The average credit score in Canada is 650, which is not quite good but isn’t quite bad either. Scores between 625 and 680 are considered “below average,” while scores below 625 are considered “poor” or “bad.”
With bad credit, it can be hard to receive financing, get approved for a credit card, or get a loan.
However, there are some lenders who will loan money to consumers with bad credit.
Below, I’ll show you some of the best bad credit loans in Canada, and explain what to expect when applying for a bad credit loan.
Can You Get A Loan With Bad Credit In Canada?
As an individual with poor credit, getting approved for a loan can seem impossible. My old college roommate was building his credit when we lived together, and he often told me how many issues it caused him. With bad credit, it’s hard to:
- Get a car loan
- Receive financing for education
- Finance tools and tech (computers, phones, etc.)
- Get approved for housing
- … and more
If your credit score isn’t up to par, traditional banks, lenders, and credit card companies won’t have a second thought about turning you down. Simply put – you represent a “risk” to them, and they’re not sure that you can pay the money back.
Thankfully, there are some places that offer bad credit loans in Canada.
Bad Credit Loans in Canada: What To Expect
When the bank turns you away, your only option may be to apply for a bad credit loan. These loans tend to be short-term personal loans that are often secured (backed) by your personal property or income, such as:
- Your vehicle
- Your home
- Your paycheque
- Other assets
With a secured loan, the lender can appropriate your personal property if you fail to make payments on the loan. Bad credit loans also tend to have high-interest rates, so it’s in your best interest (see what I did there?) to pay them off quickly!
I’ll be honest – loans for people with bad credit aren’t the best.
Some bad credit loans are often regarded as predatory due to the harsh late penalties and sky-high interest rates. You’re much better off getting a traditional bank loan or applying for a balance transfer credit card.
With bad credit, though, you may not have a lot of options. Just be aware of what to expect before you apply.
Best Bad Credit Loans Canada (2022)
In a bind and need cash fast? From bad credit personal loans to auto loans for poor credit, below are some of the best bad credit loans in Canada to consider.
- Learn More: Get your free credit score from Mogo
- Best For: Small personal loans
Mogo is a lender based in Vancouver, BC. The platform offers a number of financial products, such as credit cards, mortgages, and personal loans.
Mogo even has a trading platform that allows you to trade stocks in Canada. If you sign up for the Mogo credit card, you’ll also have access to free credit monitoring and the latest credit score reports.
In addition to standard personal loans, Mogo also offers bad credit loans. Of course, to be approved, you’ll need to provide proof that you have a steady source of income.
You may also be required to secure the loan with personal property. To my knowledge, Mogo doesn’t offer much in terms of unsecured bad credit loans.
Thankfully, it’s easy to see if you’re approved without a hard credit check. This is nice because the pre-approval application won’t show up on your credit report.
All you need to do is enter a bit of basic information about yourself on Mogo’s main page. Within three minutes, you’ll find out if you’re pre-approved for a loan or not.
2. Loan Connect
- Learn More: LoanConnect.com
- Best For: Short-term secured loans
Loan Connect is a sort of online “middleman” service that connects consumers with banks and lenders that are willing to lend to them.
Like Mogo, Loan Connect has a quick and easy pre-approval process that you can participate in to see if you’re approved for anything before you waste your time.
Based on your information, Loan Connect will pair you with a choice of lenders, listing the terms so you can compare lenders side-by-side.
Once you’re approved for a loan and sign your documents, Loan Connect will ensure that you receive your money within 24 hours, making it a good choice for those who need cash fast.
- Related Reading: My full review of Loan Connect
3. Loans Canada
- Learn More: LoansCanada.ca
- Best For: Short-term loans, home and auto refinancing, debt payoff
Loans Canada has a platform that’s very similar to Loan Connect. Once you visit the main page, you’ll be able to select the type of loan that you wish to receive.
Loans Canada offers loans for everything from home and auto refinancing to asset financing for small businesses.
Loans Canada also offers debt payoff loans, which will buy your current default loan to prevent any adverse actions, such as repossession.
Application for pre-approval is relatively easy and only takes a few minutes. After entering your information, you’ll be presented with the best rates from bad credit lenders in Canada.
From here, you can compare lenders and rates to find the terms that best fit your needs.
- Learn More: Get Your Free Credit Score From Borrowell
- Best For: Credit monitoring, custom lean offers, auto financing, mortgages
Borrowell is a complete lending service that I recommend to anybody who’s trying to improve their credit score.
As a member, you’ll automatically receive access to 24/7 credit monitoring and be able to see all of your scores, so you can see what’s helping and hurting your score.
Once you’re a member, Borrowell will also pair you with custom loan offers ranging from short-term personal loans to home and auto refinancing.
As your credit score improves, Borrowell will match your score with better rates from new lenders that you’re pre-approved for.
- Learn More: Loanz.com
- Best For: Personal loans
Loanz offers an incredibly simple, easy-to-use interface for Canadians looking for a bad credit loan. As soon as you visit the landing page, you’ll receive a poll asking how much money you need to borrow.
Then, you’ll be guided through a brief questionnaire designed to vet you for pre-approval from bad credit lenders in Canada.
In this way, it’s a lot like Loans Canada or Loan Connect.
Loanz is just a middleman that connects consumers to lenders. As a comparison platform, though, you’re more likely to get a better rate since all of the lenders are competing for the same customers.
