Installment loans in Canada

What is an installment loan?

An installment loan is technically any loan that comes in one fixed amount that you repay plus interest and fees in regular payments. Personal loans, student loans and car loans are technically installment loans. However, most loans that lenders refer to as installment loans are types of short-term loans.

These installment loans come in larger amounts and longer terms than their payday loan cousins, though they’re generally smaller than your average personal loan. They can also come with higher rates than personal loans. You can typically borrow up to $2,000 or more and take 3 months to a few years to pay it off.

Read more about the differences between installment and payday loans

Like payday loans, some installment loans in Canada are designed to attract borrowers with bad credit. That’s because they aren’t as heavily regulated as payday loans. Watch out for these: They can come with highly unfavourable terms.

Read our guide to how installment loans work

Compare online installment loans in Canada

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Name	Product	Interest Rate	Max. Loan Amount	Loan Term	Fees	Min. Credit Score	Link
LoanConnect Installment Loan		32% + brokerage fee	$2,500	3-6 months	No application or origination fees	300	Go to site More Info	LoanConnect is an online broker that matches borrowers to lenders offering loans in amounts from 500 to $2,500. Get approved for multiple loan offers from different lenders in as little as 60 seconds with any credit score.	Compare	loading Fetching your data...
Cash Money Installment Loan		46.93%	$10,000	6 months - 5 years	Vary across provinces/territories	560	Go to site More Info	Cash Money offers installment loans up to $10,000 for Alberta, Manitoba and New Brunswick residents. Residents of Manitoba and New Brunswick must apply in-store only.	Compare	loading Fetching your data...
Loans Canada Installment Loan		8.00% to 46.96%	$50,000	3-60 months	No application or origination fees.	300	Go to site More Info	Loans Canada connects borrowers to lenders offering installment loans in amounts from $500 to $50,000. Submit one application to get rates from multiple lenders across Canada.	Compare	loading Fetching your data...
Fairstone Installment Loan		26.99%-39.99%	$20,000	6 months - 5 years	None	560	Go to site More Info	Borrow up to $20,000 with a Fairstone Installment Loan.	Compare	loading Fetching your data...

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How top online installment loans compare

*Information above current as of March 2020

What can I use an installment loan for?

You can generally use an online installment loan for any legitimate purpose. However, it might be best to save them for emergencies, since they can come wth higher interest rates than other types of personal financing. You can use installment loans for:

• Medical expenses. Sometimes healthcare providers don’t provide financing that all patients can qualify for. An installment loan can help make paying off medical bills more manageable, although more expensive.
• Building or car repairs. Got a car that needs urgent repairs? Installment loans can help you cover that cost, no mater what your credit type is.
• Overdue utility bills. An installment loan can help you keep the lights on, water running and phone line working when you don’t have the funds to make your utility payments on time.
• Building your credit. Taking out an installment loan can sometimes help you rebuild your credit if you make payments on time. If this is your primary goal, however, you might want to consider applying for a credit building loan at a local financial institution like a bank or credit union. These which typically comes with lower interest rates and have low credit requirements.

What are the benefits of getting an installment loan?

Online installment loans in Canada come with various features. Here’s what you should know if you’re considering applying for one:

• Convenient application process. You can apply conveniently online and some lenders even have smartphone apps.
• Quick funding. You can learn your application status in minutes with most lenders, and if approved, you can accept the loan contract. Once you do this you can expect the money in your bank account as early as a few hours or the next business day.
• Flexible eligibility criteria. Getting online installment loans in Canada with bad credit is possible, primarily because lending norms are slightly more relaxed. “No credit check” online installment loans generally don’t make hard inquiries on your credit score, but you’ll need to demonstrate how you’ll be able to repay the loan.
• Variable fees. The province you live in along with the amount of money you borrow has an effect on how much you pay in fees. Not all lenders charge the same fees, so keep this in mind when comparing your options.
• Loan amount and terms. Both these aspects depend on provincial regulations. Find out what the regulations are in your province when comparing lenders.

Can I qualify for an installment loan?

