Private Loans – Lending Between Individuals

Private loans in Canada refer to personal loans issued by non-bank, private lenders rather than chartered banks or federally regulated credit unions. These lenders, which include mortgage investment corporations (MICs), private investors, and licensed consumer lending companies, often serve borrowers who do not qualify for conventional financing due to credit challenges, self-employment, recent immigration, or unconventional income sources. Private lending fills an important gap in the Canadian credit market, offering access to capital for borrowers the traditional system underserves.

Private personal loans in Canada typically range from $1,000 to $50,000 with terms from 3 months to 5 years. Because private lenders take on more risk by lending to non-traditional borrowers, interest rates are generally higher than bank rates, ranging from 15% to 35% APR for unsecured private loans and somewhat lower for secured products. Private mortgage loans (a subcategory of private lending) are secured by real estate and often carry rates of 8-14% in the current rate environment, with terms typically of 1 year (renewable).

All private lenders in Canada that deal with consumers must be licensed in the provinces where they operate. Consumer credit protection laws vary by province: in Ontario, lenders must be registered under the Mortgage Brokerages, Lenders and Administrators Act (for mortgage products) or the Consumer Protection Act. In British Columbia, lenders are regulated under the Business Practices and Consumer Protection Act. Always verify a private lender's provincial licence before providing personal or financial information.

Beware of unlicensed private lenders and loan scams, which are unfortunately common in the Canadian private lending space. Red flags include requests for upfront fees before the loan is funded, pressure to sign quickly, and rates advertised as extremely low without requiring a credit check. Reputable private lenders in Canada include easyfinancial, Fairstone, and various MICs operating under licensed mortgage brokers. If you are considering a private loan, consulting with a licensed mortgage broker or credit counsellor first is strongly recommended.