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Unsecured Personal Loans Canada
Unsecured personal loans Canada: Loans that individuals take that do not require an asset to be placed before the loan is given. Unsecured personal loans can be used to take care of financial emergencies. It may be for paying off debt, medical bills, travelling expenses, to start a business, cater for excessive credit card purchases and many more.
With an adult population of around 27 million in Canada, lenders now have a wider scope of people to reach. There are a lot of lending agencies, waiting to give people the loans that they need. Unsecured personal loans Canada is becoming popular.
Unlike auto loans or home equity loans, unsecured personal loans do not have any collateral. You do not have to put up anything in order to get the funds you need. No one wishes to risk their property and many people do not have too many valuable assets to place on the line hence unsecured personal loans are the best option.
Once you qualify, you can get the funds and pay back within a period with interest. Sometimes the interest rate for unsecured personal loans is seen as considerably high.
There is little appraisal needed before you get this type of loan.The effort that will be needed from the borrower will be the monthly payments that are to be made towards the amount borrowed.
If you are able to prove that you will be committed to paying back, you will not have a problem getting an unsecured personal loan in Canada.
Unsecured personal loans Canada can also be in the form of a line of credit. You withdraw the funds as and when you need it and you will be charged only for what you borrowed.
High Risk Of Unsecured Personal Loans Canada: A Myth Or Mystery
Often, unsecured personal loans in Canada are considered as high risk because you do not have collateral attached to it. The truth is lenders in Canada may charge high rates for the period of the loans. But some have also debunked the issue of high interest rates and put forward the argument that taking some time off to do some research will prove to you that there are lenders, willing and ready to give good rates that are not sky high.
If you’re looking for financial assistance and you do not have property, unsecured personal loans Canada is real and available. Any category of borrowers are at liberty to apply for unsecured personal loans in Canada.
There is no discrimination and no mystery about it. Once you’re 18 and above and have a verifiable source of income, you can apply.
Once the money is borrowed, you can have about 6 months to 10 years to pay back with a fixed repayment schedule. But should in case your monthly budget is not able to meet up with payments, you can apply for an extension. Unsecured loans are available to all if you are able to negotiate good terms with lenders.
There is no mystery about it and the whole process of applying for unsecured personal loans is hassle-free with suitable terms and conditions. There are lenders out there ready and willing to give out loans.
Applying For Unsecured Personal Loans
Unsecured personal loans lack collateral hence your credit history, income and debt to income ratio will be assessed before lenders can give to you. If your credit score is low, you may not get high amounts, but even with that when there is good negotiation, you may get it. You must be wary of lenders that charge high interest rates of up to 400%. Carefully consider interest rates and repayment terms before you apply.
Since unsecured personal loans are installment-based it allows you to plan better on how you will handle the debt. You have enough time to plan when you will repay. There is a clear time frame that shows when the debt payment will end. But with credit cards, the revolving credit makes it an endless process of acquiring debt. You can only decide to come out of it when you cancel the card.
Even those with bad credit will find that there are good deals when applying for unsecured personal loans in Canada. But in some cases, if it proves difficult you may have to go through brokers.
These brokers will negotiate the appropriate deals according to the individuals’ situation. Brokers are helpful in that they have associations with several banks and institutions and hence they can find you the appropriate lender.
Your Credit Score Counts When Applying For Unsecured Personal Loans
A lot of financial service providers that give out unsecured personal loans Canada and beyond need your credit score to know if you qualify for a particular loan. Those with higher credit scores are normally given the loans they apply for whilst those with lower credit score may be refused a loan.
A borrower who wants fast approval for an unsecured personal loan will normally be required to add a credit report to their application.
A credit report is a result of your credit history – how have your borrowing and repayment habits been in the past. If your credit history is good it will reflect as a high credit score. When your credit history has not been too good, your credit scores are low.
Sometimes financial institutions deem those with higher credit rating as less risky and have the ability to pay their loans whilst those less credit are seen as likely to default on their loans.
Those without any credit history are sometimes placed on the same grade as those with a bad score because the lender has no idea of your credit habit. If you find yourself without a credit history you can start by going in for some form of credit even if it’s a minimal amount.
Also, if your credit is low you can still apply for the loan but you must bear in mind that your repayment may not be spread over a longer period. Those with good credit rating can have much longer periods of repayments.
With unsecured personal loans Canada gives the repayment period as usually between 24 – 60 months as per the amount borrowed. The interest on the amount is fixed and calculated depending on how long you have to pay the loan.
What Determines The Amount An Individual Can Get With Unsecured Personal Loans
The amount of money that will be given to those who apply for unsecured personal loans depends firstly on the credit score of the person. Those with a higher credit score qualify for higher amounts than those with lower scores.
It also means the interest payable on the loan amount given will be more for those with lower scores than those with a higher credit rating.
Additionally, sometimes, even if two people have good credit scores, what happens is that the one who has had a previous history of handling larger debt will qualify for a larger amount than the one who has handled smaller loans. This is because lenders are sure of their credit behaviour.
