As you move into your older years, your finances change with your lifestyle. When that happens, you may find that getting a loan isn’t as easy as it was when you were earning an income from employment. However, there are lenders that will consider you for a loan as a retiree. But just be aware of the costs some loans might have and the impact borrowing at a later stage in life could have on your retirement funds.
9 types of loans for seniors in Canada
If you’re hoping to take out a loan as a retired senior, you can look into these 9 options.
1. Personal loans
A personal loan can be either secured or unsecured. Secured means putting up collateral, such as your savings. Unsecured means the loan has no collateral, but it also means higher interest rates than secured loans since the lender is taking on more risk. Some lenders offer up to $50,000, but you may not have access to this large amount if you don’t have the liquid assets to back it up and an excellent credit score.
LoanConnect is the best loan company in Canada for comparing personal loans because it's a reputable online loan platform that matches you with lenders for free based on your profile.
Easy online application that you can complete in a matter of minutes
Quick deposits within 24 hours of applying, if you meet all the eligibility criteria
High loan amounts of up to $50,000
Longer terms of up to 7 years, if needed
Lenders can provide bad credit loans
Potential for high interest rates of up to 46.96% depending on your financial circumstances
Limited providers based on companies LoanConnect works with
Online only so you cannot visit LoanConnect in person for assistance
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
Origination fee
0
Turnaround time
Receive funds within as little as 24 hours.
2. Personal lines of credit
A line of credit is similar to a personal loan. But instead of receiving a lump sum, you’ll be able to draw from your line, up to a pre-determined limit, whenever you need it. Interest will only apply to the amount you borrow. A line of credit can be particularly useful when you aren’t sure how much you need in advance.
Loans Canada is the best loan company for comparing different loan options (including lines of credit) because it has the largest lender network in Canada.
Bad credit doesn't matter because Loans Canada will match you with a lender for your particular situation
Easy online application to connect with multiple lenders
Quick deposits, with access to your cash within 1-3 business days from the time that you apply
High loan amounts of up to $35,000
No collateral required to secure your loan
Interest rates can reach as high as 21.5%
No online quotes provided. Instead you'll have to speak to a customer service representative over the phone
Loan amount
$5,000 – $35,000
APR
9.9% – 21.5%
Term
Open
Min. credit score
300
Fees
No application, origination or brokerage fees
Origination fee
0
Turnaround time
Receive funds within as little as 24 hours.
3. Home equity loans or lines of credit
If you own a home, you can use the equity of your home (the difference between the property value and the mortgage balance) to get a loan. Your home will act as collateral. A home equity loan is a lump sum that you pay back in installments over time. With a home equity line of credit (HELOC), you can borrow up to a pre-set limit, and you can borrow as much or as little as you’d like. You can pay back what you owe at any time, but you must pay the interest on the amount you borrow. Because you’re using your home as collateral, home equity loans and HELOCs tend to have lower interest rates than other types of loans.
If you have home equity you're willing to put up for collateral, you can apply for a Fairstone secured loan starting at $5,000 up to $50,000.
Borrow as little as $5,000 to start.
Terms range from as short as 36 months
Fast access to funds to the tune of 1 business day.
Flexible repayment options, including weekly, fortnightly or monthly due dates.
Potential for a higher starting interest rate.
Your home is used as collateral.
Expect additional charges for a home valuation, title search and other due diligence steps.
In-person applications only
however, there are 240 locations across Canada.
Loan amount
$5,000 – $50,000
APR
19.99% – 24.49%
Term
36 - 120 months
Min. credit score
560
Fees
Varies by province
Origination fee
Varies by province
Turnaround time
3+ days
4. Peer-to-peer loans
Peer-to-peer loans are personal loans funded by regular Canadian investors rather than banks or institutional lenders. An online marketplace will anonymously connect you with Canadians who can finance your loan. You can usually get competitive interest rates and favourable loan terms, but you need a good to excellent credit score to qualify.
