
APR 10.8% – 46.99%
Term 6 - 60 months
Min. credit score 500
Fees No fees except $30 NSF fee
Turnaround time Within 24 hours
Serviced provinces All of Canada

Most Recommended + Best-Rated

Spring Financial made it to both the Top 15 Most Recommended and the Top 15 Best-Rated personal loan providers in the Finder: Personal Loans Customer Satisfaction Awards 2023.

4. Mogo

Mogo Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
Go to site
$500 – $35,000
Loan amount
9.9% – 46.96%
APR
6 - 60 months
Term
Mogo is a Canadian fintech company that offers various financial products, including debt consolidation loans for bad credit. Full Review

Why it's one of the best

  • Get an instant decision. Get your free quote in three minutes without lowering your credit score.
  • Apply easily online. Set up an account within minutes and get approval and funding within one to two days.
  • Work with an established company. Mogo was founded in 2003 and is traded on the Toronto Stock Exchange.
  • Convenient mobile app
  • No prepayment penalties
  • Bank-level security
  • High rates for bad credit
  • Some negative Mogo reviews online
  • Loans are powered by Lendful and easyfinancial
Loan amount $500 – $35,000
APR 9.9% – 46.96%
Term 6 - 60 months
Min. credit score 500
Fees Non-sufficient funds fee of $20 to $50
Turnaround time Within 24 hours
Serviced provinces British Columbia, Alberta, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island

Best-Rated

Mogo made it to the Top 15 Best-Rated personal loan providers in the Finder: Personal Loans Customer Satisfaction Awards 2023.

5. Get Loan Approved

getloanapproved.com Vehicle Title Loan
Finder Score:
★★★★★
Go to site
$1,000 – $50,000
Loan amount
9.95% – 29%
APR
48 - 72 months
Term
Get Loan Approved offers personal loans with your car as collateral, also known as a car title loan. You can continue to use your car as you pay off your debt consolidation loan. To qualify, your car must be less than 10 years old, in good condition and fully paid off. Full Review

Why it's one of the best

  • Get leniency. Get Loan Approved specializes in personal loans for people with damaged credit. It doesn't do any credit checks and accepts many types of income.
  • Apply easily. Apply online and then either drive to a Get Loan Approved agent near you or have an agent come to you for a car appraisal. The whole process can be completed within 24 to 48 hours.
  • Increase your chances of approval. Since you'll be reducing the risk for the lender with collateral, you'll have a higher chance of getting approved.
  • Easy to get
  • No credit check
  • High rates
  • Extra fees
Loan amount $1,000 – $50,000
APR 9.95% – 29%
Term 48 - 72 months
Turnaround time In as little as one hour
Serviced provinces AB, BC, MB, NB, NL, NS, ON, PEI, SK

6. FlexMoney

FlexMoney Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
$500 – $15,000
Loan amount
18.9% – 46.9%
APR
6 - 60 months
Term
FlexMoney is an online-only lender offering fast bad credit personal loans in Canada, which you can use to consolidate debt. Full Review

Why it's one of the best

  • Get an instant decision. FlexMoney's automated system enables it to give you a no-obligation quote within minutes.
  • Get your funds fast. Funds should reach your account on the same day or the next day.
  • Rebuild your credit. FlexMoney will report regular, on-time payments to the credit bureau.
  • Make payments weekly, bi-weekly, bi-monthly or monthly
  • Easily make extra payments via e-transfer
  • Interest rates can reach as high as 46.9%
  • Minimum income required ($2,000 per month)
  • Must be employed
Loan amount $500 – $15,000
APR 18.9% – 46.9%
Term 6 - 60 months
Min. credit score 500
Fees No application, origination or prepayment fees
Turnaround time Receive funds within as little as 24 hours
Serviced provinces Alberta, British Columbia, Newfoundland, Nova Scotia, Ontario, PEI, Saskatchewan and Yukon

Most Recommended + Best-Rated

FlexMoney made it to both the Top 15 Most Recommended and the Top 15 Best-Rated personal loan providers in the Finder: Personal Loans Customer Satisfaction Awards 2023.

7. Money Mart

Money Mart Installment Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
$500 – $15,000
Loan amount
29.9% – 46.9%
APR
12 - 60 months
Term
Money Mart offers installment loans and payday loans to people with bad credit. It's been in business for over 40 years and is one of the largest alternative lenders in Canada. You can use its installment loans to consolidate debt if you have bad credit. Full Review

Why it's one of the best

  • Get your loan fast. You can get a payday loan almost instantly and an installment loan in as little as 2 hours.
  • Apply online or in-store. Get your loan online or at one of Money Mart's 500+ store locations.
  • Get some leniency. Money Mart is less strict with its requirements than banks, credit unions and some alternative lenders. You can qualify with a chequing account and a regular source of income.
  • Established lender
  • Convenient mobile app
  • Accepts non-employment income such as government benefits and private pension
  • High interest rates
  • Availability in provinces varies in-store and online
Loan amount $500 – $15,000
APR 29.9% – 46.9%
Term 12 - 60 months
Min. credit score 300
Fees None
Turnaround time Less than 1 day
Serviced provinces AB, BC, MB, NB, NS, NT, ON, PEI, SK, YT

