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Bad Credit Loans Re-imagined

The term Bad Credit Loans is in everyday use in Canada.  It has become so popular that almost everyone seems to understand what bad credit loans mean.  That is why there are many searches for bad credit loans Canada or loans for bad credit in Canada in Google, for instance, by people looking for a bad credit loan.

However, there are still a good number of people in Canada who are not quite familiar with the term. For the sake of this group, part of the article will be devoted to explaining what bad credit is, how people get bad credit and the impact on people when they get bad credit.

What Really Is Bad Credit?

The term “bad credit loans” is somewhat a misnomer. Banks give credit, that is, lend to people in various forms. It can be a loan or a credit through a credit card. Getting a bad credit then sounds like the credit the person received from the bank is bad.

It sounds like a person is not getting a good deal for a loan or credit received from a lender. A good deal in this sense refers to the benefits derivable from the credit or loan being advanced and the favorable terms associated with the transaction. Looking at it from this perspective, it may sound like bad credit means anything less than a good credit deal.

Bad Credit Loans Despite how the term bad credit loans may sound to a person not familiar with it, as used in everyday language, the real meaning of bad credit loans in everyday use has nothing to do with a bad loan deal or bad credit deal from a lender.

It is not about whether the credit being given to a borrower is good or bad. Rather it is all about the credit history of the person receiving the loan or credit, being bad.

In other words, if your credit history is bad you have bad credit and your only chance of getting a loan will be bad credit loans. These are loans designed for and given to people with bad credit history.

How Do You Get a Bad Credit History?

When a person borrows money from a bank, an alternative financial institution or is given a credit card by a credit card company, the transaction details of the loan and/or the credit card is sent to a central credit reporting agency which keeps the details of the transaction on their system.

Anyone who wants to deal with the borrower or the credit card holder in the future can refer to this information held by the credit reporting agency.
The borrower or the credit card holder continues to make a monthly payment to the lender or the credit card company. The lenders keep an eye on whether the loan repayments or the monthly credit card payments are being made regularly and on time.

An update of how the account is being run is sent to the credit reporting agency. The record is amended accordingly to show the status of the borrower and the loan. The detailed information held will show the personal details of the borrower or the credit card holder, the amount of money borrowed, the monthly payments due, and the balance outstanding on the account.

The information held at the credit reference agency will also indicate whether the borrower is keeping to the repayment plan or not and if not, how many payments have been missed. Any default on the loan or credit card is also noted. This is how credit history is created.

Good or Bad Credit History

A credit history can be bad or good, depending on how well or how bad the borrower keeps to the terms of the agreement of a loan or credit he/she has obtained.

A bad credit history is one that shows missed payments and loan defaults. Missing payments on your installment loans and credit card payments all give you a bad credit history.

On the other hand, it goes without saying that good credit history is one that shows regular payments being made on time and the loan account running responsibly with no missed payments and defaults.

The two main consumer credit reporting agencies in Canada are TransUnion and Equifax. One other agency that is popular in the UK but not so popular in Canada is Experian. Some lenders use both TransUnion and Equifax to report credit.

Some people also use either one or the other. They both do the same thing, that is, keeping the credit history of borrowers and credit card holders. Lenders can then refer to the credit history of a person they are considering to give a loan.

What is The Impact of Bad Credit History on People with Bad Credit?

Anyone with bad credit history will find it difficult to get a loan from a bank. Banks use the payment history of a borrower, that is, their credit history to assess the risk of lending to an individual.

The credit history is the barometer by which the possible future conduct of the borrower is measured. A person with a bad credit history is considered risky by banks and so they are likely to be refused a loan by banks.  However, you can get bad credit loans in Canada with guaranteed approval.

Loans offered by alternative lenders to people with bad credit who can not get a loan from a bank are called bad credit loans or loans with bad credit. Most people only go for bad credit loans when they can’t get a loan from a bank because of their bad credit history.

Therefore, bad credit loans should really be called bad credit history loans. This latter description is a bit of a mouth full, therefore most people shorten it and simply call such loans bad credit loans.  It is, therefore, possible to get loans with bad credit history.  There is a cost to this that will be discussed elsewhere in the article.

Bad Credit Loans as An Option

bad credit loans

It can be devastating if a person needs money badly to cover an emergency but is refused a loan from a bank and no other bank will lend them money because of their poor credit or bad credit history.

This is where such a person may want to consider getting a bad credit loan. If they really need to raise funds, their only option is to go lenders that offer bad credit loans to people with bad credit.

Despite the negative connotation attached to bad credit loans, these loans for people with bad credit can be helpful to people who badly need a loan but can not get one from a bank.

Many people see getting a bad credit loan as a bad thing. What makes it sound bad is the underlying reason that got you into a bad credit situation.

It gives the impression that you have some time in the past fallen on hard times or you have been reckless in managing your funds or you are not living within your means. It is not always the case that getting a bad credit is necessarily your fault. It could be because of circumstances beyond your control.

