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Demystifying Installment Loans Canada
1 Feb 2019

Demystifying Business and Personal Installment Loans Canada

Are you looking to finance that business idea or seeking to consolidate your personal loans? Installment loans Canada could be your way out of debt and into financial freedom.

Installment loans Canada are typically the most common type of loan in Canada. This is because the loans are flexible in terms of payment hence convenient to the borrower. These loans may or may not require collateral depending on the purpose and can be both long-term or short-term depending on the borrower’s needs. For the long term loans, collateral could be the asset to which the money was spent buying. For example, one could borrow money for a mortgage which in return if they are unable to pay the loan, the house will be repossessed. Installment loans could be for personal use or business financing, however, the terms for each vary.

Installment loans for business

An installment loan for a business is typically a purchase in which you take possession of an asset (usually a vehicle, building, or a plant) the funds are then disbursed for the purchase of the asset from your financing firm then you pay back the loan in installment. The number of installments you make is fixed with each having a fixed amount of money to be paid. This is as opposed to other loans where the amount of money you pay on each installment changes. Failure to fulfill the payment according to the terms agreed may lead to repossession of the asset.

Other than purchasing an asset, a business loan could be used for the purpose of consolidating or refinancing debt. Other ways in which the loans could be obtained is by employers allowing employees to purchase specialized equipment over time through the company then record the terms of repayment using installment agreement. The other purpose of a business loan is to finance a startup. All though installment loans are not recommended for this, it is always possible to get one. Here are some of the requirements for the loan if you are looking to finance your startup:

  • You will need to have an impeccable personal credit score.
  • You will need to have a co-signer with a good credit score in case you need additional security
  • You will need to provide a comprehensive business plan
  • And finally, you will need to work with your lender to provide more guarantees on the loan if need be.

Installment loans Canada for personal use

Personal installment loans are taken for different purposes. You may be taking a loan to finance your studies, refinance a loan, consolidate loans or make a purchase for which you do not have enough money. Whatever your reasons for taking an installment loan are you need to be aware of what is entailed when taking the loan. Personal loans are lenient in terms of payment as opposed to business loans, therefore easy to obtain.

Differences between the two

  • For the personal loan, you can get the loan without requiring collateral (unsecured loans). This is however not the case for a business loan which requires security.
  • The application process for a personal loan is easy as the lenders will only look at your credit history and your personal income. A business loan, on the other hand, goes deeper than that. Other than your personal credit history, lenders will consider factors including but not limited to; the profitability of your business, the industry, cash flow and time in business.
  • Personal loans do not have restrictions on usage, however business loans can only be used for the intended purpose i.e. purchasing an asset, financing inventory or even opening a new branch. Therefore, business loans require a clear plan of use.

If you are looking for an installment loan we are a leading financial advisory firm in Canada who are dedicated to helping you get the financial freedom you are looking for. Contact us today and we will help you get the installment loans Canada from the best lenders partnering with us from all over Canada.