Featured Partner Offer
1
Smarter Loans
Minimum Credit Score
No Minimum Requirement
APR
9.99% – 47.72%
Loan Amounts
$100- $50,000
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In Canada, installment loans present a viable financial solution for individuals with bad credit, offering a structured way to manage repayments over time.
Typically, potential borrowers with credit scores in the lower spectrum, around 300 to 600, face considerable challenges when seeking a traditional loan approval. Recognizing this gap, a variety of Canadian lenders specialize in installment loans for those with bad credit, providing an option for individuals with less-than-perfect credit histories. These loans are designed with fixed regular payments, allowing for easier budgeting and financial planning.
However, it’s important to use caution with these kinds of loans. It’s essential for borrowers to be aware that the interest rates for bad credit installment loans might be higher, reflecting the increased risk for the lender. The key, however, is to find a trustworthy financial institution that offers a loan with manageable terms, aligning with your ability to repay.
This guide highlights some of the leading options in Canada for installment loans that cater to individuals with adverse credit histories, helping them navigate their financial journey with greater ease and confidence.
Featured Partner Offer
1
Smarter Loans
On smarter.loans’s Website
Minimum Credit Score
No Minimum Requirement
APR
9.99% – 47.72%
Loan Amounts
$100- $50,000
No credit history necessary
9.99% to 46.96%
$500 to $100,000
easyfinancial bridges the gap for many borrowers who may find it difficult to get loans due to a lack of credit history. Same-day funding ensures swift financial relief for urgent needs. While the APR range is on the higher side, easyfinancial offers perks like autopay and loyalty discounts. With a flexible loan term ranging from 9 to 120 months and no prepayment penalties, borrowers have the freedom to pay off their loans at a pace that suits them.
Eligibility: easyfinancial stands out by catering to individuals who don’t have a credit history. Additionally, the co-signer or co-borrower capability offers an extra layer of security and assurance, potentially helping more people get approved.
Loan Uses: With loan amounts between $500 and $100,000, borrowers can cover a variety of needs, from consolidating debts to financing significant life events or emergency expenses.
Turnaround Time: The promise of same-day funding makes easyfinancial a go-to option for those in immediate financial need. The online application streamlines the process, ensuring borrowers don’t have to wait long for their funds.
No credit history necessary
23.00%
$500 to $750
No credit history necessary
23.00%
$500 to $750
Eastern Loans emerges as a clear choice for individuals requiring smaller loan amounts on a short-term basis. With a consistent APR of 23% and no prepayment penalties, it provides transparency and flexibility in the repayment process. The absence of a credit history prerequisite means it’s accessible to a broader spectrum of borrowers. Their four-star TrustPilot rating further attests to a positive customer experience. Coupled with same-day funding, Eastern Loans offers a quick and relatively hassle-free borrowing experience for borrowers with urgent financial needs.
Eligibility: Eastern Loans provides an inclusive borrowing environment, particularly for those without a credit history. Furthermore, the provision for a co-signer or co-borrower amplifies the chances of loan approval.
Loan Uses: The loan amounts ranging from $500 to $750 cater to immediate, short-term financial requirements. Be it for an unexpected bill, a minor repair or a short-term financial gap, Eastern Loans bridges the divide.
Turnaround Time: For borrowers in a rush, Eastern Loans proves to be an ally with their same-day funding. The online application further accelerates the borrowing process, ensuring minimal wait times.
550
19.99% to 39.99%*
$500 to $50,000
Fairstone caters to a broad audience by offering both secured and unsecured loan options to borrowers online and in every province except Nunavut. Its flexible loan terms, coupled with their simple loan application process and over 100 years of lending experience, make it a standout choice. With a credit score requirement of 550, they tend to cater to those who don’t have excellent credit. Its quick turnaround time, especially for unsecured loans, is an attractive feature for borrowers in urgent need of funds. The option to add a co-signer or co-borrower to its loans further enhances accessibility, although its online management for co-signers could be improved.
Learn more: Read our Fairstone Loans Review
Eligibility: Fairstone requires applicants to have a fair to good credit score (minimum credit score of 550), and offers loans in every province and territory except Nunavut.
Loan Uses: With a diverse loan range, Fairstone can cater to a variety of needs, from emergency bills to home improvements, debt consolidation and significant purchases.
Turnaround Time: Fairstone funds unsecured personal loans in as little as 24 hours. However, secured personal loans may take three or more days, varying by location.
Disclaimer:
*Interest rates are subject to change. Actual Annual Percentage Rate (APR) varies based on the province of residence and individual factors like credit details and loan amount. The interest rate on an unsecured personal loan is 31.99% in BC, 31.99% in MB, and 34.99% in QC.
