Low Interest Rate Personal Loans for Bad Credit

What are Personal Loans for Bad Credit?

Personal loans for bad credit are small-dollar loans that are meant to help people with bad credit pay for expenses that they may not have the money to cover otherwise. These loans are usually short-term and unsecured, which means you don’t have to put up any collateral to get one. 

Because of their short duration, personal loans are often used for emergency purposes. However, they can also be used to cover bills that are due later on, such as rent or a car payment. While you may be able to get a personal loan without any credit checks, it’s important to note that some lenders will require you to provide a bank statement or other proof of income to prove that you can afford the loan.

What are the Two Most Common Types of Personal Loans for Bad Credit?

In Canada, there are two main types of personal loans for bad credit: payday loans and installment loans.

Payday Loans

A payday loan is a short-term, unsecured loan that’s typically paid back in full once your next paycheck comes in. Because these loans are so short term, they can be very expensive, with Annual Percentage Rates (APRs) that can go as high as 400% to 500%. 

While payday loans can be useful for covering emergencies, they’re often not the best option for long-term financing. Many borrowers end up paying more in interest than they borrowed, and they often have to renew their loans multiple times to make ends meet.

Installment Loans

Installment loans are another type of short-term, unsecured loan that’s often used to cover bills that are due later on. Like payday loans, these loans are short-term, but they have a longer repayment period, typically up to 6 months or more. They’re considered a better option than payday loans because you can spread out the payments over a longer time frame.

Generally speaking, installment loans for bad credit also come with high interest rates, but the rates are way lower than those found with payday loans. So, if you’re looking for a way to pay off your bills, you might want to consider an installment loan instead of a payday loan.

The Dangers of Personal Loans for Bad Credit

When you take out a personal loan for bad credit, you’re essentially borrowing against your future earnings. So, it’s important to borrow only what you can afford to repay and choose a repayment period that won’t cause you too much financial stress.

The risk of getting into a debt cycle is also something that you should be aware of. If you fall behind on your payments, you could end up with a debt that’s much larger than what you originally borrowed. That’s why it’s important to keep track of your monthly payments to avoid incurring any late fees and other penalties. 

Canadian Lenders That Offer Bad Credit Personal Loans With Low Interest Rate

Here are some of the top lenders that offer low interest rate personal loans for bad credit in Canada:

Teka Loans

Vancouver-based Teka Loan is an alternative lending company that offers installment loans with no credit check. Their personal loans for bad credit range between $500 and $1,000. Teka Loan has an APR of 23% and a loan maturity date of up to 90 days.

My Next Pay

Montreal-based My Next Pay is a popular online lending company that offers installment loans for bad credit ranging from $300 to $3,000. They have a loan repayment period of up to 6 months and charge an interest rate of 18%. 

Cash Depot

Cash Depot is another online lender that offers personal loans for bad credit in Canada. They offer installment loans of up to $3,000 and charge an interest rate of 18%. Their loan repayment period can last up to 6 months. 

Conclusion

If you’re looking for a way to cover your bills, you might want to consider an installment loan instead of a payday loan. These loans usually have lower interest rates than payday loans, and they can help you pay off your debts over a longer period of time.