Personal borrowing options in Canada compared
How the main types of consumer credit work, who they suit and what to watch for.
This table compares types of credit, not lenders. Approval and pricing depend on your credit history, income, existing debts and whether you offer security, so the same product can be cheap for one borrower and expensive for another. Use it to shortlist the type of credit, then compare actual offers by APR and total cost of borrowing with the personal loan calculator.
Select a column header to sort.
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Unsecured personal loan (bank or credit union) | Fixed amount, fixed or variable rate, equal payments over a set term, usually 1 to 5 years or more | One-off costs with a clear payoff date | Approval depends heavily on credit score and debt ratios; check for deducted fees |
| Secured personal loan | Loan backed by a vehicle, savings or other asset the lender can take on default | Borrowers who can offer security in exchange for a lower rate | You risk losing the asset; security is registered (PPSA, or RDPRM in Quebec) |
| Personal line of credit | Revolving limit; interest only on what you use; rate usually floats with prime | Irregular or uncertain expenses | Interest-only minimums can keep the balance alive for years; rate can rise |
| Home equity line of credit (HELOC) | Revolving credit secured on your home; under OSFI guideline B-20 the revolving part is limited to 65% of home value at federally regulated lenders | Homeowners with equity and discipline | Your home is the security; discharge and setup costs; easy to overborrow |
| Credit card or cash advance | Revolving credit; cash advances usually charged interest from the day taken, often with a fee | Short-term needs repaid within the grace period | Purchase rates are typically far above loan rates; cash advances cost more |
| Retailer or point-of-sale financing | Loan or instalment plan offered at checkout, sometimes with a promotional rate | Planned purchases you can repay inside any 0% period | Deferred interest or fees if not paid in time; check the APR after the promotion |
| Alternative or high-cost instalment lender | Online or storefront lender serving borrowers declined elsewhere; APR can approach the 35% legal limit | A last resort after bank and credit union options | High cost, optional insurance add-ons, provincial licensing rules |
| Payday loan | Up to $1,500 for up to 62 days, repaid from your next pay; federal limit of $14 per $100 borrowed | Very short emergencies only | $14 per $100 over two weeks is an APR of about 365%; repeat borrowing traps |
| Credit-builder or secured credit card | Small credit facility backed by your deposit, used to build a credit history | New arrivals and people rebuilding credit | Fees; it builds history but does not fund large expenses |
All descriptions are general. Rates, fees and terms change and vary by lender; none of the figures above is a quote. Check the APR and total cost of borrowing in the disclosure statement before you sign. The 35% criminal rate and the payday loan rules are in the Criminal Code and the Criminal Interest Rate Regulations on the Justice Laws Website. Bank disclosure rules are overseen by the Financial Consumer Agency of Canada; provincially regulated lenders by your provincial consumer protection office, such as Consumer Protection Ontario or Quebec's Office de la protection du consommateur.