6. Spring Financial
- Learn More: SpringFinancial.ca
- Best For: Credit building, personal loans, mortgages
If you’re looking to build a solid financial future for yourself, Spring Financial is a great place to start. The platform offers personal loans to those with both good and bad credit alike.
However, Spring Financial is more than just a bad credit lender. The company offers products that help you improve your finances, build your credit, and increase your eligibility for future personal loans.
Once you sign up with Spring Financial’s “The Foundation” credit building plan and save at least $750 over the course of a year, you’ll automatically be eligible for a $1,500 “Evergreen” loan.
As you pay these small loans off, your score will increase, and you’ll be given access to higher loan amounts.
7. Magical Credit
- Learn More: MagicalCredit.ca
- Best For: Personal loans, bad credit loans
Magical Credit is a loan-sourcing platform that allows consumers to compare rates for bad credit loans.
The platform is nearly identical to Loan Connect, and allows new users to complete a brief questionnaire, allowing them to be paired with the best lenders for their needs.
Magical Credit’s main page has a simple loan repayment calculator that will help you determine your monthly payment based on the amount of the loan that you need.
As you might expect, the interest rates are ridiculously high. However, it’s a good last resort to have if traditional lenders fail you.
Best Bad Credit Auto Loans Canada (2022)
Bad credit personal loans can be a bit difficult to find. However, lenders are generally a bit more lenient when it comes to auto loans.
Cars are a necessity that consumers are more likely to pay off before other non-essential bills they have, which means that auto loans aren’t quite as risky as a personal loan (for lenders, at least).
With that in mind, here are some of the best places to find a bad credit auto loan in Canada.
8. Car Loans Canada
- Learn More: CarLoansCanada.com
- Best For: Auto loans
Car Loans Canada is definitely worth checking out if your personal bank isn’t willing to sign you for a car loan.
Car Loans Canada accepts applications from everybody, regardless of their personal credit score, which makes it a great alternative if you’re looking for an auto loan with bad credit.
Additionally, Car Loans Canada has loans that don’t require you to make any down payment on your car.
More than likely, you’ll get a high interest rate and a high monthly payment. However, it might be your only option until you can improve your credit score and get your loan refinances later down the line.
9. Hello Safe
- Learn More: HelloSafe.ca
- Best For: Comparing personal loans, insurance
Hello Safe doesn’t specialize in auto loans, but the platform can help you compare rates for personal auto loans from lenders.
Additionally, once you purchase your car, Hello Safe can help you compare rates and find the best deal on car insurance.
Auto insurance can often be more expensive for those with bad credit, so having a platform that allows you to compare and contrast everything can be really helpful.
It’s worth browsing through to see if you can find a good deal on an auto loan as well.
10. Car Fast
Car Fast doesn’t require its members to sign up for a service or create an account. All you have to do is select the type of vehicle that you’re trying to receive financing for, complete a brief questionnaire, and wait for Car Fast to pair you with a bad credit auto lender.
The landing page states that the lender accepts all credit, and that “Your job is your credit.” Presumably, this means that you’ll need to show verification of steady employment for at least two or three months to be eligible for a bad credit auto loan.
This is the case with most lenders, though, regardless of your credit score.
Best Secured Personal Loans For Bad Credit
Even if you have bad credit, you can often receive a fair rate on a personal loan if you’re willing to secure the loan with personal property (such as another vehicle or property you own).
If you have assets that you can leverage, then it may be best to search for a secured personal loan for bad credit before you jump into a standard high-interest bad credit loan.
- Learn More: LendingMate.ca
- Best For: Bad credit loans, secured personal loans
Lending Mate isn’t just another broker or loan comparison site; the company is a full-fledged lender that will handle every aspect of your loan, from its approval to its disbursement.
The platform has a four-star rating on TrustPilot, which is a feat for any lender (which often receive bad reviews from unhappy customers).
The only downside of Lending Mate is that the company is currently only lending to residents of Ontario and British Columbia.
12. Refresh Financial
- Learn More: RefreshFinancial.ca
- Best For: Credit-builder loans, secured credit card
Refresh Financial offers a service that’s similar to Spring Financial. Once you sign up, you’ll be able to apply for a secured credit card that will help you build credit.
Additionally, you can also sign up for Refresh Financial’s credit-building service, which will report your monthly payments to all of the credit bureaus.
It’s not the best site to try if you’re looking for a large loan. However, it’s a great place to start building credit so you can take advantage of larger loans in the future.
Alternative To Bad Credit Loans: Find A Cosigner
Bad credit loans can easily leave you upside-down, paying back up to double the amount that you borrowed. You want to try to avoid these high-interest loans whenever possible.
If you decide to apply for a bad credit loan, just keep in mind that the interest rates will be ridiculously high.
If you don’t want to pay extra out of pocket, you’ll want to pay your loan off as quickly as possible.
The better alternative is to find a cosigner with good credit. When a cosigner with good credit partners with you on your loan, you’ll often get approved for loans at interest rates that you otherwise wouldn’t be approved for.
Just keep in mind that your cosigner will be held financially liable in the event that you can’t make your payment.
This could damage their credit score and could seriously hurt their personal reputation. So think carefully about who you ask to cosign your loan and make sure not to disappoint them.
Conclusion – Improve Your Credit For Better Loan Rates
The best way to get out of a rut and access better lines of credit and rates on loans is to improve your credit score. It all starts with checking your credit, though. From here, you’ll be able to make the active changes and start repairing your score.
To start taking charge of your finances, you need the right data. keep reading to see the top-ten best free credit reporting sites in Canada.