Everyone craves financial independence and buoyancy. Nobody wants to borrow for any reason, but then, life happens. Expenses show up unannounced. Loans can be pretty helpful and useful at a pressing time like this, as it is the fastest way to solve that financial problem. Sometimes, they can be used to pay overdue bills or cover emergency expenses. They are different types of loans, some of them are suggestive of what they are used for. Car loan is the loan to be used for the purchase of that luxury car. Student loan is for funding your academics and education. While home loans are the ones used for the mortgage of that newly purchased house.
What are personal loans?
Judging from the name, personal loans might not suggest a clear picture of what they mean or entail. Personal loans can be secured or insecured. A secured personal loan is a type of loan that requires borrower to put up a collateral or do a down payment. The collateral can be a car, house, savings account or any equivalent of the borrowed fund. An unsecured loan on the other hand, is the opposite of a secured loan. This type of loan does not require borrower to do a down payment or provide any collateral for the money borrowed. What qualifies you for an unsecured is your financial history:credit score, income and debts. However, if your credit score isn’t strong enough to fetch you an unsecured loan, you’d have no choice but to opt for a secured loan.
In Canada, personal loans are provided by financial institutions, individuals, online and offline lending companies. They have terms and conditions about what you can use the personal loans for. The interest rate on personal loans vary from one institution to another. It’s best to compare and contrast, to know the ones with the best loan rates.
Who is eligible for a personal loan in Canada?
Personal loans are not for every Tom, Dick and Harry. There are certain requirements you have to meet, before you can be given a personal loan.
To be eligible for any personal loan in Canada, you have to be above 18 years.
Be a Canadian or a resident of Canada.
Have a personal bank account.
Have a means of identification. I.e passport, driver’s license, Photo ID or any means of valid identification.
Have a valid proof of residence. I.e a receipt of your utility bills.
Have a proof of income and earnings. This will be useful for eligible and qualified unsecured borrowers.
The proof of your monthly expenses. I.e utility bills, mortgage and rent payment.
You should have no record of bankruptcy.
Have a good record of Canadian credit history. A good credit card can be of immense help in activating your borrowing.
Low debt rate to income ratio. If the large some of your monthly income goes into paying of your incurred debts, you might not be eligible for a personal loan.
Personal loans are easy and cheap to get. When you compare the interest rate of personal loans to credit card rates, you’d discover that personal loans are way cheaper. Although, these rates vary from one company to another.