An unsecured loan is a personal loan that has no collateral requirements.
This type of loan does not require you to provide a security deposit or use an asset, such as your car, to secure the loan before you can qualify.
In general, you need a good credit score to access unsecured loans at a bank or from an online lender.
While unsecured loans are also offered to those with bad credit, they come with significantly higher interest rates because the lender assumes a higher risk.
Read on to learn about the best unsecured loans in Canada in 2023.
Best Unsecured Loans in Canada
|Loan Amount||Interest Rate||Loan Term|
|LoanConnect||$500 – $50,000||6.99% to 46.96%||3 – 120 months|
|Loans Canada||$500 – $50,000||1.99% to 46.96%||4 – 6 months|
|Loanz||Up to $15,000||29.9% to 46.96%||12 – 60 months|
LoanConnect is an online platform for comparing loan rates from various lenders.
It offers a variety of unsecured personal loans with low to high-interest rates depending on your credit profile.
You can use loans on this platform to consolidate debt, pay off your credit card, rebuild credit, buy a car, make home improvements, buy a big-ticket item, etc.
After completing the online application, your loan can be pre-approved in as little as 60 seconds, and the cash can be deposited in your bank account within 24 hours.
- Loan amount: $500 to $50,000
- Loan rates: 6.99% to 46.96%
- Loan term: 3 – 120 months
Loans Canada has been helping Canadians compare loan rates and get financing since 2012.
The site features lenders that cater to individuals with good and bad credit scores.
In addition to using LoansCanada for unsecured loans with low-interest rates, you can also get credit-building and bad credit loans via the platform.
To start your loan search, complete an online application, and they will reach out to you with your best options.
- Loan amount: $500 to $50,000
- Loan rates: 1.99% to 46.96%
- Loan term: 4 – 60 months
Loanz is a top option if you want an unsecured personal loan with bad credit and you need instant approval.
The cash you receive can be used for anything, including unexpected emergency expenses, debt consolidation payments, and more.
To qualify for a loan, you will need to submit an online form. If approved, you could receive funds in as little as 15 minutes.
Eligibility requirements include:
- A steady source of income (at least $1,200 per month)
- Not in bankruptcy or collections
- At least 18 years old
Loan amounts range from $1,000 to $15,000, and interest rates are from 29.9% to 46.9%.
What is an Unsecured Loan?
An unsecured loan is a type of personal loan with no collateral.
The lender assesses your application and approves it if you meet their financial requirements, which generally include your credit history, credit score, employment, and income sources.
Unsecured loans can be used to:
- Consolidate high-interest debt
- Pay for emergencies
- Finance a business
- Buy a car
- Pay for a vacation
- Fund home renovations, etc.
Because these loans do not involve providing collateral, the lender looks at your credit score to assess your creditworthiness.
A higher credit score means you can get a lower interest rate. A poor credit score could tank your application, or you may qualify at a much higher interest rate.
Who offers Unsecured Loans in Canada?
You can apply for an unsecured loan at your current bank or credit union. If they do not work out, online lenders and loan comparison sites can help.
There are also direct private lenders for personal loans in Canada.
While you can also get unsecured loans from payday lenders, these can be extremely expensive and are not recommended.
How To Get an Unsecured Loan in Canada
The bank requirements for approval typically include age (at least 18), employment (have a source of steady income), residency (Canadian citizen or permanent resident), and credit history.
You may need to provide the following documents:
- Proof of income such as a paystub or bank statements
- Proof of address, such as a utility bill
- Proof of age, such as a driver’s license
Benefits of Unsecured Loans
Unsecured personal loans offer some advantages:
- No collateral is required
- Online lenders have a simplified process
- You can repay the loan early without prepayment penalties (in most cases)
- Can be used to build credit
- Can be used for almost anything
Downsides of Unsecured Loans
The cons of unsecured personal loans are:
- Qualification requirements are stricter
- Interest rates may be higher than some secured loans
- A lender can still go after your assets if you default on repayments, and non-payment will damage your credit score
Unsecured Loan Payoff Calculator
A secured loan requires the borrower to provide collateral that the lender can seize if you fail to make payments.
You will generally need to provide a government-issued ID, proof of age and residency, and proof of income, e.g. paystubs.
The maximum unsecured loan available through the online lenders on this list is $50,000.
Many Canadian banks give out unsecured loans; however, their application and approval process is more stringent than online and private lenders.
The interest rates on unsecured loans vary based on your financial situation and credit history. A higher credit score can help you qualify for lower rates. The loan rates offered by the featured lenders range from 6.99% to 46.96%. You should also confirm with the lender whether it has origination fees.