8. Magical Credit

Magical Credit Installment Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
$1,500 – $20,000
Loan amount
19.99% – 46.8%
APR
12 - 60 months
Term
Magical Credit specializes in online personal loans for people with bad credit and/or low income, which you can use to consolidate debt. It's been in business since 2014 with offices in Concord and North York, Ontario. Full Review

Why it's one of the best

  • Get a fast loan. Apply online and validate your information with instant bank verification to get a fast loan decision (with funds sent in a few hours).
  • Rebuild your credit. Magical Credit reports on-time payments to the credit bureaus to increase your credit score.
  • Use non-employment income to qualify. Magical Credit accepts many types of income, such as most government benefits, private pensions and maternity benefits.
  • Receive funds within as little as 24 hours
  • Accepts child tax credit, EI, CPP, OAS, private pensions and more
  • Refer-a-friend program
  • Promotes a 3.9% fixed monthly rate but the actual APR is between 19.99% and 46.8%
  • May charge a $194 administration fee
  • Must show proof that you've been employed for six months (if applicable)
Loan amount $1,500 – $20,000
APR 19.99% – 46.8%
Term 12 - 60 months
Min. credit score 300
Fees A single administration fee of $194
Turnaround time Receive funds within as little as 24 hours
Serviced provinces Canada-wide (excluding Manitoba, Saskatchewan and Quebec)

Most Recommended

Magical Credit made it to the Top 15 Most Recommended personal loan providers in the Finder: Personal Loans Customer Satisfaction Awards 2023.

9. AAR Financial

AAR Financial Personal Loan
Finder Score:
★★★★★
$1,000 – $80,000
Loan amount
14.9% – 46.7%
APR
24 - 120 months
Term
AAR Financial offers personal loans with large loan amounts and long loan terms suited for debt consolidation. It has BBB accreditation with a B+ rating. Full Review

Why it's one of the best

  • Increase your odds of approval. AAR Financial claims to approve 99% of applications.
  • Get a secured or unsecured bad credit loan. Use your home to secure your loan and get a more competitive rate, or get an unsecured personal loan.
  • Work with an established lender. AAR Financial has been in business for over 15 years with headquarters in Winnipeg, Manitoba.
  • Flexible loan amounts
  • No prepayment penalties for unsecured loans
  • High rates starting at 14.90%
  • Several negative reviews
Loan amount $1,000 – $80,000
APR 14.9% – 46.7%
Term 24 - 120 months
Fees Fees may include insurance fees, administration fees and NSF/late payment fees.
Turnaround time Within 24 hours
Serviced provinces MB, AB

10. easyfinancial

Easyfinancial Personal Loan
Finder Score:
★★★★★
Customer Survey:
★★★★★
$500 – $100,000
Loan amount
9.99% – 46.96%
APR
9 - 120 months
Term
easyfinancial helps Canadians access financing when banks aren't an option. It offers debt consolidation loans for bad credit across Canada online and in hundreds of locations. Full Review

Why it's one of the best

  • Get a quick quote. Apply in minutes with no commitment and it won't affect your credit score.
  • Work with a well-known lender. easyfinancial is one of the biggest lenders of bad credit personal loans in Canada.
  • Improve your credit score. According to easyfinancial, one in three customers graduate to prime rates after making regular, on-time repayments.
  • Secured and unsecured bad credit debt consolidaiton loans
  • 2% rate reduction with a co-applicant
  • BBB-accredited with an A+ rating
  • Steep rates for bad credit
  • Many negative customer reviews
Loan amount $500 – $100,000
APR 9.99% – 46.96%
Term 9 - 120 months
Min. credit score 300
Fees you may come across non-sufficient funds fees, late payment fees, missed payment fees or admin fees
Turnaround time Approval within 30 minutes
Serviced provinces All of Canada

Finder: Personal Loan Consumer Satisfaction Awards

In 2023, we completed the Finder: Personal Loan Consumer Satisfaction Awards — an annual ranking of personal loan providers in Canada, based on customer satisfaction feedback. Read more about these awards and the methodology used to find the best personal loan providers, based on customer service scores.

Where can I get debt consolidation loans with bad credit?

Alternative lenders are your best choice in getting a debt consolidation loan with bad credit. They have easier eligibility requirements than banks and credit unions. Many also have completely online processes, so you can get a debt consolidation loan without ever needing to leave your home.

What is the minimum credit score for bad credit debt consolidation loans?

Minimum credit scores vary between lender to lender, but generally, lenders that offer bad credit consolidation loans want to see credit scores over 570, sometimes even 600.