However, if banks won’t give you any loan d your credit history, getting a bad credit loan can be a life-saver.

Bad Credit Loans Canada

In recent times due to the economic bad turn in Canada, thousands, if not millions of Canadians need bad credit loans. Many of these people lost their main source of income during this period and were not able to keep up with their loan and credit card payments.

As mentioned previously, mainstream banks don’t want to lend to people with bad credit. In response to this, many alternative lenders have been set up to satisfy this demand.

A quick search on Google for bad credit loans Canada shows many of these companies. Most of them are online companies and all it takes to apply for a loan from them is to go online and find them and then apply for the loan online.

Bad Credit Loans Infographic

Bad credit loan lenders are much more lenient. They are more concerned about your ability to pay the loan and not how your past credit history looks like. Very often, all that is required to get a bad credit loan from any of these companies is proof of income and some form of government ID.

How to repair your bad credit history with bad credit loans

Notwithstanding the negativity attached to bad credit loans, getting loans for bad credit can help you to get a better credit history. The way that works is that getting a loan is the beginning of another credit history on your account.

Your credit history will improve if you get a new loan and make all payments regularly. As the credit reference agency updates your account with the improved history of payments, your credit will gradually improve.

Another way a bad credit loan can help a person to repair their credit is by using it for loan consolidation. Where a person has so many debts with many different lenders, they can take a loan from a bad credit loan company to pay off all their loans.

This way, they can pay off their debts and clean up their credit history. They will then have only one payment to make to only one lender. In a lot of cases, the monthly payment of the single loan is lower than the total of the separate debts being paid. Furthermore, there will be only one update to their credit file each month.

Different types of bad credit loans in Canada

There are different types of bad credit loans. There are bad credit personal loans, bad credit auto loans, bad credit mortgage loans, and some payday loans can be considered bad credit loans. 

Therefore if you are considering loans for bad credit you also need to know the purpose for which you are applying for the loan.  This will determine which of the bad credit loans to apply for how much money you will get. 

There are also various types of bad credit loans in terms of how long they are granted for and whether the loan or at least the application is guaranteed to be accepted. Thus, there are bad credit loans with guaranteed approval, bad credit short term loans, bad credit installment loans, bad credit payday loans.

The Cost of Loans For Bad Credit

In life, there is no such thing as nothing for nothing. Loans for bad credit cost a little bit more than loans for people with good credit history.  You will have to pay a small price for the benefit of getting a bad credit loan to deal with your emergency financial needs.

This comes in the form of paying a higher interest rate than you would pay if the loan was from a bank. However, you can reduce your exposure to higher interest rate if you keep the loan only for a short time. Interest on most bad credit loans is calculated on daily basis. Consequently, you can borrow money for an emergency, let’s say for only a month and pay only one month of interest on the loan.

Lenders for bad credit loans charge a higher interest rate to cover some of their risk exposure. Statistically, lending to people with bad credit history is risky. Because of this, bad credit lenders charge a higher interest rate to offset some of the risks.

The logic behind this is that should a borrower defaults on a loan, the higher interest rate charged on every bad credit borrower the company lends to helps the lender to recoup some of the money that they lost through the default on the loan. Basically, everyone in that bad credit situation that borrows from the lender helps to pay for the risk of the lender.

For example, in a group of 3 bad credit borrowers, should one of them default on the loan, which happens so often in this business, the higher interest collected from everyone should help offset the loss on the defaulted loan.

Are Loans For Bad Credit Making Life Harder For Borrowers? 

Loans for bad credit are often the last resort to many people.  Either because they have a bad credit history or they needed money quickly and need to go to an alternative lender. As mentioned previously, lenders charge a higher rate of interest on loans for bad credit to offset money lost through default on loans by people with bad credit but was given a loan anyway.

There have been numerous debates about whether it is fair on those who although have bad credit but make payments regularly on their loans. It is these people who are penalized more than the rest who takes the money and never pay it back.

There is also another school of thought that argues that high-interest rates on loans for bad credit have a self-perpetuating effect on the conduct of the borrower regarding the payment of the loan.

To put it bluntly, how does a high-interest rate encourage a person to pay back a loan? It is rather argued that the high-interest rate will cause more defaults and leave people in a perpetual bad credit position that they may never be able to come out of.

In other words, because the interest rate is high, the monthly loan repayment is also high. If a person is not able to make this monthly installment regularly, this damages their credit further, thus putting them in a never-ending bad credit position.

How Bad Credit Loans Can Be Your Saviour

Bad Credit LoansAll said and done, what do you do if you desperately need cash but can never get a loan from a bank? Bad credit loans can be a savior.

These loans for people with bad credit can them to get out of an emergency financial situation. It can help you to repair your credit and put you back on the road to better credit history.

