A personal loan is a sum you borrow all at once, then pay back in regular payments on a schedule set in the contract. You can ask a bank, a credit union or another lender, in person or online. When the answer is no, two questions follow: why, and what are your options now? This guide answers both, step by step.
How a bank assesses a personal loan
A bank or credit union wants to know one thing first: can you pay it back? In Québec, the Office de la protection du consommateur reminds you that the lender is required to evaluate your ability to repay the loan (Consumer Tips: Before You Borrow).
To answer that question, lenders usually look at:
- Your income: how much, where it comes from and how steady it is.
- Your current payments: rent or mortgage, credit cards, other loans. The share of your income they take up is your debt ratio.
- Your credit report: how you’ve repaid credit in the past, and your credit score.
- Your job: what kind of work it is and how long you’ve had it.
- The loan itself: the amount you ask for and how long you’ll take to repay it.
You can get your credit report for free from Canada’s two main credit bureaus. The Financial Consumer Agency of Canada explains how to get your credit report and credit score. Check it before you apply: errors can be corrected.
Documents to prepare
An incomplete request can be refused. Depending on the lender, have these ready:
- photo ID
- proof of income, such as a recent pay stub or a letter from your employer
- if you’re self-employed, your recent tax returns or notices of assessment
- bank statements for the last few months
- a list of your debts and monthly payments
- proof of address
Applying for a personal loan online
Many lenders accept personal loan applications online. The rules don’t change: the lender still reviews your ability to repay, and the terms of your loan should be in a written contract before you sign. Before you fill in a form, make sure the site really belongs to the lender it names. Our guide to choosing a private lender lists the checks to run.
At Money911, bank verification happens online: instant bank verification sends us a read-only copy of your statement. We never see your username or password.
No co-borrower in your circle? Money911 commits to the loan with you.
Online form, then read-only bank verification. You read the lender’s contract before you sign.
Why a request is refused
A refusal almost always has a specific reason. Reasons vary from one lender to the next, but these come up often:
- income that’s too low, too recent or too irregular for the amount requested
- a debt ratio that’s too high: your payments already take a large share of your income
- a thin credit report, or one with late payments, a consumer proposal or a bankruptcy
- a job that’s too recent
- an incomplete application, or details that don’t match
Ask the lender why you were refused. The answer tells you what to fix, and which option to aim for next.
We publish our own reasons for refusal too: bank verification (IBV) not completed, a bank account that’s too recent, incomplete documents, eligibility criteria not met, a debt ratio that’s too high, a returned (NSF) payment or a stop payment, and other reasons judged appropriate.
Your options after a refusal
- Fix what you can. An error on your credit report, a missing document, a debt to pay down: some refusals can be fixed with a little time.
- Rethink the amount. A smaller amount means payments that fit your budget more easily.
- Try another institution. Every bank and credit union sets its own criteria.
- Borrow with a co-borrower. A co-borrower commits to the loan with you, which lowers the lender’s risk.
- Put off the expense, if you can. Borrowing costs money. Sometimes a payment arrangement with the business you owe, or a short wait, costs less.
Be wary of offers that promise a yes before anyone has looked at your file. No serious lender can promise to accept a request it hasn’t reviewed.
When a co-borrower loan makes sense
Has your credit file closed a door before? That is what a co-borrower is for. No co-borrower in your circle? Money911 commits to the loan with you.
A loan with a co-borrower makes sense when:
- you meet the published criteria
- the planned payments fit your budget
- you’ve read the lender’s contract and understand its terms
Avoid taking several small loans at once: the payments can outgrow your budget.
Money911’s criteria
- 18 or older
- Living in Canada
- A stable job
- Pay deposited into a Canadian bank account
- Net income of at least $1,500 a month
- No consumer proposal, debt consolidation or bankruptcy in the last 30 days, and none planned in the next 6 months
Self-employed? Your request is reviewed like an employee’s. Money911 is your co-borrower; a separate lender provides the loan. Every request is reviewed for your ability to repay; a request judged too risky is refused.
To see who does what, read our guide to co-borrowers and joint loans. For the steps, see how a request works. Meet the criteria? Send your request.
Frequently asked questions
What’s the difference between a personal loan and a line of credit?
A personal loan gives you a sum all at once, paid back in regular payments on a set schedule. A line of credit lets you borrow as needed, up to a limit, and interest applies to the amount you use.
Does a bank refusal stop me from borrowing elsewhere?
No. Every lender sets its own criteria. Ask why you were refused and fix what you can before you apply again.
Is Money911 a bank?
No. Money911 is your co-borrower; a separate lender provides the loan. Money911 is not the lender.
How much does a loan cost?
The applicable terms are in the contract the lender sends you. Read it before you sign: no payment or advance is required at signing. A question? Call us.
Can I pay it off early?
Yes. Call us and we will direct you to the lender, who gives you the payment details for your balance.
Ready to send your request?
Money911 commits to the loan with you, with a separate lender. You apply online, in two steps.
Online form, then read-only bank verification. You read the lender’s contract before you sign.
Notice about the co-borrower service
Money911 offers a co-borrower service. The loan is granted by a separate lender. Each request is reviewed for the ability to repay; approval is not guaranteed. The applicable terms are set out in the contract the lender sends.