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Personal Loans in Canada: Rates, Types, and What to Know

Personal loans in Canada come in two main forms: secured and unsecured. Secured loans are backed by collateral — typically a vehicle, GIC, or other asset — and offer lower interest rates, generally 6–10% at major banks. Unsecured personal loans require no collateral but carry higher rates, typically 7–13% at banks and credit unions, and up to 35% or more from alternative online lenders. The interest rate you receive depends primarily on your credit score, income stability, and debt-to-income ratio. A credit score above 740 generally qualifies for the best rates, while scores below 650 may limit you to alternative lenders with significantly higher costs.

Canadian banks, credit unions, and online lenders each serve different segments of the market. The Big Five banks offer competitive rates for existing customers with strong credit profiles, often bundling rate discounts with other products. Credit unions may offer more flexible qualification criteria and personalized service, particularly for members with established relationships. Online lenders like Borrowell, Fairstone, and others fill the gap for borrowers who need faster approval or have less-than-perfect credit, though convenience comes at the cost of higher interest rates.

Typical Personal Loan Rates in Canada (2026)

Before taking a personal loan, compare the total cost of borrowing — not just the interest rate. Federal regulations require all lenders to disclose the Annual Percentage Rate (APR), which includes fees and other charges. Watch for origination fees, early repayment penalties, and mandatory insurance products that inflate the effective cost. A shorter loan term means higher monthly payments but substantially less total interest — a $15,000 loan at 8.5% costs $3,500 in interest over 5 years but only $1,400 over 2 years.