Best Online Personal Loans In Canada For April 2024

We reviewed 82 popular lenders based on 17 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the 8 best lenders based on the weighting assigned to each category:

• Loan details: 20%
• Loan cost: 35%
• Eligibility and accessibility: 20%
• Customer experience: 15%
• Application process: 10%

Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps. We of course rated those lenders that allowed for online loan applications higher than those that didn’t.

Where appropriate, we awarded partial points depending on how well a lender met each criterion. It should go without saying that lenders that didn’t provide online applications for personal loans were excluded from consideration.

An online personal loan is typically an unsecured loan that can be used for any purpose. Unlike a mortgage, online personal loans are not directly attached to an asset and as such, are very flexible.

In contrast to loans offered in person—also referred to as traditional loans—online loans often come with much faster application and approval timelines. As with any lending contract, the borrower will be provided with funds and will be required to pay back the borrowed amount within the agreed upon time period.

Online personal loans work by providing funds, at an agreed upon interest rate and payback period, to a borrower. These funds can be used for any purpose the borrower deems necessary. Lenders of online personal loans may be banks and other financial institutions, payday loan companies or peer-to-peer lending platforms. Each of these lenders will offer different interest rates based upon the rate type chosen, (i.e. variable or fixed) your credit score and history and your income level.

Related: How Do Traditional Personal Loans Work

To apply for a personal loan online, you simply need to enter in your personal and financial information on the lender’s website. Once entered, you may be asked some questions regarding the type of loan you are looking for, its payment structure and other administrative details. Online lenders may also do a soft credit check to confirm your identity and ensure you are able to borrow from them.

Related: Should You Apply For A Loan Online Or In Person?

Personal loan terms, which refer to the duration of the loan, can vary significantly. According to the Financial Consumer Agency of Canada, “most personal loans in Canada range from $100 to $50,000 with a term between six and 60 months.” The term you choose will influence your monthly payment amounts and total interest you pay over the life of the loan. Borrowers often select a term based on their budget and financial stability, balancing manageable monthly payments with the desire to minimize their total interest costs.

Interest rates for online personal loans vary greatly depending on your credit score, credit history and other factors. After surveying a number of data points, Forbes Advisor found that lenders that offer rates of 12% or less typically required high credit scores (600+). On the other hand, lenders that extended their offerings to individuals with poor or no credit scores had interest rates starting around 20% going up to 60%.

By law, lenders are not allowed to charge more than 60% interest for a personal loan on an annual basis.

Though there are a number of reasons why someone would apply for a personal loan online, here are five of the most common reasons.

• Get funds quickly. Unlike traditional loans, online loans are typically disbursed within a few hours to a few days of approval, giving applicants their funds very quickly.
• Receive funds with little-to-no credit history. Many banks and major lenders require borrowers to have a decent credit score in order to be eligible for personal loans. Online loans typically don’t carry eligibility requirements that are as stringent.
• Cover major expenses. Online loans are ideal for individuals or families that have major expenses coming up that may be outside of their regular budget, like home renovations or buying a new vehicle.
• Improve your credit score. As mentioned before, online personal loans don’t carry the same credit history requirements as traditional loans. This makes them an ideal way to build up your credit score—especially if you are not in the market for a secured credit card.
• Consolidate debt. If you are struggling with multiple debt streams, an online personal loan can help you combine these into one manageable monthly payment as a consolidation loan.

Related: How To Get Guaranteed Approval For A Personal Loan

Because personal loans can be used for any reason the borrower deems important, they are used for many reasons. According to research from Fairstone, a Canadian lender, the top five reasons Canadians were taking out personal loans in 2022 were:

1. Debt consolidation due to payment of everyday items

2. Vehicle purchases or repairs

3. Home repairs or purchases related to a residence (e.g. furniture)

4. Travel and holiday purchases

5. Education funding

In the Bank of Canada’s Survey of Consumer Expectations from the second quarter of this year, 48% of respondents viewed their cost of living as their highest financial concern. With many Canadians still feeling the pressure of inflation through the rising costs of goods and services, the use of personal loans for expenses outside of their living wage (e.g. vehicle repair) is an ongoing possibility.

Online personal loans are a reliable option for most people when it comes to borrowing money, but there are a number of pros and cons to be aware of.

Pros

• Fast access to cash. Online lenders typically allow borrowers to get approval and fund disbursement faster than other traditional options. In fact, some online lenders claim you can receive your funds the same day you are approved.
• Less stringent requirements. While brick-and-mortar banks and major lending institutions may require high credit scores to access their lending options, many online lenders do not require high credit scores at all. Some don’t even require a credit history whatsoever.

Cons

• No in-person experience. Sometimes, sitting down with a professional in person can add a level of understanding and empathy to your situation that an online interaction cannot replicate. While online loans may offer telephone services or online chat interactions, meeting a representative in person can be important.
• Need to submit private information online. In an age with cyber crime and online scams, consumers might feel uncomfortable submitting their personal and financial data online—especially if they are not sure what will ultimately be done with it.

Related: Benefits Of Personal Loans

According to our research, based on a sample of 82 popular lenders, Forbes Advisor Canada has found that BMO, Fusion Credit Union, Dejardins, Eastern Loans and easyfinancial are the best five places to get online loans at this time.

While these recommendations come from a scrupulous review of a large number of data points, be sure to review multiple lenders for yourself—your specific circumstances may warrant choosing a lender that is not on our list.

Getting an online personal loan is relatively simple. Once you’ve done research on what you think are the best personal loans for your situation, simply begin the online application process. Typically, this involves submitting a number of personal and financial details to the potential lender, including your employment situation, income level, proof of a bank account and other financial and identity information. Once you have submitted this information, you will need to sign any applicable loan documents as well.

After these steps have been completed, and you have been approved for the loan, the lender will ask you how much you would like to borrow—up to your approved limit. The funds will then be transferred to you within a few days and sometimes, on the same day.

At their core, online and traditional loans are quite similar aside from one being offered in a brick-and-mortar branch and the other from your computer. Online loans are ideal for individuals looking for fast approval times and that are comfortable with submitting their personal information online.

In contrast, traditional loans require a bit more time as they usually involve an appointment with a loan specialist. But, if you already have a relationship with a bank or other lending institution, traditional loans give you the chance to leverage that relationship for more competitive rates and fewer fees.

Another point to consider is how online lenders and traditional lenders pull your credit. With online loans, borrowers can prequalify for multiple loans on multiple sites without being subject to hard credit checks on each platform. Conversely, traditional loans offered through banks may not have a prequalification process, resulting in your credit score being lowered, at least temporarily, through hard credit checks.

Individuals looking for a personal loan with a poor credit history are generally still able to get them—with a few caveats to note.

Lenders look at a variety of factors when considering eligibility for their offerings. Even if you have a poor credit score, your employment history and current amount of debt may be healthy enough to offset your negative credit history. Note there are a myriad of lenders out there to choose from, ranging from private peer-to-peer lending to major financial institutions. These institutions have differing eligibility requirements. If you’re not getting approved for a personal loan with one of the Big Six Banks, it might be time to look at smaller or alternative lenders.

Additionally, if you are struggling to get approved on your own, getting the help of a co-signer or co-borrower with a much higher credit score may help you get the loan you’re looking for.

Note that just because you can get a personal loan with a poor credit score, does not mean that it will be worth it: Borrowers approved for personal loans that have a poor credit history may be subject to higher interest rates.