To qualify for an installment loan with most lenders, you generally need to:

• Have verifiable income. This doesn’t mean you need to be employed, to many require you to have at least a part-time job. Some lenders accept welfare, disability and pension payments as income.
• Have an active bank account. If you don’t have a chequing account, you can sometimes get a cash installment loan from a brick-and-mortar storefront.
• Present government-issued ID. Lenders might ask to see your driver’s license to verify that you meet the age requirements.
• Live in an eligible province. Many installment loan providers don’t lend to residents of all provinces and territories. Be sure to find one that operates legally in yours.
• Canadian citizen or permanent resident. You’ll typically need to at least be a permanent resident of the province you reside in.

While most online installment loan providers are willing to work with borrowers with less-than-perfect credit, you’ll likely end up with higher rates.

Installment loans for bad credit

6 tips for finding the right installment loan in Canada

1. Figure out what you care about most. Is speed most important to you? You might want to look at online lenders. Do you care more about overall cost? You might want to check your local bank or credit union. Know what you need out of a loan can help you speed up your search by giving you something to go by.
2. Ask yourself: Does a credit card make more sense? Credit cards typically have higher interest rates than personal loans, but that’s not always the case with online installment loans. There’s a chance you could get funding at less cost (or risk) by slapping that expense on plastic, if it isn’t over your credit limit.
3. Pay attention to the APR, not just the interest. A loan’s APR takes into account both interest rates and fees, giving you a better idea of the true cost of the loan.
4. Search for personal loans too. As we mentioned before, lenders that use the term “installment loan” can be predatory. You might have better luck finding a legit lender if you also look for personal loans.
5. Compare lenders. You might not be getting the best deal if you don’t look at multiple lenders. You can start by using our comparison table.
6. Don’t be tricked by long terms. Some installment loan providers offer high-interest loans with long terms. While this might reduce your monthly payments significantly, you could end up paying double the amount your borrowed — or even more — if you take the entire time to pay it off.

How much will my loan cost me?

Check out our monthly payment calculator below to see how much you’ll pay in both the short and long run:

Is an online installment loan right for me?

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What are my other options?

Most online installment loans in Canada are unsecured, meaning that they don’t require collateral. It sounds great at first, right? You don’t have to put anything on the line. However, unsecured installment loans that come with high rates and can actually pose more of a risk to your financial health: You can end up in a cycle of debt if you have trouble paying it off. Here are some alternatives you can choose from.

• Secured personal loan. Having trouble qualifying for a personal loan? Consider securing it with collateral. Securing your loans make you look like less of a risk to lenders and can offset a weak credit history. You’ll have a better chance at getting approved and getting a good deal on rates than you would with an unsecured loan.
• Home equity loan. This is a special type of secured loan that uses the amount of equity you own in your home as collateral. You can typically borrow up to 85% of your home’s value.
• Credit union loans. Credit unions and other non-profit financial institutions typically offer lower rates than other lenders, even to people without excellent credit. You can typically get even lower rates by securing your loan with a chequing or savings account that you hold with them.
• Crowdfunding. If you don’t need those funds immediately, it might be worth it to reach out to your social network and start a crowdfunding campaign. You won’t have to pay it back, though many platforms charge a fee based on how much money you raise.

Paying off an installment loan

How you repay your installment loan largely depends on your lender. Generally, you need to make monthly, semi-monthly or weekly repayments until the loan is completely paid off.

If your lender allows you to repay your loan ahead of time without charging a prepayment penalty, you could stand to save on interest. That is, as long as your loan repayments all go toward paying off interest and the amount you borrow. It’s not uncommon for installment loan providers to charge interest-only repayments in the beginning, meaning that you can’t save on interest by paying it off early.

Frequently asked questions

• How much time do I need to complete an online application?

  If you have all the required information easily accessible, completing your application should take around 5 to 10 minutes. Much the same as a payday loan.

• Can anyone apply for an installment loan?

  Remember that not all lenders provide installment loans in all provinces and territories. In provinces and territories where they do, you have to meet minimum age requirements, you should show you have a regular source of income, and you that you have an operational bank account.

• What information do I have to provide to apply?

  You’ll have to provide personal details, employment details, and your bank account details.

• Can I use an installment loan to consolidate debt?

  Technically, you can. However, since installment loans typically come with high interest rates, it’s might not be the fix you need.

  If you’re struggling to repay several short-term loans and your credit is shot, consider signing up for credit counseling. Credit counseling agencies can work with you to find a solution to your specific situation and offer advice on how to stay out of debt.

  If you’re experiencing financial hardship and would like to speak to someone for free financial counselling, you can call Credit Counselling Canada on 1-800-007-007.