5. Debt consolidation loans
If you’re looking to combine your debt from multiple places into one single loan with a lower interest rate, some loan options are specifically tailored for the purpose of debt consolidation. A debt consolidation loan can help save you money on interest and fees across multiple loans.
Spring Financial is one of the biggest alternative lenders in Canada, offering online personal loans you can use to consolidate debt. It has flexible loan amounts and loan terms. However, if you don't qualify for a debt consolidation loan, it may promote its credit builder loan instead.
Seamless online application
Quick deposits within 24 to 48 hours of applying
High loan amounts of up to $35,000
Longer terms of up to 5 years, if needed
Bad credit loans available
Potential for high interest rates of up to 46.99% depending on your financial circumstances
If you’re having trouble getting approved for a loan on your own, consider asking a family member with a higher income and solid credit score to cosign for you on the loan. A cosigner can also help you get more favourable loan terms or qualify for a higher loan amount. But keep in mind that a cosigner is tied to your loan, so if you default on your loan, your cosigner’s credit score will also take a hit and they will be required to cover your payments.
7. Car loans
If you’re looking to purchase a new or used vehicle, you can get a car loan. These types of loans offer competitive interest rates because the vehicle you purchase is used as collateral.
Browse thousands of vehicles from dealers across Canada with CarsFast and get matched with financing that meets your needs, and purchase a new or used vehicle and get it delivered to your door.
A reverse mortgage is a loan where you borrow money using your home equity. Instead of a traditional mortgage where you make payments to the lender, the lender makes payments to you based on a percentage of your home’s value. Over time your debt increases as the lender buys more of your home’s value. You continue to own the home, but the moment you move out, sell it, default on the loan or pass away, the loan needs to be repaid. The lender sells the home to get back the money that was paid to you, and whatever is left goes to you or your heirs.
Two financial institutions offer reverse mortgages in Canada: HomeEquity Bank and Equitable Bank. To be eligible, you must be a homeowner and at least 55 years old.
9. Payday loans
A payday loan is a small amount of money you borrow that needs to be repaid by your next “payday”. Payday loans, whether you are retired or not, are extremely expensive and should only be a last resort. They also have different regulations depending on which province you live in.
⚠️ Warning: Be cautious with payday loans
High-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. View payday costs and regulations by province here. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.
Maximum borrowing costs of payday loans per province
Always refer to your contract for exact repayment amounts and costs.
Province
Max. cost of borrowing a $100 payday loan
Cooling off period to cancel loan
Max. penalty for returned cheque or pre-authorized debit
Alberta
$15
2 business days
$25
British Columbia
$15
2 business days
$20
Manitoba
$17
48 hours excluding Sundays and holidays
$20
New Brunswick
$15
48 hours excluding Sundays and holidays
$20
Newfoundland and Labrador
$14
2 business days
$20
Nova Scotia
$15
Next business day (2 days for online loans)
$40 (default penalty)
Ontario
$15
2 business days
$25
Prince Edward Island
$15
2 business days
N/A
Quebec
Limit of 35% AIR
N/A
N/A
Saskatchewan
$17
Next business day
$25
What types of retirement situations do lenders look at?
When you borrow money as a retiree, having a form of income is necessary since you have to be able to prove that you can pay back the loan. Lenders want to see that you can comfortably pay back your loan and still pay for necessities in life such as food, housing and utilities.
Self-funded retirees. If you earn income from investments, such as rental properties or a private pension, you’re a self-funded retiree. When applying for a loan, make sure you have as much proof of your assets and income as possible to prove to the lender you’ll be able to manage the loan repayments.
Retirees receiving Canada Pension Plan (CPP) and Old Age Security (OAS). Be sure to check the eligibility criteria of the lender – not all consider CPP and OAS as a form of income. Having a private pension on top of CPP and OAS will help prove that you can manage repayments.
Retirees who work part-time. If you have steady employment – even if it’s only part-time – this income will be considered by lenders. Remember minimum income criteria may apply, so check this before submitting your application.
