Guide to Unsecured Loans in Canada

by admin on March 6, 2014

Borrowers can choose from conventional and high interest rate loans with shorter repayment terms. Financial institutions offer unsecured loans with fixed and adjustable interest rates. The lending criteria vary from one institution to another, but banks are usually interested in your income and credit history. You may need a cosigner if you have a low income or a history of missed or late payments.

Do You Need a Guarantor

The guarantor agrees to pay off the loan in case of default. Cash loans are another type of short-term financing to use in emergencies. While a credit check is not required, borrowers pay a lot in interest charges. Students often apply for loans to pay tuition and board and other school-related expenses. Banks, credit unions, and governmental agencies offer financing to students. The main benefits for students are affordable interest rates and deferred payments while at school (for government assistance). Car financing is offered to customers who seek to purchase a vehicle. The type of loan determines whether you apply with a bank or non-bank lender. It is a good idea to ask the retailer about the invoice price before applying for auto financing.

walletBorrowers benefit from a 30-day payment deferral, up to 100 percent financing, and affordable interest rates. What you need to apply is your recent pay stubs, the vehicle identification number, your ID, and other documents, depending on the financial institution. Check for restrictions, fees, and penalties.

Different factors play a role, including your credit history, personal references, employer and employment history, and others. They offer affordable monthly payments and flexible solutions to creditworthy customers.

The criteria also vary depending on whether you apply for a personal or business unsecured loan. For banks, the main factor that determines the interest rate is your credit score. They are willing to offer lower interest rates if you pledge some valuable item as collateral, but this means that you apply for a secured loan. The loan amount is smaller compared to secured debt, and the term is shorter.

The main benefit of short-term loans is that you pay less in interest charges but the monthly payments are higher. The most important consideration for banks is whether you will be able to pay off the loan. The criteria are different depending on whether you are a salaried employee, work part-time, or are paid commissions. Additional sources of income include inheritance, cash in your savings account, child support payments, and others.

Gifts, retirement plans, employee achievement awards, and health savings accounts are also income sources. Some sources of income are tax-free. You are considered a risky borrower if you have a history of late payments, consumer proposals, and other debt relief schemes.

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