Personal loans Canada are either secured or unsecured. There are very minimal requirements for getting one. Here is all you need to know about personal loans.
Financial constraints are a common cause of stress and to some extent, depression. You will not always have enough money for all your financial needs. Some needs will arise at any time regardless of the status of your bank account. In such a case, borrowing a personal loan is an option that you may not afford to ignore. Personal loans in Canada are available to persons residing in Canada. The loans come in different types, terms, and characteristics as well. Both traditional lenders such as banks and other lenders offer these loans.
With personal loans, you borrow a fixed amount of money from a lender of your choosing. The money is then repaid to the lender as per the agreements. You may pay back in regular payments known as installments.
Types of personal loans Canada
There are two types of personal loans. These types are;
- Secured loans- These are loans in which assets are attached on the loan to serve as collateral. An asset such as a car may be attached to assure the lenders that you will pay back the money. The lender may repossess your asset if you fail to pay for the loan.
- Unsecured loan- For this kind of loan, no collateral is required for you to secure the loan. Failure to pay the loan may force the lenders to sue you in the court of law or apply the right of offset.
How the personal loans work
In Canada, for you to get a personal loan, you need to make an application to your chosen lender. The lenders will assess your application to determine your qualifications and the amount of money which you requested. Some lenders will conduct a credit check upon your application. Your credit history may determine your qualification. The lenders also expect you to have:
- An active bank account
- A frequent source of income
- Valid identifications information
Upon review and approval, the money may be given to you in cash, disbursed to your bank account, e-transfer, use of a prepaid card, and send directly in case of debt consolidation.
Loan repayment procedures
The loans are paid as per the agreements with the lender. Some lenders may ask to be taking the payments directly from your bank. This is referred to as pre-authorized debt. Some lenders may allow you to pay off your loan before the time is due without penalizing you. In case of a change of your financial situation, you may negotiate on payment terms. Some lenders may forward your payment details to the credit bureaus.
Advantages of personal loans
Personal loans are associated with the following advantages:
- The fixed rates and terms of the loans allow you to properly manage the debt. This means the loan terms and rates remain constant throughout the due course.
- Personal loans can be used to consolidate other debts with higher interest rates. The practice of debt consolidation saves you from the risk of late repayment of other debts. It also helps you manage your way of paying as you only have to repay one loan other than paying to different lenders.
- Personal loans are a good way to build your credit and increase your credit score. A good credit history and a better credit score go a long way in helping you acquire a huge loan to take care of a bigger project.
Personal loans Canada are very useful for anyone who wants to improve their financial situations. If you are struggling with financial problems and do not know how to go about it, borrowing these loans may be a great step in the right direction for you.