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Fact Checked
Update date 24.04.2025
A 1-year personal loan is a short-term borrowing option that lets you access a fixed amount of money and repay it over 12 months through regular monthly, bi-weekly, or weekly payments. Loan amounts typically range from $100 to $50,000, and you can apply for either a secured or unsecured loan depending on your eligibility. Lenders like RBC, TD, and CIBC offer repayment flexibility, including early repayments without penalty and adjustable payment schedules. Approval usually depends on your credit score, income, and debt-to-income ratio. These loans are commonly used for debt consolidation, home projects, or covering large personal expenses.
Requirements and Conditions
Requirements
Proof of identity is required, usually in the form of a government-issued photo ID.
Proof of regular income, such as pay stubs or bank statements, must be provided to show repayment ability.
An active bank account is needed for receiving the loan and setting up automatic payments.
Proof of a permanent address may be requested during the application process.
Some lenders require evidence of stable employment, often with a minimum employment period.
Your debt-to-income ratio may be reviewed to confirm affordability of the loan.
You must be of legal age in your province or territory, which is either 18 or 19 years old.
Canadian residency or citizenship is usually required.
Conditions
The loan amount is determined based on your financial profile and the lender’s criteria.
The interest rate, fixed or variable, defines the cost of borrowing over the one-year term.
The loan term is one year, with a clear repayment schedule.
Monthly payments are set by the lender and must be paid as outlined in the agreement.
Origination fees may apply and are disclosed in the loan terms.
Early repayment may be allowed, but some lenders impose penalties — check the conditions.
Late payments may result in additional fees, which will be specified in the contract.
Prepayment penalties, if any, are outlined in advance and depend on the lender’s policy.
A one-year personal loan gives you a short-term financial option with a set repayment schedule, making it easier to manage debt within a specific timeframe. This type of loan can be helpful if you need to cover urgent expenses or unexpected costs without committing to a long-term plan. The fixed term makes budgeting more straightforward, and the shorter duration may suit those who want to avoid extended financial commitments.
FAQ
How much income do I need to qualify for a 1-year personal loan in Canada?
There’s no fixed minimum income required across all lenders in Canada to qualify for a 1-year personal loan, but many expect you to show stable, regular income. Some may require annual earnings as low as $17,000, while others set thresholds closer to $25,000–$35,000. Lenders also look at your debt-to-income ratio, credit score, and job stability. If your income is lower, you might still qualify for a smaller loan, especially if you apply with a co-signer or choose a lender with more flexible criteria.
What credit score is considered good for getting a personal loan in Canada?
A good credit score for getting a personal loan in Canada typically starts around 650, which is the minimum most mainstream lenders look for. A score of 740 or higher is considered very good and will usually qualify you for better interest rates and higher loan amounts. If your score is above 800, you’re in the excellent range and will likely get the most competitive loan offers. While some online lenders may accept scores as low as 600, borrowers below 650 often face higher rates or may need to provide collateral or a co-signer to qualify.