How To Get Unsecured Personal Loans Canada
There are different processes that you can use to get unsecured personal loans in Canada. Some include:
Checking Your Credit Score
A good credit score makes you qualify for unsecured personal loans in Canada at a lower interest rate. If you have a score of 720 and higher, your credit is strong but below 630 is considered bad credit. If you’re faced with unfriendly scores, you may need to take some time off to build it before you apply for unsecured loans
Shop Around For The Loan
This can be done by going online or going to your local credit union or even the banks. There are several lending agencies available for you to scout for loans from.
Credit unions can offer you such unsecured personal loans at low interest rates and on flexible terms. Local community banks may also have good rates if you have a relationship with them.
You can also get unsecured personal loans in Canada by comparing your options. Some of these options can be that you qualify for a 0% interest credit card.
If the credit card allows you to purchase at that interest, you will then have enough to pay back by the time its due. In other cases, you may be offered a co-signing option to get unsecured personal loans in Canada if you don’t have good credit to get a loan on your own.
Read The Fine Print.
This simply means giving time and attention to the details of the terms and conditions you will be offered. When seeking to get unsecured personal loans in Canada it may have some specific requirements and conditions that come with applying for such loans because there is no collateral placed on the loan before you get it.
All you need to do is to read over to familiarize yourself with the information given. You can check what your APR is for instance. The APR refers to the Annual Percentage Rate for the loan you are taking. The APR is the total cost of the loan you are borrowing.
Checking whether payments will be reported to the credit bureau is also another area that you should look out for when reading terms and conditions. Credit scores mean everything in the world of lending.
Those who lend unsecured personal loans Canada have flexible payment features that benefit to any borrower. This is because the more flexible the payments, the better it is for you to plan your repayment. It’s, therefore, necessary to check if you are allowed some leeway for late payment of your loan or you can skip a payment when you are hard up.
Reading the fine print for unsecured personal loans Canada also involves checking if direct payments are being made to creditors with the lender you are dealing with.
You should check if the borrowed funds are being sent directly to lenders, to avoid further debt problems.
Wait For Approval.
Waiting for approval comes in after you have submitted documents of identification, provided your bill and proof of income for your unsecured personal loan application. Lenders may run hard credit checks which may affect your credit score but in the end, you will receive your funds accordingly.
Types Of Unsecured Personal Loans
There are several types of unsecured personal loans in Canada. A few will be mentioned in our discussion below.
Credit cards as a type of unsecured personal loan are one of the most common means of finance for individuals. Credit cards are given out to cardholders to enable them to pay for goods and services now and then pay back later in monthly installments.
You draw the amount from the card as and when you need it. The most important thing is not to exceed the limit on the card. Credit cards may have high interest rates but sometimes providers give promotional rates of 0% but it may not last for long.
Credit cards work in such a way that as you pay off the amount you’ve used, you qualify for another credit. There is no clear time where an individual can say they have paid all their credit card debt. You’re only obligated to pay up the minimum monthly payments that are charged.
Signature loans derive its name from the fact that, its only your signature or a promise to pay that is needed to get this loan. To get a signature loan, your credit history must be solid and you must have sufficient income to pay the loan. In some cases, the lender requires a co-signer to sign a promissory note for the loan. The co-signer is only called on when the borrower defaults on his payments.
With signature loans, once the amount is repaid, the account is closed and if you want another loan you would have to re-apply. This differs from revolving credit where there is more credit for you to borrow when you make your required payments.
Signature loans as a type of unsecured personal loan in Canada can have fixed interest rates or the interest rates can vary depending on your credit score and income.
Peer-to-peer loans are another type of unsecured personal loan. It works mainly online and on a platform. It allows people to invest in people. There are a lot of peer – to – peer lending websites now available. These lending websites can be used for personal or business use.
On the site, individuals can put up the reason they want the amount they are looking for and then the amount they need. People will then see the request and contribute towards the loan. In Canada, there are sites like PrivateLender.org that gives out loans for real estate and non-real estate purchases for instance.
The people contributing towards the loan may not necessarily know you. Your identity is kept anonymous. The only requirement will be the ability to pay back the loan as agreed to those who lent it to you. The interest rates are generally low and when you apply you can get a loan between 2 – 14 days.
Student loans as a type of unsecured personal loan are easy to get because there are fewer restrictions on payments and collateral requirements. Student loans have grace periods and subsidies that allow students to pay for their tuition, living expenses and any other cost that comes with education. Student loans from government sources are generally preferred because they have lower interest rates and are subsidized whilst you are in school.
There may be limits on the amounts you can receive from such loans and you may need to look elsewhere if you need more money. Student loans are available in financial aid offices of schools.
After providing your necessary details, you can wait for your approval or offer letter and if you agree you can then append your signature. Once you’re a student, you qualify for student loans regardless of income or credit score and there is no request for collateral before you receive the loan. You pay back the loan in fixed instalments after you have completed your education
If the students’ loan will not be enough to cater to all your needs you can look to private lenders. However, these private lenders will need credit scores and debt to income ratios that will be good enough for you to borrow more.
