Personal loan interest rates in Canada span an enormous range — from under 7% at a credit union for an excellent-credit borrower to nearly 47% APR at a subprime lender for someone rebuilding their credit history. Knowing where you fall on the spectrum before you apply helps you set realistic expectations and negotiate from a position of knowledge.
Your interest rate isn't random. It's calculated based on several overlapping factors:
The single biggest factor. Canada uses the Equifax and TransUnion scoring models, with scores ranging from 300 to 900. A score above 760 typically gets the best advertised rates. Below 600, you'll be looking at subprime lenders with significantly higher costs.
Canada's benchmark interest rate, set by the Bank of Canada, influences the cost of lending for all financial institutions. When the policy rate rises (as it did sharply in 2022–2023), personal loan rates rise too. As of early 2025, rates have moderated from their peaks but remain elevated compared to 2021 levels.
Larger loans sometimes attract slightly lower rates because the economics of servicing a big loan work better for the lender. Longer terms usually come with higher rates because the lender is exposed to your credit risk for longer.
Secured loans — backed by collateral like a car or savings account — carry lower rates because the lender has recourse if you default. Unsecured loans are riskier for the lender and priced accordingly.
Where you borrow matters as much as your credit score. Banks, credit unions, and online lenders all have different cost structures, risk appetites, and profit models that result in different rate ranges.
These are general ranges. Your actual rate depends on your credit profile, income, relationship with the bank, and the specific product. Banks often don't publish exact rates and instead provide them after reviewing your application.
Credit unions consistently undercut bank rates, often by 2–5 percentage points. This is because they're not-for-profit cooperatives — profits go back to members, not shareholders. Examples:
Most personal loans in Canada come with a fixed interest rate, meaning your payment never changes over the life of the loan. This predictability is one of the main benefits of a personal loan versus a line of credit.
Variable-rate personal loans exist but are less common. They may start lower than fixed rates but can increase if the Bank of Canada raises its policy rate. For most borrowers, the predictability of a fixed rate is worth any small premium over a variable rate.
Always compare loans using APR (Annual Percentage Rate), not just the interest rate. APR includes the interest rate plus any fees expressed as an annual rate. A loan with a 15% interest rate but a 3% origination fee may have an APR of 17–18% in practice.
In Canada, lenders are required to disclose the APR under provincial consumer protection laws. If a lender won't clearly state the APR in writing before you sign, walk away.
To illustrate why rate shopping matters, here's the total cost of a $15,000 personal loan over 3 years at different rates:
The difference between an 8% bank loan and a 40% subprime loan on $15,000 is nearly $9,000 in extra interest over three years. Rate shopping and credit improvement can have a massive real-world impact on your finances.
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