Installment loans have been around for a long time. However, you could be doing yourself a disservice if you believe you know all there is to know about them. These loans have changed over the years, as have lenders, requirements, and legislation.

Test your knowledge by taking this short quiz. Simply answer “yes”, “no”, or “possibly” and check your answers with those at the end of this article.

Once you’re done, you may discover installment loans can be a very versatile financial product, providing you choose the right lender and product.

Questions About Installment Loans

Question 1:       Do I need to visit an office or branch to apply?

Question 2:       Does the application process take a long time?

Question 3:       Will I need to provide proof of income?

Question 4:       Can my application affect my credit score?

Question 5:       Can I apply through more than one lender?

Question 6:       Will I need to meet a minimum credit score?

Question 7:       Do I need to earn a lot of money to qualify?

Question 8:       Will lenders consider self-employed income?

Question 9:       Will lenders consider pension income?

Question 10:     Will the lender decide quickly?

Question 11:     Will the lender reveal all costs?

Question 12:     Do I have legal protections?

Question 13:     Does it matter if the lender is Canadian?

Question 14:     Will I need to visit an office to sign loan documents?

Question 15:     Will I pay fees or penalties?

Question 16:     Does my interest rate change during the loan?

Question 17:     Are my payments fixed?

Question 18:     Can I make extra payments?

Question 19:     Can I pay my loan off early?

Question 20:     Can I choose my payment frequency?

Question 21:     Can I choose how long I want to take to repay?

Question 22:     Is there a limit on how much I can borrow?

Question 23:     Will it take a long time to get my money?

Question 24:     Can I qualify if I’ve changed jobs, moved, or switched banks?

Question 25:     Do all lenders look at the same criteria?

Answers to Questions Regarding Installment Loans

Answer 1: No. Many lenders offer online installment loans.

There’s absolutely no reason to take time out of your busy day to visit an office. It’s old-fashioned and a waste of your valuable time.

Answer 2: Possibly, if you apply through a traditional lender.

Brick-and-mortar lenders often ask for as many as five years history on your work, bank, and where you’ve lived.

However, an online application usually takes around 15-minutes to complete. If you can demonstrate at least three months at the same employer, address, and bank, you could qualify. Good online lenders aren’t as concerned about stability as your ability to repay.

Answer 3: Possibly, depending on the lender.

However, a good online lender will safely and securely confirm your income through your bank. In this case, you wouldn’t need to collect pay stubs, get a letter from your employer, or ask your accountant to prepare a statement of income.

Answer 4: Yes, if you choose a lender that uses a hard credit inquiry.

Lenders have two options available to them when they check your credit. One is a hard credit inquiry, which lowers your credit score and stays on your credit file.

The other is a soft credit inquiry. This does not affect your credit score and is usually used for information purposes. Clearly, you’ll want to choose a lender that uses a soft inquiry. This is particularly true if you have little credit history or you’re rebuilding it.

Answer 5: Yes, but check the lender’s practices first.

Theoretically, you can apply for installment loans through as many lenders are you like. However, you will definitely want to confirm that they use a soft credit inquiry first.

However, most people don’t have the time or inclination to apply for multiple loans. It’s must simpler to find a good lender from the start.

Answer 6: Possibly, depending on the lender.

Mainstream lenders tend to place more emphasis on your credit score and may require you meet a minimum rating.

However, some lenders do not require a minimum credit score. Instead, they use their own scorecard to determine your credit worthiness. This scorecard looks at many factors, not just your credit.

Answer 7: No. Some lenders offer loans based on a reasonable salary.

If a traditional lender turns you down and says you don’t earn enough to borrow, that doesn’t mean that you can’t qualify elsewhere. Online lenders tend to demand less of their applicants than mainstream lenders.

You could be approved, even if you earn a modest income. If your take home pay is at least $2,000 monthly, you have a good chance of obtaining installment loans in Canada.

Answer 8: Possibly, depending on the lender.

Mainstream lenders may grant installment loans to self-employed individuals if they provide an income statement. Unfortunately, this needs to be prepared by an accountant and usually costs the person money. However, traditional lenders are often reluctant to lend to entrepreneurs. They prefer to fund people with a steady income.

Luckily, some alternative lenders often consider self-employed income. The best part is that they will confirm income through your bank and you don’t need to get an income statement.

Answer 9: Possibly, depending on the lender.

Mainstream lenders are often reluctant to grant installment loans based on pension income. They prefer to lend to a younger demographic, because there’s less risk of non-payment.

Once again, some online lenders do consider pension income when applying for installment loans. These companies are less considered about age and more concerned about your ability to repay.

Answer 10:       Possibly, depending on the lender.

Brick-and-mortar lenders can’t match the speed and efficiency online lenders have perfected. They won’t leave you dangling while they slowly work their way through their pile of applications.

Instead, they utilize cutting edge artificial intelligence to quickly assess your application. You could have a decision within minutes, instead of the days or weeks that a traditional lender normally takes.

Answer 11:       Possibly, depending on the lender.

We’d like to say absolutely yes, every lender is honest, transparent, and forthcoming. However, this isn’t the case. Not all lenders are licensed and if they aren’t they aren’t legally required to provide you with this information.

Fortunately, licensed lenders must advise you of all fees upfront. They are also obliged to follow all lending laws in your region.

Answer 12:       Possibly, depending on the lender.

When you borrow through a licensed lender, you absolutely do have legal protections. If the company doesn’t handle their installment loans in an appropriate manner, you can contact them to seek resolution.