In Ontario, Fairstone Financial Inc. is licensed as mortgage brokerage 10821.
In Nova Scotia, Fairstone Financial Inc. is licensed as mortgage lender #2021-3000028.
No credit history necessary
9.99% to 46.99%
$500 to $35,000
Spring Financial fills a niche for borrowers who may not have an established credit history but require personal loans for diverse needs. Their competitive starting APR makes the lender an attractive option for individuals who qualify for the lower rates. The lack of late payment fees and prepayment penalties ensures borrowers will have a more flexible repayment experience. Coupled with a high rating on TrustPilot, Spring Financial demonstrates a level of customer satisfaction worth noting. Their promise of a one to two business-day turnaround can be appealing for borrowers in urgent need of funds.
Eligibility: Spring Financial makes it accessible for a broad range of applicants by not necessitating an established credit history. This can be particularly beneficial for young adults or newcomers to Canada.
Loan Uses: With loan amounts ranging from $500 to $35,000, Spring Financial caters to multiple needs, whether it’s for a small project, debt consolidation or a significant purchase.
Turnaround Time: One of the strengths of Spring Financial lies in their quick processing, promising a turnaround time of just one to two business days after you fill out an application.
No credit check necessary
22% (with a transaction fee of $0.50)
$500 to $750
No credit check necessary
22% (with a transaction fee of $0.50)
$500 to $750
Captain Cash offers fast, flexible borrowing without the need for a credit check. The lender specializes in small-scale loans with a uniform APR and the ability to accommodate borrowers in up to seven provinces and territories. They also allow for the option of a co-signer or co-borrower and the ability to manage loans via a mobile app. Plus, same-day funding is a significant advantage for individuals in urgent need of funds.
Lender | Forbes Advisor Rating | Minimum Credit Score | APR Range | Loan Amounts |
---|---|---|---|---|
easyfinancial | No credit history necessary | 9.99% to 46.96% | $500 to $100,000 | |
Eastern Loans | No credit history necessary | 23.00% | $500 to $750 | |
Fairstone Financial | 550 | 19.99% to 39.99% | $500 to $50,000 | |
Spring Financial | No credit history necessary | 9.99% to 46.99% | $500 to $35,000 | |
Captain Cash | No credit history necessary | 22% (with a transaction fee of $0.50) | $500 to $750 |
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 10 best lenders based on the weighting assigned to each category:
Within each major category, we also considered several characteristics that would benefit those with bad credit in particular, including awarding an extra five points for lenders offering a low maximum APR, a low minimum credit score, a high maximum loan term and cosigner/borrower capability. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
Installment loans for bad credit are financial solutions tailored to individuals whose credit histories are not in the ideal range, typically falling below 600.
These loans offer a structured repayment plan, making them a practical option for borrowers who might struggle to secure traditional financing due to a low credit score or an insufficient credit history.
Given the heightened risk associated with lending to individuals with poor credit, these loans often carry higher interest rates, have more modest loan amounts and feature shorter repayment periods compared to standard loans.
Canadian lenders who specialize in bad credit installment loans usually offer more flexible qualification criteria. They might consider alternative credit data or other aspects of a borrower’s financial profile, such as income stability and debt-to-income ratio. Some lenders allow applications with a co-signer, which can help secure better terms. Additionally, secured installment loans, which require collateral, are often available with more lenient credit requirements due to the reduced risk they pose to lenders. These diverse lending options aim to bridge the gap for individuals who might otherwise struggle to access necessary funds due to their credit situation.
The process begins with an application, where you provide relevant financial information. After submitting your application, you enter a phase of assessment and verification, where the lender evaluates your creditworthiness.
Upon approval, the loan amount is directly deposited into your bank account as a single lump sum. From there, interest begins accruing right away. Borrowers are required to make regular, usually monthly, payments over the course of the loan term. This term can vary, often ranging from one to several years, depending on the lender’s policy and the loan agreement.
Installment loans for bad credit bring a multitude of advantages for individuals working towards financial stability and credit improvement. Key benefits include:
If your credit score falls into the lower ranges, typically below 650, and you need a loan and/or are looking to improve your credit history, you might consider an installment loan. These loans offer a structured repayment plan that can assist in budgeting and financial planning, so having a consistent income and budget is key. Regular, timely payments on an installment loan can contribute positively to rebuilding your credit score over time.
That said, it’s crucial to ensure that your monthly income can cover the loan repayments, which will include both the principal and interest. This is where tools like online loan calculators that can help you estimate your monthly payments.
An installment loan for bad credit can be a tool for consolidating debt, rebuilding your credit and funding whatever you need the loan for, as long as you are able to make your payments on time.
With a variety of lenders in the Canadian market, here’s how you can make an informed decision about which loan to take choose:
Remember, the best loan is not just about immediate financial relief but also about improving your financial situation in the long run.
