$2,500 Installment Loans for Bad Credit | Finder Canada

If you’re in search of $2,500 installment loans for bad credit in Canada, you may wish to consider online brokers or direct lenders. You can apply quickly and easily and use the funds to finance a major purchase or cover emergency expenses.

What is an installment loan?

Installment loans are a type of personal loan offered by online direct lenders. They share these key features:

  • No collateral required. You don’t need to secure your installment loan with an asset.
  • Repaid in installments. Once you receive a lump sum of cash, you’ll be responsible for paying that amount back in the required timeframe. Payments are usually on a monthly fixed schedule.
  • Higher interest rates. Because lenders are taking a bigger risk without any collateral on the line, you’ll pay higher rates – especially if your credit isn’t in great shape.
  • Smaller loan amounts. Borrowers typically qualify for smaller amounts with installment loans compared to conventional personal loans. The maximum amount you could qualify for depends on your income and financial situation.
  • Shorter loan terms. Installment loans are repaid over the course of a few months to a few years.
  • Lenient eligibility criteria. It’s easier to qualify for an installment loan compared to personal loans from traditional lenders. Borrowers with bad credit below 560 can apply.

Do banks and credit unions offer $2,500 installment loans for bad credit?

Banks and credit unions in Canada offer personal loans with loan amounts that typically start at $3,000 to $5,000, and usually only to good or excellent credit borrowers. If there is a bank or credit union you’re interested in, check the minimum credit score requirement and loan amount available before you apply.

You might have more luck if you apply to a local credit union. Servus in Alberta, for example, can offer small loans up to $2,500 to eligible members.

How to get $2,500 installment loans for bad credit in Canada

Online lenders are the primary source of installment loans for bad credit. To help you find the best bad credit installment loan to suit your needs, follow these steps:

  1. Check your credit. Check both your credit report and credit score so you have a good read on how you’ll appear to direct lenders. If you notice inaccuracies, contact your creditor and the credit bureau to report the error and make sure it’s removed.
  2. Compare direct lenders and check eligibility requirements. Focus on lenders with a minimum credit score requirement that’s lower than your score. Compare your shortlist of options using factors like loan amounts, terms, interest rates and fees.
  3. Apply to your top choices and wait for pre-approval on your personal loan. Fill out applications to the lenders that you’ve shortlisted for loans you fit the eligibility criteria for. Pre-qualifying for a $2,500 personal loan gives you an estimate of the APRs you might be eligible for.
  4. Pick a lender and complete the rest of your application. If you’re happy with a loan offer you’ve prequalified for, proceed with the rest of the application process.
  5. Review and sign your final offer. Once your lender verifies your identity and your income, you’ll receive your final loan offer. Read over your loan agreement before signing.

Which direct lenders offer online installment loans?

There are several direct lenders offering online installment loans in Canada. Of course whenever you enter the online lending space, you’ll want to be careful that you’re working with a legitimate lender. To help you out, we’ve curated a list of reputable online installment loan lenders in the table above, which includes some loan broker platforms. Here is a list of those installment loan providers who are direct lenders:

  • Money Mart
  • Spring Financial
  • Mogo
  • SkyCap
  • Fairstone
  • Cash Money (online loans for Alberta residents only)
  • Loan Away
  • Magical Credit

Questions to ask yourself when looking for $2,500 installment loans for bad credit

When you’re searching for a bad credit installment loan in Canada, ask yourself these questions to compare lenders:

What is the APR?

While searching for $2,500 personal loans, you’ll see lenders using the terms “interest rate” and/or “APR,” which stands for annual percentage rate. Zero in on the APR, which will show you the true cost of your loan, because it includes the interest rate plus other fees you need to pay. Sometimes a loan doesn’t have other fees. In this case, the APR is the same as the annual interest rate. Compare personal loan rates in Canada.

How long is the loan term?

You’ll need to figure out how long you want to take your loan out for and find lenders that can accommodate your needs. Ultimately, a longer loan term will make your monthly payments cheaper, but you’ll end up paying far more interest over the life of the $2,500 loan, especially if the interest rate you’ve secured is high because of bad credit. A shorter term will have higher monthly payments but will cost you less.

Do I meet the eligibility criteria?

Online lenders have varying eligibility requirements, so you’ll need to make sure you’re applying for installment loans you fit the criteria for. Check if the lender has a minimum credit score requirement or a minimum monthly income to qualify before proceeding with your application. Keep in mind, some lenders won’t have these eligibility requirements and will judge applications on a case-by-case basis.

Are there other fees?

Consider any extra fees like origination fees (fee to process your loan), late payment fees, prepayment fees and any other charges. Late payment fees are more common than prepayment fees and origination fees.

Are repayments flexible?

Look for a lender that offers flexible terms, including refinancing options, early repayment without penalties and the option to rearrange your due date if needed.

How fast can I get the $2,500 personal loan?

Make sure the lender you apply with can get your loan amount to you when you need it. You can typically get a bad credit installment loan within 24 to 48 hours.

How much does a $2,500 loan cost?

The cost of a $2,500 personal loan will vary greatly, depending on the interest rate you secure, how long you may take to repay the loan and if there are any additional fees you need to account for.

Here’s an example of how much the total cost of a $2,500 installment loan may be, with different APRs and loan terms at play.

6 month loan term

12.99%19.99%29.99%Monthly payment$432.59$441.29$453.86Total interest paid$95.57$147.77$223.17Total cost$2,595.57$2,647.77$2,723.17

3 year loan term

12.99%19.99%29.99%Monthly payment$84.22$92.90$106.12Total interest paid$532.02$844.26$1,320.15Total cost$3,032.02$3,344.26$3,820.15

As you can see, you’ll pay less overall if you get the shortest loan term and lowest APR. How long it takes you to repay the loan matters. A $2,500 loan with a loan term of 6 months and a higher APR of 19.99% or 29.99% will cost less than a $2,500 loan with a loan term of 3 years and a lower APR of 12.99%.

Once you have an idea of the APR you’re eligible for, aim for the shortest loan term possible with monthly payments you can still manage.

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What do I need to apply for a $2,500 loan?

You’ll usually need to meet the following criteria to qualify for an installment loan:

  • Be of the age of majority in your province or territory. Depending on where you live, you’ll need to be 18 or 19 years old to apply, with a government ID to verify your age.
  • Be a Canadian citizen or resident. You may have to prove your citizenship or residency with a Canadian passport or other form of identification.
  • Have proof of a steady source of income. You’ll usually need to show pay stubs, bank statements or employment records to prove that you can pay back your loan on time.
  • Have a working bank account. You’ll have to submit your bank account details to organize payment (and ensure repayment of your loan).
  • Submit to a credit check. You’ll usually need to prove that you have a decent credit score to qualify, though there are lenders that provide installment loans specifically for bad credit.

Bottom line

Installment loans are a worthwhile option if you’re looking for a smaller loan to pay one-off expenses. Overall, however, they usually come with higher interest rates, smaller loan amounts and shorter terms than traditional personal loans.

Be sure to compare personal loan lenders and consider your options to find the best fit for you.

Frequently asked questions

  • Online lenders are the main source of installment loans for bad credit, with loan amounts varying from as low as $500 to as high as $15,000.

  • Most lenders will require a credit check if you want to take out a $2,500 personal loan. Lenders who don’t do credit checks will shift their focus on your ability to make the repayments, so make sure you can demonstrate stable, recurring income.

  • Yes, it is possible to get a loan with a 550 credit score. Some installment loan providers have minimum credit score requirements starting at 300. It’s important to watch out for higher interest rates on bed credit loans to ensure you can afford the repayments. Compare bad credit installment loans here.