A personal loan is a popular choice for Canadians, because it is so versatile. It can be used to fund a variety of expenses such as an emergency repair, vacation, or home improvements.
Once, an individual could only get a personal loan from the big banks and they needed perfect credit. However, the market has changed in Canada. More lenders are available, each with their own personal loan offerings.
With so many choices and lenders, it may seem difficult to find what you need. Let’s look at what you should consider when looking for a personal loan and why FlexMoney is a great choice.
What is a Personal Loan?
A lender grants you credit for a predetermined amount to help you pay expenses. As mentioned, personal loans aren’t restricted to the big banks anymore. Today, many online lenders, credit unions, and other financial institutions also offer loans.
Everything starts with an application. Some lenders have very exacting requirements, while others just need you to fill out a basic online form. Most lenders ask what you intend to use the money for to better determine your needs.
Read the fine print carefully if you decide to apply. Some lenders do a “soft” inquiry on your credit which does not appear on your credit file. Others do a “hard” inquiry that does show up on your credit file. Multiple hard inquiries can make it seem like you’re struggling to find credit. Look for lenders that mention pre-approval. They use soft inquiries.
Once you’ve submitted your application, the lender should let you know one way or the other. Check their documentation. Some lenders can leave you dangling for days, which can be a very frustrating experience.
If pre-approved, the lender provides you with the details of your personal loan such as the interest rate, payment amount and schedule, as well as when your personal loan will be fully repaid.
Once again, it is important to read the fine print, because some lenders charge extra fees such as an origination fee based on a percentage of your loan amount. They may also charge fees if you want to pay extra payments or if you want to pay your entire loan off early.
At the pre-approval stage you have no obligation to follow through. If you don’t like what they offer, you can look elsewhere. However, once you sign your personal loan documents it is legally binding and your payment schedule starts.
More Products – More Options
Every lender has their own criteria for determining whether you’re “worthy” of credit. Prime lenders such as the major banks follow very strict qualification requirements including a credit check, proof of income, demonstrated stability, and other factors. Clearly, these strict standards can lead to many personal loan refusals.
Fortunately, Canada also has lenders with less exacting standards. As a result, a borrower can probably find a personal loan even if they haven’t been with the same employer for a long time or they don’t have pristine credit.
Of course, all lenders look at many factors to assess your creditworthiness. In some cases, a solid source of income, bank account, mobile phone, and email may be enough to find a personal loan. However, it is highly unlikely you will access a personal loan if you’re in bankruptcy, a consumer proposal, or credit counselling program.
Lenders also offer varying personal loan amounts. Decide precisely how much you want to borrow then research personal loan lenders. This will eliminate many companies.
Customizable Payment Schedule
Another important consideration is your payment schedule. Check whether the lender offers a variety of repayment options such as weekly, bi-weekly, semi-monthly, or monthly payments.
Also check whether the lender will allow you pay the personal loan off quickly or over a longer period. You’ll want to align this with your lifestyle and financial goals.
Find a lender that offers a payment calculator so you can see how each option affects your payment and terms. If they don’t offer you the flexibility you need, look elsewhere.
Finding a Good Interest Rate
Lenders charge you interest for the use of their money. Every personal loan payment includes a portion that goes towards paying off the amount you borrow and a portion for interest that goes to the lender.
Every lender also determines the interest rate they will charge. Their decision is based on your income, debts, credit, stability, and other factors. Even if one lender turns you down it doesn’t necessarily mean the next won’t approve you.
However, some lenders do charge very high interest rates. It is important to compare similar products between multiple lenders to find the best possible interest rate. Just because a lender pre-approves you, it doesn’t mean you have to accept unreasonable terms.
When you do find a competitive interest rate and sign your personal loan documents, your interest rate is fixed throughout the duration of your loan. If you pay your loan payments on time until the end of the term, you may qualify for a lower interest rate the next time you borrow.
Will My Credit Lead to a Personal Loan Refusal?
Some lenders have a minimum credit score requirement when you apply for a personal loan. Others place less emphasis on it, but may still consider it.
Additionally, some lenders will not grant credit if your credit file shows a late payment. Others will lend to you if you only have one small problem on your credit file.
Basically, there are not set rules across all lenders regarding a personal loan refusal. However, it is wise to check your credit before you apply for a personal loan. Errors occur on credit files frequently.
Information such as an incorrect Social Insurance Number, employer, address, or even your name can affect your credit score. If you have a common surname such as Smith or Jones, definitely review this information. Your information could be confused with another person with bad credit.
Other problems that can mistakenly appear on your credit file include missed payments that you actually made, duplicate accounts that can make it seem like you’re carrying more debt than you actually are, or even accounts that you didn’t set up because someone has stolen your identity. If you know you have problems on your credit files, you should still check them regularly.
Even though your credit may or may not determine a personal loan approval, it will probably affect the interest rate lenders offer. It’s worthwhile to continually improve your creditworthiness as it could save you hundreds or even thousands of dollars in interest.
Finding a Personal Loan That Suits Your Life
With so many products available, it can be difficult to know what to look for and where to start. We suggest you use this handy checklist to determine whether you want to initiate the personal loan application process through FlexMoney.
- Canadian citizen who is at least 20 years old.
- Actively working with the same employer for at least three months.
- Earned at least $2,000 per month in the last three months.
- Have a mobile phone and email address.
- Presently have an open and active bank account with a Canadian financial institution showing at least three months of transaction and banking history.
- Want to conduct the personal loan process entirely online.
- Don’t want to provide proof of income, unless you qualify.
- Want a pre-approval process with a soft inquiry.
- Don’t want your credit file to be the only factor used in the approval process.
- Want payment options such as weekly, bi-weekly, semi-monthly, or monthly.
- Need to borrow between $500 and $15,000.
- Want money in your bank account quickly.
- Need repayment flexibility of between six months and five years.
- Want a competitive interest rate.
- Don’t want to pay origination or early repayment fees.
- Want complete transparency regarding your payment amount, interest rate, and repayment terms.
- Want telephone, email, and online customer service options.
When You Shouldn’t Apply for a FlexMoney Personal Loan
Unfortunately, FlexMoney can’t guarantee your personal loan approval in some cases. You should not apply 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.
- You intend to supply false information in your application.
FlexMoney prides itself on their customer service, transparency, and speed. When you apply for a FlexMoney personal loan, you’ll hear back for us very quickly. If pre-approved, you’ll be provided with your interest rate, payment amount and schedule, and term. FlexMoney does not charge an origination fee or early payment fee.
If you agree with the interest rate and the terms, you can sign the loan documents digitally. Your personal loan money will be in your bank account within 24 hours.
FlexMoney lends throughout Canada and offers telephone, email, and online support. Visit our website for more information or to start the application process now.