You must bear in mind that you will have to pay the money back. Borrow only what you can afford to pay back. Because of the risk involved, many of the bad credit lenders will not lend more than $5000.

The usual time for the loan is over 36 months. However, you can pay it back earlier if you want. This will help you to reduce the interest rate you pay on the loan.

Bad Credit Loans with Guaranteed Approval and No Credit Check in Canada

Before one considers applying for loans with bad credit, they should first assess whether a particular lender will give them the loan or not.  Some of these people with bad credit might prefer bad credit loans with no credit check guaranteed approval by the lender.

If you search online, you will see that there are many searches for bad credit loans with guaranteed approval. As mentioned earlier, most bad credit loan lenders are lenient with their lending criteria.

However, they also want people who can pay the loan. So, if you have bad credit but you can prove that you can make the monthly installment, you are guaranteed a loan.

Many potential borrowers with bad credit prefer to search for bad credit loans with no credit check, simply because they feel that if their credit status is discovered through a credit check they will not get a loan.

The thing is, they don’t need to be worried, the bad credit loans lenders are more concerned about getting their money back. Invariably, a credit check is always done although not much emphasis is put on it by lenders. They need to check your identity and to assess if you can pay the loan, not whether you have a credit history.

Bad Credit Loans up to $5000

Because of the risk involved in lending to people with bad credit history, lenders try to reduce their risk by limiting the period of the loan to about 36 months per loan period. They further limit their risk by limiting the amount of loan they give to one person.

The range of loan granted is usually between $5,000 to $10,000. However, many lenders prefer to lend not more than $5000.  Loans for bad credit offered by a great majority of bad credit loan lenders may be one of the following amounts and paid over a fixed number of months:

$500 Loan payable over 36 months

$1,000 Loan payable over 36 months

$1,500 Loan payable over 36 months

$2,000 Loan payable over 36 months

$2,500 Loan payable over 36 months

$3,000 Loan payable over 36 months

$3,500 Loan payable over 36 months

$4,000 Loan payable over 36 months

$4,500 Loan payable over 36 months

$5,000 Loan payable over 36 months

Whatever amount you want to borrow; many bad credit lenders will allow you to pay off the loan earlier than the 36 months. You will save money on interest payments if you pay the loan earlier. Therefore, always aim at paying your loan earlier than waiting for the full 36 months.

Bad Credit Loans

Can I Renew My Bad Credit Loans?

Usually, loans for bad credit are for only a specific period of time.  However, if you find you need more money after paying down the loan for some time, you can renew the loan back up.

This means that if, for example, you borrow $5000 initially but you now have 10 months left to pay off the loan, you can apply to renew your loan back to $5000 and to the original 36 months period and raise more money that way. Just remember that by paying off the loan early, you will save on interest payments.

In summary, the term bad credit loans refer to granting loans to people with bad credit history. Bad credit history is caused by not keeping up with regular payments on your previous loans and credit cards.

If you have bad credit, you may not get a loan from a regular bank.  In this sense loans for bad credit is useful to lenders who don’t have any other option.

Where To Get Bad Credit Loans?

Bad Credit LoansYou can get a bad credit loan from an independent financial institution like Afterloans, albeit at a higher interest rate than regular banks. Ironically, getting a bad credit loan can help you to get good credit in the future. You can use a bad credit loan to consolidate all your debt.

This means you borrow enough money from a bad credit lender to pay off your outstanding debts which are giving you a bad credit history.

You then have a clean slate to start again and make only one payment to one loan company. In our next article, we will discuss in detail how you can repair your bad credit situation by taking bad credit loans.

In the meantime, if you are looking for a loan in Canada you can apply for a bad credit loan from We and our partners will look at your case sympathetically.

At AfterLoans we know life happens and you may have gotten into a bad credit situation due to unfortunate circumstances beyond your control. We also take the view that even if it is your own fault that you got into a bad credit situation, everyone deserves a second chance. We will be willing to look at your application sympathetically. If you can prove that you can pay back the loan, we will give you a loan.

Our bad credit loans are tailored to people like you. Simply click one of the many ‘apply’ now buttons on this website and complete a simple online application. Then, with one click of a mouse send us your application and you could receive your money in your bank account within 24 hours.

Disclaimer: All loans offered through this website are subject to credit and underwriting approval. is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations. You can borrow up to $20000. Loans amortization is between 6-36 months. APRs range from 19.99% to 55%. The actual APR charged will depend on the lender’s assessment of your credit profile. For example, on a $1000 loan borrowed for 12 months at 29.9%, the monthly payment will be $97.24; with a total repayment, including interest, of $1166.88 There is also lender’s optional loan protection policy. In the event of a missed payment an insufficient funds fee of around 45$ may be charged (dependent on the lender). If you default on your loan payment plan the lender may terminate the plan and the remaining balance will become payable immediately. Our lenders employ fair debt collection practices, but will pursue the payment of Outstanding debts to the full extent that Canadian law allows.