Uses Of Unsecured Personal Loans
1. To Make An Improvement On Your Home
If you want to make improvements on your home, you can go in for an unsecured personal loan for that purpose because at the end of the day, it will add value to your home. This will be very necessary if in case you want to sell your home or you would want a home equity loan on a home equity line of credit. You can use the money you will get from the equity to pay back the unsecured personal loan after you have gained value on your house.
2. To Solve A Cash Flow Crunch
Sometimes, the budget that we make honestly is not able to cater for the month’s expenses that were projected. Thus there will be a need for a loan of some sort to tide you over. Hard luck if there’s no money coming in from anywhere to support you.
The situation is worse when you are either not ready to put any property on the line nor do you even have any property in the first place to go in for a loan. In such times, its only unsecured personal loans in Canada that you can reach out for to cater for cash flow problems you may encounter. There is no restriction on what the money can be used for.
3. For Business Owners Who Need To Pay For Renovations, Expand Or Move To A New Location.
No business wants to stay small forever when they start. There is always a time for growth and new opportunities. As its well known, businesses are capital intensive and require a lot of different concerted efforts for it to succeed.
Thus, if you’re a business owner, and need money for expansion but don’t have the cash at hand and no collateral an unsecured personal loan can be an option.
Unsecured personal loans Canada may also be available for businesses who want to renovate their premises or expand to new locations. All these are necessary steps that businesses will have to take to move forward in the industry that they are working in.
There is competition on the market for clients, thus businesses who have reached their natural stage of expansion or relocation can opt for unsecured personal loans to enable them to reach their goals. They can have these loans even if they do not have the collateral to go in for secured loans. Due to the fact that unsecured loans personal loans in Canada do not require any collateral, they are fairly easy to obtain by businesses when they need them.
4. Debt Consolidation
Unsecured personal loans can be used to consolidate debt. When you cannot manage multiple credits that you have acquired, it might affect your credit score. An urgent measure to solve this situation is to go in for unsecured personal loans. Such loans are offered with low interest rates than what credit cards will offer.
If the applicants’ credit condition is nowhere near perfect, unsecured personal loans are available to bail out the person from their financial predicament.
For Unsecured Personal Loans in Canada, there are requirements
Here are some of the things you will need in order to get a personal loan.
– A minimum of 18 years old at the time of application
– Proof of identification. This can be a government issued form of identification such as social security card, driver’s license or your passport.
– Address and other bio information such as date of birth will be needed. It gives the lender a fair idea about who they are dealing with.
– Employment history. This is to help lenders know the exact amount you are eligible for and how much debt you can take on and pay back.`
– Pay stub. This serves as evidence to lenders that you have a viable income source or whether you’re getting some funds from alimony for example.
– Checking account. This is needed because it’s the same account to which the loan will be paid into and repayment also scheduled.
Warning Signs Of Bad Unsecured Personal Lenders
Desperation could get you into a difficult situation when you are short of funds. You may then easily be prey for the bad nuts. These are some of the things you should watch out for to differentiate between genuine and fake unsecured personal lenders offering unsecured personal loans in Canada.
1. They’re Not Interested In Your Credit History
Most legitimate unsecured personal loan lenders will ask for your credit score. Lenders who are uninterested in your credit score should be a bother to you because their services may not serve the best of your interests in the long run.
2. There’s A Request For Upfront Application Fees
Lenders who require upfront fees before your loan is processed are not likely to be real. Legitimate lenders will not ask for any payment before you get your loan. Look out for lenders who term these upfront fees as collateral due to your bad credit or any other reason.
3. You’re Pressured To Act
When you’re being pressured to send information on your credit card or bank account information, your red flags should go up immediately because scammers could be at work. Genuine lenders will hardly pressure you to provide such key information because they are aware of the sensitive nature of it. They will get all these details from you in due time as the loan process progresses.
Any lender who claims to demand such information before any paperwork begins is one to watch out for.
4. They Do Not Provide Location Information
If there is hesitation by a lending company or loan broker to tell you their physical location, then there might be something fishy about them. If they give you a box number, you should check it with the appropriate authorities so that you avoid falling into bad hands. You can also verify from the Better Business Bureau website to confirm how genuine they are.
5. So-Called Connections With Financial Institutions
You would have to investigate to find out if the company you are dealing with truly has any connections with some established financial institution. You should verify the company’s name and cross-check to know if it’s true before accepting any loan from them.
Unsecured personal loans are available to avoid cash flow crunches when people are in need of funds to solve their needs. The most important thing is to keep to the repayment plan.
You should not give cause for you to be reported to the credit bureau for non-payment of debts as this can severely damage your credit. Unsecured loans are therefore not a hiding place for those who do not want to pay back their loans on time. Paying unsecured loans back are as important as paying back for taking any other kind of loan.
Unsecured personal loans Canada is a great option for anyone who is cash-strapped and needs a fix. You should weigh your options before deciding on which unsecured loan will be good for you depending on your financial situation.
Disclaimer: All loans offered through this website are subject to credit and underwriting approval. AfterLoans.ca 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.