For majority of Canadians, personal loans offer an ideal platform to access necessary financial assistance for meeting unexpected expenditure, carry out renovations, buying assets and for investment purposes. For many people, though, the process of applying for a personal loan is riddled with challenges such as unending paperwork and agonizing meetings with the lender. Thankfully, technology has made loan application process easier. Below are the steps to getting a personal loan approved within the Canadian territories.
To find the best options for personal loan providers in Canada, visit Smarter Loans, Canada’s Loan Directory.
Secured vs. Unsecured Personal Loans
Personal loans are clustered into secured and unsecured loans depending on whether a borrower is required to deposit a collateral when borrowing or not. Secured loans are backed by documented assets such as vehicles, land, equipment and such. Lenders consider secured loans less risky thus levy a lower percentage of interest rate.
For unsecured personal loans, the borrower only needs to append their signature to be considered for the loan. As unsecured loans don’t have collateral backing, the borrower is likely to get a lower amount of loan and also incur higher interest rates.
Instalment loans have also gained a lot of popularity over the past few years as they offer an alternative for many people that in the past resorted to payday loans.
Approved vs. Pre-approved Personal Loans
With pre-approved personal loans, your lender uses your credit score and credit history to determine the amount that you qualify for. While a pre-approval means you have met most of the requirements, it’s not a guarantee that your banker will approve the loan facility.
Once you have received a pre-approval offer, the lender will thoroughly review your application and personal details. Depending on the outcome of the review, the lender can either decide to advance the cash or deny you the loan.
Choosing the Best Lender
There’s already a long roster of lender clamoring to sell their personal loan packages to you. These packages differ in terms of amount loan that you can get, the interest charged and the flexibility when it comes to repaying the loan.
Do some thorough research beforehand so that you choose a lender that you can collaborate with in the long term. Smarter Loans offers a way to compare lenders in Canada, including their terms, interest rates, reviews and more. Some popular lenders to check out at Smarter Loans are Cash Money and Mogo.
Tips to Qualify for a Personal Loan
Don’t just commit to the first lender you come across. Take your time to meet different loan officers and ask questions about the features of the loans on offer. That way, you’ll only sign to a loan that fits your situation.
Your credit score matters
Whether you are applying for a secured loan or the unsecured one, the lender will base the decision on your credit history. Don’t let a credit score a less than perfect credit score ruin your chances of getting your loan approved. Work out ways to repay a percentage of the loans you already have and check for errors in your credit report.
Apply for loans that you can repay
Most of your lenders will leave some of record of the loans you take with them. These records will be used by other lenders to gauge how responsible you are with finances. Too many loans can negatively impact on your chances of having your loan approved as lenders view you as a high-risk customer.
These days, thanks to sophisticate technology, you can apply for online loans for either personal or business purpose from the comfort of your home!
Inform your lenders if you change your Job
A change in your job or financial situation may affect your chances of qualifying for a personal loan. If you change jobs or your income deteriorates, inform your lenders about the changes to safeguard your chances of an approval.
Before you start the process of applying for a personal loan, it’s helpful to understand how best you can get approved on your first application. Some research will translate to better rates, flexible repayment duration,and some advice from your loan officer.