Personal loans in Canada come in all shapes and sizes and from various sources. However, many people don’t qualify through traditional lenders. Others don’t want to bother jumping through their requirements hoops.
Luckily, Canadians have additional choices. Personal loans in Canada are also available online and through alternative lenders. Nonetheless, you need to understand what a good personal loan looks like for you.
Some may not offer options that matter to you. Others won’t offer many benefits at all. Luckily, you can narrow the field quickly to find one that perfectly suits your needs.
What Features are Important to You?
As mentioned, you’ll find dozens on lenders and even more types of personal loans in Canada. Each lender wants to make a profit, so they promote specific benefits to attract borrowers.
However, some benefits are more important than others. Consumers shouldn’t get caught up in advertisements and glitzy websites. Instead, they should delve into the meat of what a lender offers.
Here are just a few benefits you’ll certainly want to see in whatever product you consider.
Fair Credit Review Process
Regrettably, most lenders place a heavy emphasis on your credit report and your credit score. Basically, they demand a certain credit score, before they’ll even consider your application.
While it is understandable lenders want to judge your creditworthiness, credit information alone doesn’t provide a clear picture of where you stand now.
For instance, many people do not have excellent credit, because they have a small problem on their credit file. Others have a relatively short credit history and haven’t had time to build their credit score yet. Both these factors are often sufficient reasons for a lender to say “no” to your application.
Luckily, some lenders consider additional factors. If you earn a steady income and have handled your credit well for some time, you could qualify. This is because they don’t have a minimum credit score or base their decision on credit alone.
Pre-Approval & Soft Credit Inquiry
The best personal loans in Canada utilize a pre-approval process and a soft credit inquiry. This benefits you, because even if the lender checks your credit and turns you down, it won’t lower your credit score.
Additionally, pre-approval allows you to “see” what interest rate the lender is offering you. It also provides you with your payment amount, payment schedule, and loan end date. You can shop around for the best deal, instead of waiting and hoping a lender might offer you a competitive interest rate.
Most importantly, avoid lenders that use a hard credit inquiry. If you apply through multiple lenders utilizing hard credit inquiries it can appear you’re struggling to find a loan, rather than shopping around.
This inquiry method also lowers your credit score slightly and stays on your credit file for up to three years. This applies whether you’re approved for a loan, or denied.
Simple Application Process
This benefit quickly separates good personal loans in Canada, from those less desirable.
Many lenders have very lengthy application forms and sometimes need you to finalize your paperwork in-person. This may include providing written proof of income, such as a letter from your employer or copies of paystubs.
Fortunately, good lenders offer a very simple application form you can complete in less than 15 minutes online. They will ask your permission to access bank statements to confirm your income too. Consequently, the process is simpler and quicker and your data is encrypted.
Short Stability Requirements
This may be important to you if you’ve changed jobs, banks, or your address in recent years. Unfortunately, many lenders value stability very highly and they could turn you down for a loan, even if you have decent credit.
Fortunately, some good personal loans in Canada don’t dwell on long-term stability. If you can demonstrate stability over the past three months, you could qualify. These lenders are more concerned with what’s happening in your life at the moment, not where you were or what you were doing years ago.
Reasonable Income Minimum
Every lender determines the minimum monthly income you must earn to consider your loan application. Unfortunately, these amounts are often higher than many people earn. Lenders want the assurance you can easily repay your debt and consequently set higher than necessary requirements.
Fortunately, some good personal loans in Canada have lower income requirements. If you earn a net monthly income of $2,000 or more, you could qualify.
Plus, a group of elite lenders also considers many income sources, not just a regular job. As a result, you could qualify if you’re self-employed or drawing a pension, which certainly isn’t the case with many lenders.
Loans Options That Suit Your Life
Lenders usually offer repayment terms that are easy for them to manage. For instance, monthly payments are a common choice, because it reduces lender administrative costs.
However, you will want a lender that offers terms that suit your life. If you’re paid every two weeks, you should have the option to pay two smaller payments a month, if you would like.
Additionally, you will want to check whether the lender offers the amount you need. This may seem obvious, but some lenders don’t bother with loans under $1,000, while other only lend up to a few thousand dollars. This won’t help you much if you only want to borrow $500 or need a loan of $15,000.
Furthermore, some lenders only offer short repayment terms. Therefore, when you choose the wrong lender, you are forced to pay the loan off quicker than you wanted. This leads to higher payments.
Check Their Fees & Penalties
Personal loans in Canada may include unnecessary fees. For example, some lenders make it seem their “origination fee” is an industry standard. In actuality, it is just a fancy term for an administrative charge you must pay to set up an account with the lender.
This is an unnecessary and can sometimes be very costly. Origination fees can range between 0.5 – 8% of your total loan amount. Even at the lowest rate, it could cost you $750 on a $15,000 loan.
As well, some lenders penalize you if you want to pay your loan off early through extra payments. While you would think all lenders would be happy to recoup their money quicker, this may not be the case. Pre-payment penalties are meant to make up for the interest they would have earned through regular payments.
Good Customer Service Options
If the pandemic has taught us anything it is that no one knows what the future holds. Even if you don’t think you’ll ever need to contact customer service, it could happen.
Unfortunately, many lenders that offer personal loans in Canada don’t provide great customer service options. Often, it’s email, or nothing.
At the very least, your lender should have a toll-free number and Canadian business hours. Of course, they should offer email support too. Great lenders also provide website support tickets and an in-depth help section on their website. You should be able to find answers to commonly asked questions independently, if you wish.
Finally, you will want to choose a Canadian lender. Many companies offer personal loans in Canada, but they’re based elsewhere. Clearly, this may lead to time zone and communication issues, if agents operate elsewhere.
If you have a dispute with how the lender handles your loan, you may also struggle if the lender falls back on their regional laws.
Review Their Timeline
A good lender tells you how long it will take them to make a decision on your application. Good personal loans in Canada provide a response within minutes, not hours or days.
Your chosen lender should also tell you how long it will take to receive your money once you’ve signed your loan contract. Good personal loans in Canada provide funds in-hand within 24 hours.
Personal Loans in Canada Through FlexMoney
If you’re considering a personal loan in Canada, FlexMoney can help. Here is a short list of our requirements and the benefits of choosing our company and loans:
- Canadian citizen
- At least 20 years old
- Steady income from the same source for at least three months
- Minimum net monthly income of $2,000 for at least three months
- Valid email address
- Cellphone number to confirm your identity
- Active account with a Canadian financial institute showing at least three months of transactions.
Unfortunately, we can’t help you if you are currently enrolled in an active bankruptcy, consumer proposal, or credit counselling program. We can’t consider your application if your income source is Employment Insurance or government benefits related to COVID-19 either.
- Fast process
- 15-minute application form
- Fair credit review process based on artificial intelligence
- Minimum three-months stability
- Pre-approval process using a soft credit inquiry
- Loans between $500 and $15,000
- Repayment terms of between 6 months and 5 years
- Competitive interest rates
- Funds released within 24 hours
- No unnecessary fees or penalties
- Outstanding customer service options
FlexMoney offers personal loans in Canada in many provinces. These include Ontario, British Columbia, Alberta, Nova Scotia, Saskatchewan, Newfoundland & Labrador, Prince Edward Island, and Yukon Territory.