Questions to ask yourself before applying for a loan
To find out the true cost of a loan, look at the annual percentage rate (APR). The APR is the combination of the interest rate and financing fees expressed as a yearly cost. Some lenders might advertise their monthly rate instead of the annual rate.
The longer the loan term, the more interest you’ll pay. Your goal is to get the shortest loan term possible, but at the same time, you don’t want the term to be so short that you can no longer afford the payments.
Lenders often list their eligibility criteria. To save time and to save your credit score from taking a dip, only apply for loans where you meet the requirements.
Fees can include an origination fee (fee to process your loan), NSF fees and prepayment penalties.
Some lenders let you choose the frequency of your payments or even pay off your loan at any time without penalty.
Not all lenders are the same. Check third-party reviews to see what other applicants or clients have to say about the lender.
Your loan amount, interest rate and loan term determine how high or low your repayments will be. Use our personal loan monthly payment calculator below to get an idea of how much the loan might cost you.
Calculate your personal loan monthly payment
Calculate how much you could expect to pay each month
Once you’ve compared lenders that accept pension, OAS and/or investment income as forms of acceptable income, you’ll need to make sure you meet the other eligibility criteria. You’ll also need to gather documents and then apply online.
Eligibility criteria vary among lenders. Below are some basic requirements:
Be a Canadian citizen or a permanent resident.
Have a permanent address.
Be at least 18 years of age or the age of majority in your province or territory.
Have a working bank account.
Meet the minimum income requirements.
Meet any minimum credit score requirements.
Government-issued ID, such as your driver’s licence or passport
Financial statements regarding your income
Can I get a loan as a senior with bad credit?
If you’re a retiree with poor credit, it’s still possible to get a personal loan. Some lenders will only offer loans to those with bad credit up to a maximum amount, like $5,000, while others will offer more. Keep in mind you will often pay high interest rates with bad credit loans since you’d be considered a riskier borrower. Compare personal loans for bad credit.
How to increase your chances of approval as a retiree with bad credit
Review the eligibility criteria. Before you apply for a loan, check if you meet the eligibility criteria. See whether the lender accepts the type of income you have, and look for things like minimum income and credit score.
Consider a joint application or cosigner. If you don’t meet the credit score requirements, consider applying with a cosigner or another applicant.
Submit all necessary documents. Check what documents are needed and make sure you’re able to submit everything that is required, such as your CPP or OAS statements.
Bottom line
Even if you’re no longer in the workforce, you can still apply for a loan as a retiree. Many lenders accept investment income, OAS, CPP and private pensions as forms of acceptable income, which means if you’re able to make your loan repayments and you meet the other basic eligibility requirements, you could be approved for the funds.
Frequently asked questions about getting loans for retired seniors
Yes, there are payday loans for retired people. Many payday loan lenders can accept non-employment income such as CPP and OAS. However, payday loans have an extremely high cost of borrowing. Only take out a payday loan as a last resort and only if you’re certain you can repay it by your next “payday”.
Personal loan applications usually take around 10-15 minutes to complete if you have all of the necessary information on hand.
Yes. Personal loan applications are counted as hard inquiries on your credit report. Inquiries play a factor in your overall credit score, with each inquiry knocking around 5 points off your score. Lenders may also view too many inquiries as a red flag. To keep your credit in good standing and improve your chances of approval, limit the number of loan applications you submit to 1 or 2, and wait for an answer from lenders.
Most lenders have customer service lines you can call to ask specific questions. Check their website for contact details. If you already have a loan with the lender, check your loan contract thoroughly and contact the lender if you still have questions.
Emma Balmforth is a producer at Finder. She is passionate about helping people make financial decisions that will benefit them now and in the future. She has written for a variety of publications including World Nomads, Trek Effect and Uncharted. Emma has a degree in Business and Psychology from the University of Waterloo. She enjoys backpacking, reading and taking long hikes and road trips with her adventurous dog.
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