Securing an installment loan with bad credit, while challenging, is not impossible. Here’s how to go about the process:
* Regarding the impact on your credit score, installment loans are reported to Canadian credit bureaus. Regular, timely payments can positively influence your credit history, which is significant considering that payment history is a major factor in credit scoring models. Conversely, missed or late payments can harm your credit score. Alongside payment history, having an installment loan diversifies your credit mix, which can also positively affect your credit score over time.
Related: 5 Personal Loan Requirements To Know Before Applying
Bad credit installment loans can have a significant impact on your credit score, offering the opportunity to both access funds and potentially improve your credit score. When you take out this type of loan and make consistent, on-time payments, you positively impact your credit score. This is because payment history is a crucial component of your credit score, heavily influencing its calculation.
Regular payments on an installment loan are reported to major Canadian credit bureaus like Equifax and TransUnion. Each timely payment is a positive mark on your credit report, gradually improving your credit score over time. This aspect is particularly important if your credit history has been marred by late payments or defaults in the past.
Moreover, an installment loan diversifies your credit mix. In the world of credit scoring, having a variety of credit types—such as revolving credit (like credit cards) and installment loans— can reflect positively on your creditworthiness. This diversity shows potential lenders that you can manage different types of credit responsibly.
In addition to diversifying your credit mix, an installment loan also helps in building a more robust credit history. Particularly for anybody with a thin credit file, adding an installment loan can extend your credit history, which is another factor credit bureaus consider.
However, missed and late payments or defaulting on an installment loan, can have the opposite effect, significantly hurting your credit score. To mitigate this risk, many lenders offer automated payment options, ensuring that payments are made regularly and on time.
When exploring financial solutions, particularly if you have a poor credit score, it’s wise to consider alternatives to traditional installment loans. Two noteworthy options are credit union alternative loans, which are similar to Payday Alternative Loans (PALs), and Crowdfunding.
All of these alternatives provide unique advantages over traditional bad credit installment loans. Credit Union Alternative Loans offer a more affordable and structured borrowing method, while peer-to-peer lending presents a more direct, personal and perhaps faster way to raise funds. Each option requires you to carefully consider your circumstances and needs but offers a creative solution to financial challenges, especially for anybody working to improve their credit scores.
Featured Partner Offer
1
Smarter Loans
On smarter.loans’s Website
Minimum Credit Score
No Minimum Requirement
APR
9.99% – 47.72%
Loan Amounts
$100- $50,000
To qualify for an installment loan, you generally need to meet certain criteria, including having a steady source of income, being a Canadian resident and being of legal age in your province or territory. Lenders also review your credit history and score. However, requirements may vary for bad credit installment loans. Some lenders might require additional documentation, such as proof of income or employment and a valid bank account.
An installment loan can both positively and negatively affect your credit score. If you make timely payments, it can help improve your score by building a positive payment history. However, missed or late payments can negatively impact your score. Additionally, the initial credit check performed by lenders can cause a temporary small dip in your score. Managing your loan responsibly is key to ensuring it has a positive effect on your credit.
Yes, it is possible to obtain an installment loan, even with bad credit. Some lenders specialize in providing loans to individuals with lower credit scores. However, these loans may come with higher interest rates and more stringent terms to offset the risk to the lender. It’s important to shop around and compare offers from various lenders to find the most favorable terms for your situation.
Installment loans can be used for a variety of purposes. Common uses include consolidating debt, paying for unexpected expenses like medical bills or car repairs, financing large purchases or covering educational costs. However, it’s important to use these loans responsibly and ensure that you can meet the repayment terms to avoid financial strain.
The approval time for an installment loan in Canada can vary depending on the lender and your individual circumstances. Some online lenders offer quick approval and funding, sometimes within the same day or within a few business days. Traditional lenders, like banks, may take longer to process your application. Ensuring you provide all required documentation promptly can help speed up the approval process.
Yes, it is possible to secure a loan with a credit score of 550, although it can be more challenging. Many Canadian lenders typically prefer higher credit scores, but there are institutions that specialize in lending to individuals with lower scores. These lenders often evaluate a broader range of factors beyond just the credit score, such as your income, employment stability and overall financial history. Some may also consider alternative financial data, similar to the services provided by companies like Equifax and TransUnion. However, be prepared for potentially higher interest rates and more stringent terms due to the perceived higher risk.
Kevin Nishmas is an expert financial content writer with a long and successful history of working with Canada's largest financial institutions. His knack (and passion) for transforming complex personal finance information into clear, compelling content has landed him in leading business publications such as Report on Business, Advisor’s Edge, Benefits Canada and Investor's Digest of Canada.