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Personal Loans for Bad Credit in Canada – Get Approved Online

Written by Jessica Steer
Getting a loan with bad credit is easier (and safer) than it ever has been. The emergence of financial technology means that online lenders have become a welcome alternative to traditional brick-and-mortar lenders. Finally, you can skip the frustrating bank appointments and avoid the predatory quick cash loan companies. If you need a loan with bad credit, there's a better way to get approved.
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    What kind of loan can you get with bad credit?

    Since banks only seem to lend money to Canadians who have good credit, what options exist for bad credit situations? Here are the two most common types of loans for bad credit:

    1. Payday loans for bad credit

    You see them online and in many cities and towns across Canada, but payday loans are illegal in some provinces—and for good reason. Payday loans are a short-term quick cash loan that rope you in with the promise of fast cash and easy approval. However, the amount they lend rarely goes over $1,500, and the entire amount must be repaid in as little as two weeks. With such an short repayment period, it's easy to miss to a due date and you'll find late fees and interest charges begin to pile up. This is often the beginning of a debt cycle. 

    Payday lenders also charge very high interest rates. According to the Financial Consumer Agency of Canada, the APR of a payday loan is typically well over 400%!

    One of the best things about getting approved for a loan product with bad credit is the opportunity it gives you to rebuild your credit. Unfortunately, you won't build credit with a payday loan because these types of loans are usually repaid in one lump sum. For this reason, payday lenders do not report positive payment history to the credit bureaus.

    2. Personal loans for bad credit

    If you need to get a loan with bad credit, the smartest option is to get a personal instalment loan from a trusted online lender. Even if you have bad credit, a personal instalment loan from a direct lender is much easier to attain than a traditional bank loan and offers far lower interest rates than a payday lender. 

    Unlike a payday loan which can easily trap you in a cycle of high-interest debt with its short repayment periods and high fees, borrowers can typically get up to 60 months to pay off the balance on a personal loan. 

    A personal loan is also an extremely effective tool for building credit. With a term of up to 60 months, that's plenty of time to space out your payments but also build a positive payment history with the credit bureaus.

    Get approved for a bad credit personal loan from Spring Financial and have up to $35,000 transferred to your bank account within 24 hours.

    Can I get a loan with no credit check and guaranteed approval?

    If you have bad credit, you might think you can get a guaranteed approval by choosing a lender that doesn't check credit. And it is possible to get a loan with no credit check. However, there are a few warning signs to keep in mind if you’re looking for a “sure thing”. Remember, this type of loan always comes at a high cost to the borrower and it's almost never worth it. 

    Their fees or interest rates may be extremely high, or they may request a valuable asset to secure the loan that might put you in a lot of risk. For example, you might be asked to offer your vehicle (market value: $10,000) as collateral for a $1,500 cash loan. You don't need to resort to these high-risk and high-cost lenders.

    As long as you meet sufficient income requirements, a personal loan from a trusted online lender is available to you, even if you have bad credit.

    What’s considered sufficient income for a personal loan? 

    While banks rely heavily on your credit score, some online lenders will look at other factors too, including your employment and income. If you have sufficient income to repay the loan, you'll find it easier to get approved with an online lender. Every lender will have its own requirements. For example, with Spring Financial, a minimum income of $1,200 per month before taxes or deductions (i.e. CPP, EI, etc.) is needed to get approved for its personal loan offering.

    To put your income requirements into perspective, here’s a breakdown:

    Weekly Income:

    At least $285 per week (before deductions)

    Bi-weekly Income:

    At least $570 every two weeks (before deductions)

    Monthly Income:

    At least $1200 per month (before deductions)

    How to get a personal loan with bad credit

    Today, trusted online lenders leverage technology to make loans safer and more accessible to bad credit customers than they ever were before. If you need cash in a hurry but have low credit, here are a few tips to help you get approved today.

    Total time:

    • 3 minutes

    What you’ll need:

    • Government-issued ID
    • Proof of income
    • Smartphone

      1. Find a lender that can help

      Find a lender

      If you’re approaching lenders with a bad credit history, find one that specializes in helping Canadians with low credit (or no credit). Know what the lender’s eligibility criteria is before applying because it varies among financial institutions. Credit unions, for example, can be more stringent about who they lend to versus a lender like Spring Financial, that can work with customers facing all backgrounds and financial situations. 

      2. Show your income

      Show your income

      Since some lenders are willing to look at other factors besides your credit score, be ready to show your income. You may be asked to submit bank statements and/or pay stubs. If you’re coming up short, don’t forget to include whatever government income you're receiving. It usually counts towards your monthly income. You can prove your income by taking photos of any non-sensitive documents with your smartphone and sending them via email.

      3. Add a cosigner


      Adding a cosigner to your application is optional, but if you don't meet the lender's monthly income threshold (including any government income you receive), you may need to consider it. A cosigner is a trusted friend or family member who agrees to share the responsibility of your loan. The cosigner should have a decent income and a good credit score.

      4. Start monitoring your credit

      Credit Meter Icon

      Once you get approved for a bad credit personal loan, it's going to help you raise your credit score as long as you make your payments in full and on time. There's a convenient app that lets you check and monitor your credit score online. Visit Borrowell to download your credit report for free.

      Secured vs. unsecured bad credit loans

      If you can get approved for an unsecured bad credit loan, it means your lender is satisfied that you will be able to repay the loan despite your credit situation. However, if you can't get approved for an unsecured loan, a secured loan (or collateral loan) might be easier to attain. This is when a lender is willing to accept collateral to secure the loan amount. 

      What is collateral?

      Collateral is a valuable asset that gets pledged as security for a loan. In the event that a borrower defaults on their payments, they forfeit that asset. Common types of secured loans are mortgages and auto loans. The collateral that is built into an auto loan agreement is the car itself, whereas the collateral in a mortgage agreement is the property itself. If you default on your payments, your vehicle or house can be repossessed by the lender to be resold.

      Because adding collateral to the deal effectively lowers the lender's risk, secured loans offer a pathway to: 

      • Approval
      • Higher loan amounts
      • Lower interest rates

      As you can see, secured loans have some advantages. However, there is a downside. The risk to the borrower is typically higher with a secured loan because if the borrower can't repay the loan, the lender can take possession of the collateral to recoup what is owed. 

      In the case of a bad credit loan, you might be tempted to offer collateral to get approved more easily (and for a higher amount). However, you should weigh up the risk involved. If something goes wrong and your ability to repay the loan is compromised, you could lose a valuable asset.

      Get approved for a bad credit loan today

      At Spring Financial, we believe that personal loans should be simple, safe, and convenient. Get the financing you need in few clicks.

      • Any credit welcome: Good credit? Bad credit? No Credit? We're here to help all Canadians in every province and territory to access fairly priced financial products.
      • Fast online application: Apply within minutes and get approved in a few hours. Money can be e-tranferred to your bank account on the same day!
      • No appointments required: Spring Financial is completely online and available 24/7. Talk to us by phone or email any time.
      • Borrow up to $35,000: Our loans start at $500 and go all the way up to $35,000.
      • No hidden fees: With Spring, there's no such thing as application fees or maintenance charges.
      • Build credit: Unlike payday and no credit check loans, a personal instalment loan from Spring is a great credit-building tool that can help you rebuild your credit score.
      • Trusted lender: Since 2014, Spring Financial has worked with thousands of happy Canadians. Check out our customer reviews.

      Apply for a bad credit personal loan from Spring Financial today!

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