Tips to increase your chances of approval on bad credit debt consolidation loans

  • Get a secured loan. You have a higher chance of approval with a secured loan, which requires collateral. Home equity and vehicles are the most common forms of collateral.
  • Don’t apply for too many loans. Only apply to your top choices. Lenders will do a hard credit check and if they see you’re applying to many places, they’ll be more cautious about giving you a loan.
  • Apply with a cosigner. Having a friend or relative with good credit back your loan makes you less of a risk to lenders and could get you a better deal. Learn more about cosigned personal loans.
  • Work on rebuilding your credit. If it’s possible, use the next six months to rebuild your credit first by making on-time bill and debt payments.

How to compare debt consolidation loans for bad credit in Canada

Like any debt or loan solution, it’s important to compare your options to find the consolidation loan for you. When you’re comparing your options, keep in mind the following:

  • The lender. There are disreputable lenders who prey on those with bad credit, promising fair loans but then charging unreasonably high rates and fees. Verify that a lender is legitimate by checking out reviews from other customers and looking up ratings on sites like the Better Business Bureau and Trustpilot.
  • Fees. See what lenders are charging, and check your lender’s fine print to make sure there are no hidden costs. Some fees you might encounter include admin fees, NSF fees, late payment fees and prepayment penalties.
  • Interest rates. You’ll likely get offered high interest rates of up to 47%, so be sure to compare your options.
  • Loan terms. Your lender will likely offer a long loan term in order to lower your monthly payments. Generally, the longer the loan term, the more you’ll pay in interest. It’s possible to end up paying more interest than the loan amount.

How much will a consolidation loan cost me?

The cost of your consolidation loan will depend on your loan amount, loan term and interest rate. Use the calculator below to find out your monthly payment and how much you’ll pay in interest overall.

Calculate your monthly loan payment

Your loan
Loan amount
$
Loan terms (in years)
Interest rate
%

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

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You can expect to pay back $ per month
Based on your loan terms
Principal $
Interest $
Total Cost $

How does debt consolidation affect your credit score?

If you already have bad credit, consider how debt consolidation loan could further impact your credit score. Depending on which type of debt consolidation option you choose, consolidating your debt can affect your credit score in these two ways:

  1. Your credit score can go down. Your credit score can go down even more when you initially sign up for debt consolidation. That’s mostly because creditors do a hard pull on your credit to check your eligibility, and because you take on new “immature” debt once you’re approved. Once you start making payments on a consistent basis, you should see your score start to climb.
  2. Your credit score can go up. Your credit score will typically start to go up after a few months or years of making on-time and consistent payments. Just be aware that you’ll lose any progress you make on your credit score if you fall behind on your repayments.

What are the benefits of consolidating debt if you have bad credit?

There are various advantages to consolidating your debt when you have bad credit, including:

  • Paying a single monthly payment. By consolidating your debts you’ll only have to worry about one monthly payment as opposed to several, so your debt is easier to budget for, and you’re less likely to miss a payment.
  • Getting more room in your budget. If you have a lower monthly payment, you can allocate more of your income to other areas.
  • Improving your financial position. Making on-time debt consolidation loan payments will help increase your credit score.

How to make a debt consolidation loan for bad credit work for you

Not everyone who takes out a debt consolidation loan for bad credit improves their financial situation. It’s important to use these loans the right way, so you don’t worsen your financial situation:

  • Budget. Your budget will change as you’ll be paying for one big loan rather than several little ones. Make sure you know when your payment is due and pay it on time. Consolidating your debt won’t help your credit very much if your score dips because you miss payments.
  • Compare your loan options. To make sure you’re getting the best deal, compare your loan options before you apply. This will help ensure you get the option with the best rate and loan term.
  • Seek advice. If you’re struggling to consolidate your debts or are wondering how best to manage your payments, seek advice from a credit counsellor who can point out all your options and answer any questions you may have.
  • Don’t take on new debt. Once you get your consolidation loan, avoid the temptation to take on any new credit card, line of credit or types of debt until you’ve completely paid off your loan. Once it’s paid off, be mindful of how much debt you’re taking on to avoid ending up in the same situation again.

Alternatives to debt consolidation for bad credit

If you’re not sure getting a debt consolidation loan for bad credit is the best option for you, there are other alternatives to help you get out of debt.

Snowball debt management plan

If a new loan seems like too drastic of an option but you need help getting in control of your finances, consider using the snowball method. Pay off your smallest debt first, then roll the payments you were making on that debt into your next smallest debt. As you keep paying off debt, your payments will get larger and larger and you’ll be able to pay off all your loans faster.

Debt consolidation program

If you have more debt than you can afford to pay no matter what the interest rate is, consider using a debt relief company, especially if you don’t qualify for a bad credit debt consolidation loan. These agencies negotiate with your creditors to lower your interest rates or monthly payments. You agree to begin paying off your debts through the agency in one or more affordable monthly payments — usually over 3 to 5 years — while the agency pays your creditors on your behalf.

Bottom line

While a debt consolidation loan is often a viable option to consider if you’re trying to get a handle on your debt, the same solution won’t work for everyone. Before taking out one of these loans, make sure your new monthly payment and loan term will be worth paying more interest. Speak to a credit counsellor about other options that may be open to you.

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