Canada
Loan types compared: which loan fits your situation?
Last reviewed February 2026 · Checked against current provincial lending rules
Payday, bad credit, auto, business, mortgage — the word “loan” covers a lot of very different products. Here's how the main types compare so you start in the right place.
Short-term vs installment
Payday & short-term
- Small amounts, repaid on your next payday
- Fast to arrange, minimal paperwork
- High cost of borrowing — use sparingly
- Fees are capped by each province
Installment loans
- Larger amounts repaid over months or years
- Fixed, predictable monthly payments
- Lower rates than payday for good credit
- Includes auto, business and personal loans
Secured vs unsecured
A secured loan is backed by an asset — a car, a powersports vehicle, or a home in the case of a mortgage. Because the lender can repossess the asset if you default, secured loans usually carry lower rates. Unsecured loans rely on your credit and income alone, so they cost more but put no specific asset on the line.
When credit is a barrier
If your credit is limited or damaged, look at bad credit, no credit check and no credit lenders. These focus on affordability rather than score, but often cost more — so compare carefully and borrow only what you need.