Last updated: March 2025 — Installment loans are fixed-term loans repaid in regular installments (usually monthly or bi-weekly). Unlike payday loans, installment loans give borrowers more time to repay, making them a significantly more manageable option for Canadians who need credit but can't qualify at banks.
What Is an Installment Loan?
An installment loan is any loan repaid over multiple scheduled payments — this includes personal loans, auto loans, mortgages, and student loans. In common usage, "installment loan" in the Canadian context typically refers to consumer installment loans from alternative lenders like Fairstone, Spring Financial, or easyfinancial — lenders who serve borrowers with fair or poor credit at higher interest rates than banks.
The key differentiator from payday loans is time: installment loans give you months or years to repay, while payday loans demand full repayment on your next payday.
Top Installment Loan Lenders in Canada 2025
| Lender | Rate Range (APR) | Loan Amount | Term | Min Credit Score |
|---|---|---|---|---|
| Mogo | 9.90% – 29.99% | $1,000 – $35,000 | 2–5 yrs | 620+ |
| Spring Financial | 14.99% – 46.96% | $500 – $35,000 | 9–60 mo | 550+ |
| Fairstone | 19.99% – 39.99% | $500 – $50,000 | 6–120 mo | 560+ |
| easyfinancial | 9.99% – 46.96% | $500 – $100,000 | 9–120 mo | No minimum (secured) |
| LoanConnect | 6.99% – 46.96% | $500 – $50,000 | 3–120 mo | 300+ (marketplace) |
| Loans Canada | 2.99% – 46.96% | $300 – $50,000 | 3–60 mo | Any (marketplace) |
Mogo — Best for Mid-Range Credit
Mogo is one of Canada's largest digital lenders, offering personal loans at rates from 9.90% to 29.99% APR. Mogo stands out for its soft credit check pre-qualification (no impact to your score) and its MogoCard, a prepaid Visa card with free credit score monitoring. Mogo is ideal for borrowers with credit scores of 620–700 who don't qualify at major banks.
- Best for: Mid-range credit, fast approval, credit monitoring
- Rates: 9.90% – 29.99% APR
- Amount: $1,000 – $35,000
- Term: 2–5 years
- Origination fee: None stated; check actual offer
Spring Financial — Best for Credit Building
Spring Financial focuses specifically on credit rebuilding for Canadians with poor credit history. Their The Foundation loan program is a small installment loan ($1,500 over 12 months) specifically designed to build a positive payment history on your credit report. After completing the program, borrowers typically qualify for larger loans at better rates.
- Best for: Bad credit, credit rebuilding
- Rates: 14.99% – 46.96% APR (lower rates for secured loans)
- Amount: $500 – $35,000
- Term: 9–60 months
Fairstone — Best for In-Person Service
Fairstone has over 240 branches across Canada, making it one of the most accessible alternative lenders with physical locations. Fairstone offers both unsecured (19.99%–39.99%) and secured loans (19.99%–26.99%) where your home equity can be used as collateral for a lower rate and higher amount (up to $50,000).
- Best for: In-person service, secured loans, homeowners
- Unsecured rates: 19.99% – 39.99% APR
- Secured rates: 19.99% – 26.99% APR
- Amount: $500 – $50,000
- Term: 6 months – 10 years
easyfinancial — Best for Very Poor Credit
easyfinancial (a subsidiary of goeasy Ltd.) serves Canadians with very poor credit or no credit history. Their loans range from $500 to $100,000 and they offer secured and unsecured options. For secured loans, vehicles or home equity are used as collateral. Their rates range widely — secured loans start as low as 9.99% while unsecured can reach 46.96%.
Pros and Cons of Installment Loans
Pros
- Predictable fixed monthly payments — easy to budget
- Much lower APR than payday loans
- Building credit history with regular payments (lenders report to bureaus)
- Access for Canadians who don't qualify at banks
- Soft credit check pre-qualification available at most lenders
- Flexible loan amounts ($500–$100,000)
Cons
- Rates can be very high (up to 46.96%) for poor credit borrowers
- Total interest paid can rival or exceed the principal on long-term high-rate loans
- Some lenders push mandatory insurance products that add significant cost
- Prepayment penalties at some lenders
- Risk of defaulting and credit score damage if payments become unmanageable
Secured vs Unsecured Installment Loans
A secured installment loan uses an asset as collateral — typically a vehicle or home equity. This significantly reduces the lender's risk, enabling much lower rates (9.99%–26.99%) compared to unsecured loans. The risk is that you can lose your collateral if you default. An unsecured installment loan requires no collateral but carries higher rates (19.99%–46.96% for alternative lenders).
How Installment Loans Affect Your Credit Score
Installment loans, when repaid on time, are excellent credit builders because they demonstrate:
- Payment history (35% of your credit score) — the most important factor
- Credit mix (10% of score) — having different types of credit is beneficial
- Length of credit history — older accounts help your score
Missing payments damages your score significantly. Set up automatic payments whenever possible.
Installment Loans vs Lines of Credit
An installment loan is best when you need a specific amount for a defined purpose and want a clear end date. A line of credit is better for ongoing or variable needs — you draw what you need and repay, then borrow again. See our Line of Credit Canada guide for a full comparison.
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Can I get an installment loan with no credit check in Canada?
Some lenders advertise "no credit check" but this usually means they use alternative data rather than checking Equifax/TransUnion. Legitimate lenders do check creditworthiness in some form. Be extremely cautious of any lender claiming no verification of any kind — these are often predatory.
What's the difference between an installment loan and a payday loan?
An installment loan is repaid over multiple scheduled payments (months to years), while a payday loan demands full repayment on your next payday (2 weeks). Installment loans have dramatically lower APRs (14%–47% vs 391%+) and are far less likely to trap borrowers in a debt cycle.
Can I pay off an installment loan early?
Check your loan agreement. Many installment lenders allow early repayment with no penalty. Some charge 2–3 months' interest for early payoff. If you have savings, paying off a high-rate installment loan early is almost always a great financial decision.
See also: Personal Loans Canada | Personal Loans Bad Credit | Debt Consolidation