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A Guide to Personal Loan Interest Rates in Canada

Written by Stephen Hoenig
Reviewed by Tyler Thielmann
In Canada, many different factors contribute to the interest rate you get approved for on a personal loan. Some of these factors are based on the lender's limitations, while others are based on your financial situation and credit history.
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    Personal loans, also referred to as unsecured loans, are one of the most difficult forms of credit to get approved for, but they are also some of the more powerful on your credit history. It often doesn’t matter what size of the personal loan that you’re approved for or who the lender is; all that matters is that you make the payments on time and pay off the loan. 

    Where to Get a Personal Loan in Canada

    In Canada, there are plenty of different lenders that offer unsecured personal loans as wall as secured personal loans. While traditionally, we think of banks and traditional financial institutions for personal loans, there are actually online lenders and private lenders that deal strictly with personal loans.

    That doesn’t mean you still can’t get personal loans from banks, though. You’ll often find that banks are a bit stricter than private lenders and don’t offer as much flexibility, depending on your reasoning for getting the loan. The interest rates will also vary. 

    Banks vs. Private Lenders

    Before you decide whether you’re going to apply for a personal loan with a bank or an alternative lender, it’s important to consider what the differences are and how those will affect you. When it comes to personal loans, both of these different lender types have their own requirements and interest rates. Your current and previous financial and credit situations factor into those as well. Let’s take a look at how they differ. 


    If you’re looking into getting a personal loan from your bank, the chances are higher that you’ll get a lower interest rate. That is, as long as you get approved. It can be much more difficult to get approved for a loan with a traditional financial institution. This is because banks have a higher credit score requirement, especially if you don’t have a relationship with them.

    If you have a relationship with your financial institution, they may be more lenient with the minimum credit score requirement since you’ve proven you’re able to make your payments on time. You might also be more likely to get approved if you are looking for a debt consolidation loan since you’ll be reducing your monthly payments.

    If you have a limited credit history, a high debt-to-income ratio, and a high credit card balance, the banks will have a more difficult time approving you for a loan since they have nothing to tell them that you’ll make your personal loan payments on time. This is where your credit history and payment history factor in just as much as your credit score. 

    Private Lenders

    Private lenders tend to be more lenient when it comes to personal loan approvals. This is because these types of personal loan providers are meant for lending to all credit types, including those with bad credit. This allows them to offer different loan amounts and have a wider range of interest rates. This means that depending on your credit score, you could end up paying more interest. 

    It’s important to keep in mind that you don’t have to have bad credit to use these lenders. You can get approval with a good credit score with competitive interest rates. They don’t have as many restrictions as traditional lenders, so that you can receive your money sometimes as fast as the same day. They usually open loans as well, meaning that you can pay the balance in full at any time, penalty-free. 

    Current Personal Loan Rates in Canada

    As mentioned, the interest rate is based on different factors. The lender determines some of these factors, while the borrower determines others with their personal factors. One of the main factors that affects the interest rate is Canada’s Prime Rate. 

    What exactly is Canada’s Prime Rate? Well, this is the annual percentage rate that The Bank of Canada uses to set interest rates for things like personal loans, mortgages, variable-rate loans and variable-rate mortgages. As of December 21, 2023, Canada’s prime lending rate sits at 7.2%.

    Seeing that the primary lending rate is 7.2%, lenders will have to set interest rates higher than this in order to make a profit. With a good credit rating and a good credit mix without having multiple debts, the average personal loan rate is anywhere between 9.75% and 11%. Those with lower credit scores or who are newer to credit can see rates ranging anywhere from 11% to 46.96%.

    6% Interest Rate in Canada

    In Canada, 6% interest on a loan is considered to be a reasonable rate. That said, whether or not you can get that rate depends on your current credit score and Canada’s prime rate. With the current prime rate sitting at 7.2%, very few people have such a low percentage rate on their loans unless they received that rate before the prime rate increased. 

    12% Interest Rate in Canada

    Whether or not 12% interest is considered good or not depends on the current prime rate in Canada. When the prime rate was around 3%, 12% would be considered an alright interest rate. While it wasn’t the highest rate you could get, you could definitely go lower. 

    Because prime is at 7.2%, 12% is actually considered a relatively good interest rate. This is a rate that many banks and financial institutions are giving to those who have good to excellent credit. While in the past this may not have been the case, currently, this is a pretty good rate for Canadians looking for a personal loan. 

    Interest Rates at Major Banks in Canada

    Banks and credit unions in Canada are known for offering competitive interest rates. This is why interest rates on lending products vary depending on the lender as well as the prime lending rate. Let’s take a look at some of the different rates available based on the financial institution. 

    Royal Bank of Canada

    If you’re looking into getting a personal loan with RBC, unfortunately, they don’t disclose what their interest rates are online. In order to determine what their rates are and what you could get approved for, you’d need to apply online. That said, they only tend to lend to those with good credit or higher. Those with low credit scores tend not to get approved. 

    While RBC doesn’t disclose their loan amount or rates, there are some things that they do advertise about their loans. 

    • Amortization periods ranging from 1 to 5 years
    • Skip payment options
    • No penalties for early repayment
    • Payment frequency options include monthly payments, semi-monthly payments, bi-weekly payments, and weekly payments.
    • A choice between fixed and variable interest rates

    You can even choose to have the loan payments taken directly from your bank account. In order to do this, you just have to make sure that it’s specified in the loan details.  


