A Canadian installment loan is one of many financial products available for your needs. However, you may have questions you want answered to determine if one is right for you.

As a result, GoDay has provided this article. It should help you understand this loan type and assist you if you’re looking for a reputable lender.

Is An Installment Loan a Payday Loan?

No. An installment loan is completely different than a payday loan.

Payday loans are short-term and repayment usually occurs by your next payday of your two-week pay cycle. They usually involve high interest rates and fees.

Installment loans offer much longer repayment terms. You may have as long as five years to pay back your loan and interest rates are much lower. These loans offer a fixed interest rate and fixed payments throughout the term.

Is It Easy to Apply for an Installment Loan?

That depends on the lender. Traditional lenders often want you to book an appointment, fill out a detailed application form, and provide proof of income. However, that shouldn’t be necessary today.

Online lenders offer a digital experience. You never need to visit an office and their online application form is usually pretty simple. They’ll probably ask you for identifying information such as your name, address, email, Social Insurance Number, and cellphone number. They’ll also want employment and banking information in lieu of proof of income.

Will My Application Impact My Credit?

This depends on the lender too. Some use a hard credit inquiry which does show up on your credit file, even if they don’t approve your Canadian installment loan application. Others use a soft inquiry, which doesn’t impact it.

If you decide to apply elsewhere after trying a company that uses a hard inquiry, it can send up a red flag to other lenders. It may appear that you can’t get credit, even if you’re just shopping around. If a lender does risk lending to you, you’re also less likely to get the best possible terms.

What Criteria Do Lenders Look At?

Every lender has their own formula for determining who they will lend to and who they will refuse. However, most place a very strong emphasis on your credit score and your debt-to-income ratio.

They may also want to see a long employment history with the same employer, banking through the same institution for a long time, and a lengthy time at the same address. Luckily, this isn’t the case for all lenders, because many people don’t meet these strict requirements.

Some may grant you a loan if you have less than pristine credit and manageable debt. They won’t dismiss your application just because you haven’t banked, worked, or lived in the same places for years either.

Instead, they look at overall financial health and viability. As long as you’ve demonstrated stability for the past three months and earn a decent income, chances are you can obtain a Canadian installment loan.

How Much Can I Borrow?

Generally, this will depend on much you earn and how much you owe. Lenders want to see that you manage your money well and you have the means to repay your Canadian installment loan.

A good lender should offer you choices. If you only want to borrow $500, you shouldn’t be forced to apply for more. If you want to borrow $15,000, you shouldn’t be forced to borrow less just because the lender’s maximum loan amount is much lower.

How Quickly Do I Have to Pay Back My Loan?

A good lender should offer you many repayment options. Generally, you should be able to choose a very short term (6 months) if you want to pay your loan off quickly. However, they should also provide options that allow you to repay much more slowly. Five years is a common maximum repayment term.

Many borrowers don’t realize that how frequently they make payments can have a direct effect on how much a loan costs them. If the lender doesn’t offer options such as weekly, bi-weekly (every two weeks), and semi-monthly (twice a month) payment, you should look elsewhere. Paying monthly payments might be the most convenient, but you also pay more interest. You should be able to choose a payment that suits your life and your budget.

A good lender will provide you with an online payment calculator. This allows you to juggle the payment amount and term until you strike the ideal balance.

How Long Does Approval Take?

Brick-and-mortar lenders could take days, or weeks. Online lenders tend to be much more responsive since much of the process is automated.

A good online lender should not leave you dangling. They should let you know if you’ve passed their artificial intelligence assessment in minutes. There’s no excuse for waiting days or weeks.

What Interest Rates Do Lenders Offer?

Once again, this entirely depends on the company and how they assess your creditworthiness. Lenders may offer a wide array of interest rates as well as various responses to your credit application.

Consequently, don’t despair if one lender turns you down or offers you poor terms. Just make sure that they use a soft credit inquiry before you apply  so it does not impact your credit file.

Even if the lender offers you credit, check the fine print. Some lenders hope you’re desperate for cash and won’t delve to deeply into their offer. Regrettably, unlicensed lenders in Canada can charge you up to 60% interest. If they don’t state their interest rate upfront, it’s best to look elsewhere.

Reputable lenders reveal all terms upfront so you can make an informed decision. Check your support options too. Do they offer a toll-free number, email, and website support? What about their reviews?

Do I Have Legal Protections?

Unfortunately, unless you borrow through a licensed lender you have few, if any, legal protections if the company acts improperly.

Licensed lenders are bound by federal and provincial laws and you do have legal recourse should they act improperly.

What Fees Will I Pay?

This is an important point you should consider when applying for a Canadian installment loan. Licensed lenders must restrict how much they charge in interest and fees. Unlicensed lenders don’t have these fee limits.

Some levy an origination fee just for setting up your account. The amount is a percentage of your loan amount. Others charge a prepayment penalty if you want to pay your loan off early or you want to make extra payments.

As mentioned, unlicensed lenders can charge as much as they want. Origination fees can be as high as 8.0%. Late payment fees, NSF charges, and prepayment penalties can also be ridiculously high. Since they’re unlicensed, legislative bodies such as Consumer Affairs can’t help you much either.

Will I Wait Long for Funds Release?

We hate to repeat ourselves, but brick-and-mortar lenders tend to take their time when it comes to releasing your Canada installment loan funds. Even if you’re approved, you could wait days to actually receive your money. That’s not going to hep you much if you need to handle an emergency or you want to grab a good deal.

Luckily, a good online lender is faster. They should release funds within 24 hours, or less. They only time you might need to wait a little longer is if you apply on a holiday or weekend. Lenders need to prepare paperwork for your signature before they can release your funds.

A Canadian Installment Loan Through FlexMoney Way

You’d be hard-pressed to find a better lender than FlexMoney for your Canadian installment loan. Here’s what we offer:

  • 100% online process
  • 100% Canadian company
  • Licensed lender
  • Artificial intelligence assessment
  • Pre-approval using a soft inquiry
  • Multiple payment options & terms between 6 months and 5 years
  • Loans from $500 and $15,000
  • No fees
  • Competitive interest rates
  • Fast decision & funds release
  • Outstanding customer service

We don’t leave you guessing about what we need from you either. Here’s our requirement checklist. You must be:

  • A Canadian citizen
  • At least 20 years old
  • Actively working for the past three months with the same employer
  • Earning at least $2,000 per month, in the past three months (we will consider self-employment and pension income)
  • In possession of a mobile phone and active email address
  • Presently banking with a Canadian financial institution with at least three months of transaction and banking history.

Unfortunately, FlexMoney can’t guarantee 100% approval. We can’t help you if:

  • You are currently enrolled in an active bankruptcy, consumer proposal, or credit counselling program.
  • Your income is based on Employment Insurance, the Disability Tax Credit, and government benefits related to COVID-19.

Other than these restrictions, we invite you to apply. Please provide complete and accurate information.

If you agree with the interest rate and the terms, you can sign your loan documents digitally. Your personal loan money will be in your bank account within 24 hours.

FlexMoney lends throughout Canada. Visit our website for more information or to start the application process now.