If that doesn’t work, the Financial Consumer Agency of Canada or the appropriate commission in your region can help.

Alternatively, if you borrow from an unlicensed lender, you have little recourse if they handle your installment loan improperly. You could also find yourself caught up in a scam.

Answer 13:       Yes. Canadian companies offer greater accessibility.

Many lenders set up a subsidiary in Canada, but their home base lies elsewhere. This may not be a problem, until you need help or a clear explanation regarding your installment loan.

Regrettably, these companies may only offer email support. You may not get a response until their customer service representatives start working within their time zone. If you don’t have any way to talk to a real person during Canadian business hours, it could be very frustrating. Plus, if there’s ever a discrepancy, Canadian law takes precedent.

Answer 14:       Possibly, if you apply in-person.

You will almost certainly need to visit an office or bank branch if you applied in-person. The company will prepare your loan documents and ask you to come in to sign.

However, online lenders operate digitally. There’s no need to visit an office. The company will email you your documents and you will sign them digitally.

Answer 15:       Yes. Choose your lender wisely.

This is a very important consideration when choosing a lender. Some companies charge an origination fee just for setting up your account. This could cost you between 0.5 – 8% of your total loan amount.

Some lenders also charge you open-ended late payment fees and NSF charges. Additionally, they levy a prepayment penalty if you want to pay your loan offer early or wish to make extra payments.

Fortunately, good lenders don’t charge these fees or penalties. Choose your lender wisely, or you could pay dearly.

Answer 16:       No. Installment loans interest rates remain fixed.

This is one of the best features of installment loans. Once you lock in your interest rate, you never need to worry about future interest rate changes. This certainly isn’t the case with credit cards.

Nonetheless, you need to find the best interest rate possible. Otherwise, you’ll pay more than you should throughout the loan term.

We don’t suggest you use comparison websites to find the best interest rates. These sites include referral links that pay the website owner a small amount each time someone clicks through.

Instead, find a reputable lender that uses a soft credit inquiry, submit your application, and see what they offer.

Answer 17:       Yes. You’ll pay the same amount each time.

This is another great feature of an installment loan. Your payment remains the same throughout the term of your loan. This makes it very easy to plan for the expense and to include in your budget

Answer 18:       Possibly, depending on the lender.

Good lenders allow extra payments at any time. However, less desirable lenders may penalize you, since they depend on the future interest your loan would generate.

Answer 19:       Possibly, depending on the lender.

You should be able to pay off your loan at any time without penalty. Unfortunately, that isn’t always the case.

Some lenders charge a prepayment penalty if you pay your loan off before the loan end date. This may negate the benefit of paying off your debt ahead of time. Always look for a lender that does not charge a prepayment penalty.

Answer 20:       Yes, but your options may be limited.

Most, but not all lenders offer various choices for repaying your loan. However, some are very limited.

Look for a lender that offers weekly, bi-weekly, bi-monthly, and monthly payment choices. A good lender provides these choices so you can comfortably align your payments with your life.

Answer 21:       Possibly, depending on the lender.

Normally, you choose how long you want to take to repay your loan. This is important, because everyone has their own financial goals.

For instance, you may want to pay higher payments and get out of debt quickly. Conversely, you may want to spread a large sum out to enjoy affordable payments.

Always look for a lender that offers a wide range of terms of between 6 and 60 months.

Answer 22:       Yes, but it depends on the lender.

Every company decides on how much or how little they’re willing to lend. Unfortunately, most banks and credit unions don’t bother with small loans. They may also set low maximum amounts if you have less than pristine credit.

Fortunately, online installment loans usually offer a wider range. You may be able to borrow as little as $1,000 or as much as $15,000.

Answer 23:       Possibly, depending on the lender.

As mentioned, if you apply in-person through a traditional lender, you could wait quite a while for your funds. They aren’t fully-automated like online lenders and people must handle the funds release process.

Luckily, good online lenders are much faster. You can usually expect funds in your bank account within 24 hours, unless you sign your loan documents outside of business hours.

Answer 24:        Yes. Not all lenders emphasize stability.

Traditional lenders do favour applicants that demonstrate work, home, and banking stability. However, things do change at times and often for good reasons.

Luckily, good online lenders have a less strict view of what they consider stable. If you’ve worked at the same job, lived at the same address, and banked at the same bank for three months, you can still qualify.

Answer 25:       No. Each lender has their own lending standards.

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.

Fortunately, some lenders use their own scorecard to assess your overall financial health and viability. Even if a traditional lender turns you down, you could still qualify elsewhere.

If you’re looking for installment loans, FlexMoney can help.

Here’s a brief recap of what we offer to help you decide if we’re a good fit for your needs:

  • 100% online – no office visits
  • Easy application process
  • No proof of income
  • Soft credit inquiry that does not lower your credit score
  • No minimum credit score required
  • Minimum income requirement of $2,000 net monthly
  • Will consider self-employment and pension income
  • Fast decision – you’ll be notified within minutes
  • Pre-approval – see what we offer and then decide
  • Licensed lender
  • Canadian owned and operated
  • Digital document signing
  • No origination fee or prepayment penalties
  • Artificial intelligence assessment
  • Multiple payment and term options
  • Loans from $1,000 and $15,000
  • Fast funds release – usually within 24 hours, or less

FlexMoney issues the best installment loans throughout Canada. Visit our website for more information or to start the application process now.