    Just like RBC, Scotiabank doesn’t advertise what their interest rates are on their website. That said, they do advertise that they offer both variable and fixed interest rates. You can even choose your amortization period up to 5 years. You can also pay off the loan early with no penalties. 

    With a Scotiabank personal loan, you can choose your payment schedule. This means that you can choose between monthly, semi-monthly, bi-weekly or weekly payments. They don’t have to be monthly payments. You can even postpone up to 1 payment for each year that you have the loan, and you can manage your loan only. This includes making any extra payments whenever you like. 

    Bank of Montreal

    Even though BMO doesn’t give you an interest rate online, they do give you other specifics relating to their personal loans. They also have a personal loan calculator that gives you a rough estimate of what your monthly payments could be based on the loan amount and interest rate. 

    Some aspects to consider when looking into a BMO personal loan are that they offer:

    • Fixed and variable interest rates
    • Automatic payments
    • Competitive interest rates
    • Flexible borrowing options
    • No prepayment penalties

    That said, though, their personal loan amounts start at $5,000. This is a pretty high amount. If you’re looking for a lower amount, then you may have to go with a different lender or a line of credit instead. 

    TD Canada Trust

    With TD personal loans, interest rates aren’t advertised either. You’d have to apply online or speak with an advisor to get a better idea of your options. That said, you can get personal loans with TD up to $50,000. You also get an option between fixed and variable interest rates. They even offer flexible payment options. 

    Unlike most personal loans that have amortization periods ranging from 1 to 5 years, TD offers amortization periods ranging from 1 to 7 years. They even offer different loan insurances you can purchase with the loan to ensure your protection in the event you’re unable to make your loan payments. 


    Just like the other large banks in Canada, CIBC interest rates are based on Canada’s prime rate, and no specific rates are mentioned. That said, you’re able to choose the loan term, which can range from 1 to 5 years. You can also borrow money in amounts ranging from $3,000 to $200,000.

    Alternative Lender Rates

    When it comes to borrowing from alternative lenders, the prime rate also comes into play, but there’s a bit more leniency when it comes to the borrower’s credit score. They also offer a wide range of interest rates. Their rates can start as low as the banks, but they can also go as high as 46.96%. 

    Spring Financial Personal Loans

    With Spring Financial, you can get a personal loan ranging from $500 to $35,000, with interest rates starting as low as 9.99%. Unlike the banks, you can apply for the loan online and receive your funds as soon as today. You also have the freedom to pay off your loan in full at any time with no prepayment penalties.

    Best Personal Loan Rates

    In Canada, the best personal loan rate will vary depending on the current prime rate. If you have a good, diverse credit portfolio and an excellent credit score, you could be approved for a personal loan of just over 7.2% currently. However, anything below 11%-12% is considered good right now. 

    If you’re in the market for a personal loan, you may notice that line of credit rates can be a bit lower. There is a catch with this, though. Line of credit interest rates are variable. This means that as the prime rate changes, so does your interest rate. With a personal loan, you have the option of a fixed interest rate and can always refinance at a later date, depending on your lender. Before you make a decision if you want to take the personal loan, remember that you can always compare loan options before you make any decisions. 

    Disadvantages of Bank Personal Loans

    While most people tend to steer towards personal loans from traditional financial institutions, there are some drawbacks. The first one is the strict credit and income requirements, which often require that you have a steady income as well as a minimum income amount. Only some people are able to meet these requirements, and it could result in a higher interest rate or a lower loan amount. 

    Another thing that comes with bank loans is insurance, origination fees and other applicable fees, which will be specified in the loan agreement. Many of these aren’t optional and should be considered in the final total of the loan.

    Plus, depending on the type of personal loan, you may be required to get a secured loan in order to keep your interest rate low. This is common with a car loan or a large sum of money when you have a mortgage. 

    With any kind of personal loan, whether with a bank or not, it’s always a negative when it increases your debt loan. Any increase in debt load can make it more difficult to manage your debt and make your payments on time. At first, they’ll even decrease your credit score.

    This is because a hard credit check for your full credit report will be done through the credit bureaus to assess your eligibility before a personal loan is given. Every lender will do this, so it’s advised not to apply with multiple lenders. 


    In Canada, there are many reasons why people choose to get a personal loan. While this was a lot more difficult in the past, it has become increasingly easier with the addition of online and alternative lenders. These lenders give those who wouldn’t normally get approved for a personal loan the ability to widen their credit history and gain access to the funds they need.

    They also allow those with good credit scores access to the funds they need faster. By avoiding appointments and facilitating a loan for your device, a lot of the wait time is omitted. 

    That said, personal loans can be costly and increase your overall debt load. When considering a personal loan, it’s important to take the interest rate into account, as well as the length of the loan and how it affects your monthly income. It’s important that you make your payments on time to improve your credit history, so you want to be sure you can afford it. No matter where you choose to get a loan, these are things you should consider.

    However, since personal loans are a more structured form of credit, they are preferred by most over lines of credit and credit cards. While the ultimate goal for most Canadians is to be debt-free, sometimes you need to borrow money, so finding a way you can afford to do so for a short period of time is important. 

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