A personal installment loan can be a good choice for your financial needs. However, there’s plenty of misinformation floating around on the internet. This can make them seem inaccessible, expensive, complicated, or a less attractive option than other financial products.
Hopefully, this article can help dispel many of these myths. We want you to have the facts so you can make an informed decision on a personal installment loan in Canada.
Myth – You can’t qualify if you’re turned down by a bank
Every lending institution has specific criteria they use to determine whether an applicant qualifies for a personal loan, or not. Traditional lenders usually have the strictest requirements. Consequently, they turn down many applicants. Nonetheless, this doesn’t close off your other options.
Fact – You can often qualify through other lenders
Just because a bank or credit union says no, that doesn’t mean you can’t get a personal installment loan elsewhere. Many lenders have less stringent requirements so it is entirely possible to qualify through another lender, even if your bank or credit union turned you down.
Myth – You have to earn a high income to qualify
Certainly, some lenders have steep income requirements that put a personal installment loan out of the reach of many. If you aren’t earning in the mid to high four figures monthly, they consider you too risky. They may turn you down if your income comes from self-employment or a pension too.
Fact – Many lenders have much lower income requirements
Many reputable Canadian lenders will grant you credit if you can show you have a steady income of $2,000 per month. They will consider your application even if your income comes from pension benefits or self-employment.
Myth – You need long-term stability
Yes, traditional lenders often frown on life, work, and employment changes. They want to see long-term stability to ensure you’ll repay your loan.
Unfortunately, this means some events can lead to a loan denial through a traditional lender. For instance, you may change jobs for a higher salary or more perks. You could move to reduce your commute or because you found a nicer place to live. You may even change your bank to avoid unnecessary fees or because it is more convenient.
Fortunately, you have borrowing options other than traditional lenders.
Fact – Three-months stability is enough for some lenders
Some reputable Canadian lenders will consider your application even if you can’t demonstrate long-term stability.
Undoubtedly, they will want to see the minimum requirements of an active bank account, steady pay cheques from the same employer, and a permanent address for at least three-months. Even if you’ve moved, changed jobs, or switched bank accounts you can still qualify.
Myth – You can’t get a personal installment loan without good credit
Every lender decides what degree your credit plays in your loan application. Traditional lenders do place a great deal of emphasis on credit and they may have a minimum credit score requirement. However, they aren’t your only choice.
Fact – Some lenders place less emphasis on your credit
A good lender often considers many factors beyond your credit. They use their own proprietary software to quickly assess where you are in life for a fully-informed decision.
This artificial intelligence “smart” system measures your overall financial well-being, rather than whether you meet a minimum credit score.
Myth – You need to provide proof of income
This is usually true of traditional lenders. They will ask you to provide documentation that proves how much you earn. As a result, you need to dig out pay stubs or get a statement of income if you’re self-employed. This can be a huge hassle.
However, alternative lenders operate differently.
Fact – Alternative lenders don’t ask for proof of income
Alternative lenders want to compete and make the loan process as simple as possible. A good one won’t ask you to provide proof of income.
Instead, they’ll quickly and easily verify your regular deposits through your bank. Don’t worry – they can’t pry into your personal affairs.
Myth – The application process takes a long time
You may be reluctant to apply for a personal installment loan, because you believe the process takes too long. You’ll need to make an appointment, drive to an office, fill out paperwork, and wait for days.
While this can be the case through a traditional lender, it doesn’t have to be that way. Alternative lenders can make the application process incredibly fast.
Fact – An online application usually takes less than 15-minutes
In today’s digital age, there’s absolutely no reason for you to take time out of your day to visit an office. The entire personal installment loan application process can occur online.
Additionally, you’ll receive a decision in minutes instead of days.
Myth – Even if I’m approved, I’ll wait a long time for my money
Sure, a traditional lender might let you know that you’re approved. But what about the money? They may take several more days to release funds, when all you want to do is get on with life.
Fact – You could have funds in your account within hours
Good lenders strive to get your personal installment funds in your bank account within 24 hours. Your loan funds could be deposited much sooner if you sign during regular business hours.
Nonetheless, once you sign your loan documents, everything should move very quickly. If you sign in the evening or on the weekend, you should see a deposit the next business day.
Myth – I’ll pay high fees for a personal installment loan
Certainly, some lenders do charge high or unnecessary fees. For instance, they may charge an origination fee just for setting up your account. This fee ranges between .05% and 8.0% of the loan amount and they take it off the top of your loan funds.
Others may ding you if you want to make extra payments or if you want to pay off your loan early. However, some lenders don’t charge either.
Fact – A reputable lender doesn’t charge you extra fees
A good lender won’t charge you prepayment penalties or an origination fee. They’re more than happy to welcome you as a new customer and they’ll also accept extra payments at any time.
Myth – I can’t get a small personal installment loan
It is true that traditional lenders usually don’t accept applications for small loans. They don’t feel the time and effort merits the return. Consequently, you can be forced into borrowing more than you really need. Nevertheless, some lenders do consider applications for small loans.
Fact – You can borrow as little as $500
Non-traditional lenders are far more flexible. They do grant small loans and offer shorter repayment terms too.
As a result, if you only want to borrow $500 and want to repay it within 6 months, you can.
Myth – I’ll pay incredibly high interest
Without a doubt, some lenders do charge very high interest rates. Just check a few comparison websites and you’ll see some companies have rates as high as 46.93% if they consider you high risk.
Fact – Lender interest rates vary greatly
Lenders base their interest rates on your financial position and your ability to repay. If you have reasonable credit and a steady income, chances are you can obtain a good interest rate.
If you don’t like the interest rate one lender offers, find one that can do better. You don’t need to accept a high interest rate just because you need money.
FlexMoney’s Personal Installment Loan
FlexMoney is a non-traditional, online licensed lender serving Canadians since 2012. We’re Canadian owned and operated. All our customer service representatives live and work here. Contact us via our toll-free number, email, or website support.
We are licensed to lend in Ontario, British Columbia, Alberta, New Brunswick, Nova Scotia, and Newfoundland. Regional laws govern our behaviour and limit how much we can charge you for a personal installment loan. Unlicensed lenders may bypass consumer legal protections.
The following are additional reasons why you should consider FlexMoney for a personal installment loan.
- We use an artificial intelligence assessment which places less emphasis on your credit
- Our application, approval, and funds release processes are fast and efficient
- FlexMoney offers loans from $500 and $15,000 with repayment terms between 6 months and 5 years
- We do not charge an origination fee or prepayment penalties
- Our interest rates are very competitive
- Our net income requirement is only $2,000 per month for the past three months. We will consider self-employment and pension income.
Unfortunately, we cannot consider your application if your income source is Employment Insurance, the Disability Tax Credit, or COVID-19 benefits. Sorry, we can’t help you if involved in an active bankruptcy, consumer proposal, or credit counselling program either.
Find Out More
If you’re interested in starting the application process for a personal installment loan, or if you have more questions, please visit our website.
Finding the ideal loan needn’t days or weeks. FlexMoney strives to have money in your bank account within 24 hours after you sign your loan documents.