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.
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. The providers shown on the best list are those who scored highest based on this data-driven methodology. They are providers that are available and not available through Finder, with partners listed first. These loans are not representative of the entire market. Read more about the Finder personal loan ratings and review methodology.
Loans Canada is an online loan search platform partnered with over 60 lenders, including those that offer debt consolidation loans for bad credit. Fill out one application and get your matches for free.
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 in 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.
LoanConnect maintains a large database of lenders and matches you with one or more consolidation loan offers based on your unique profile.
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 debt consolidation 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 – $60,000
APR
8.99% – 46.96%
Term
3 - 120 months
Min. credit score
300
Fees
No application, origination or brokerage fees
Turnaround time
Receive funds in 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.
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 The Foundation. With this loan, you won't access the loan funds until after you've made all your payments on time, with interest.
Why it's one of the best
Get a debt consolidation 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
9.99% – 46.96%
Term
9 - 84 months
Min. credit score
550
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.
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.
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 provinces
Winner: Best-in-Class
easyfinancial was awarded the Winner award in the Best Personal Loan Alternative Lender category in the Finder: Personal Loans Best-in-Class Awards 2024.
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.
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.
FlexMoney is an online-only lender offering fast bad credit personal loans in Canada, which you can use to consolidate debt.
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.
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.
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
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.
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.
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.
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 – $50,000
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, SK, AB, ON and BC
About the Finder Awards
The Finder Awards celebrate companies that offer the best products that make life easier and more cost-effective for Canadians. Winners are determined based on a data-driven evaluation to ensure fairness across each and every awards program and category. Ultimately, our goal is to help you find the best products so you can save, invest and grow your wealth.
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.
Are there guaranteed consolidation loans for bad credit?
No. Avoid lenders advertising guaranteed approval because this could be a scam. Legitimate lenders first need to review your finances before approving. They do not guarantee approval.
Debt consolidation loans for bad credit especially should not have guaranteed approval because the combination of a low credit score and high debt load makes your application risky for a lender. If a lender seems too happy to give you a loan – and at very favourable terms – it’s not a good sign that they’re legit. You could be putting your finances and personal information at risk if you apply.
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.
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:
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.
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.
If you have poor credit, you can apply for debt consolidation loans from alternative lenders. They have higher rates than traditional loans, but they're easier to get approved for. If you don't qualify for a consolidation loan, it's worth exploring debt relief options such as a debt management program or consumer proposal.
It may be difficult to get a debt consolidation loan with a 500 credit score unless you secure your loan with collateral. Even then, you'll likely get offered high interest rates that may make your debt consolidation loan not worthwhile. If you're experiencing financial hardship, consider seeking credit counselling from a registered non-profit like Credit Counselling Canada.
Yes, there are plenty of consolidation lenders that operate online. You won't need to visit a branch to get your loan.
Most lenders will need to do a credit check. However, there are lenders of car title loans in Canada that don't do credit checks, and you can use their loan to consolidate debt. But keep in mind that car title loans are expensive if you have poor credit.
Leanne Escobal is a publisher for Finder. She has spent over 11 years working with financial products and services, specializing in content and marketing. Leanne has completed the Canadian securities course (CSC®) as well as the personal lending and mortgages course by the Canadian Securities Institute. She has a Bachelor of Arts (Honours) in English literature and creative writing from Western University. See full bio
Chelsey Hurst is an associate editor at Finder. She loves empowering people to avoid financial pitfalls and make better decisions with their money. Chelsey has a Bachelor of Science from Redeemer University, a Master of Science from McMaster University, and has won multiple awards for research communication. In her spare time, Chelsey enjoys cooking and taking long walks in nature. See full bio
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