How to Apply for a Personal Loan
Applying for personal loan can be challenging at some point, but easy if you are prepared
At some point, you may be strapped for cash. Think about it: perhaps you’re dealing with an emergency or want to fund a home improvement project. Maybe you want to consolidate your credit card debt or fund your growing business. Regardless of the reason, sometimes you just need some extra cash.
Your first thought may be to turn to your credit card. But, a credit card isn’t always the best choice for a quick cash infusion. You may instead want to turn to a personal loan. A personal loan can have many benefits compared to high-interest credit cards, and the application process is fairly easy.
Take a look at our primer on how to find the best rates and apply for a personal loan.
Step 1: Do your research
First off, do your research and find a reputable company to get the best personal loan in Canada. At LendingArch, we’ve simplified the process for you and our vetted vendors make getting a personal loan even easier.
While you’re researching your options, make sure you understand the pros and cons, read the fine print and look carefully at the terms and conditions before accepting a personal loan.
It’s also important to understand the repayment terms, APR, and monthly payments. Make sure you also know what you can reasonably afford to borrow, as well as how much you will pay in interest throughout the life of the loan.
One more thing: be sure to understand any minimum and maximum loan amounts.
Step 2: Know what you want
Although a personal loan can be a better alternative to a credit card, it’s still a loan. So, make sure you know why you’re taking on debt, be clear on what you’ll use the personal loan for, and understand how much you need to borrow.
For example, if your goal is to consolidate $5,000 in credit card debt, you may want to get a personal loan for that exact amount.
Once approved, you can pay off your credit cards. By doing this, you’ll have only one payment and one interest rate instead of multiple payments each month.
Likewise, if you want to renovate your home, make sure to get an accurate estimate before applying for a loan. Ultimately, you will want to borrow the amount that you need.
Here are some other examples of what a personal loan may be used for:
- Funding your small business
- Paying for emergencies
- Funding major purchases and events, like a wedding
- Paying for educational costs
The great thing about personal loans is that you can decide how to use the money and make it work for you. At the end of the day, it’s important to find the best personal loan for you.
Personal Loan Calculator
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Step 3: Gather your information
Before applying for a personal loan, gather your information and make sure you have everything on hand. Many lenders require you to be at least 18 years of age and a Canadian resident. Aside from your personal information, like your name and address, the lender will typically check your credit history and income to make sure you’re an eligible candidate for a personal loan.
Be prepared to provide your bank account information and earnings. Additionally, you may need to provide more information, depending on the type of personal loan you are taking out. Ultimately, the lender will want to ensure that you’re creditworthy and that your income can support your monthly loan payments.
Understanding the two types of personal loans
There are two types of personal loans: secured and unsecured. Secured personal loans are backed by collateral, whereas unsecured personal loans are not. What’s collateral? It’s an asset, like a home line of credit. If you need a personal loan, and have assets that can back the loan, a secured option may be a good fit for you. Why? A secured personal loan often means you’ll get a lower interest rate as well as a higher credit limit.
Because you need to back a secured loan with collateral, you may need to provide additional documentation that proves you have the assets. As such, applying for a secured personal loan may take a bit longer than applying for an unsecured personal loan. The money you can save on interest may help you pay more toward the principal balance during repayment.
If you don’t have any assets to back the loan, you’ll want to apply for an unsecured personal loan. While an unsecured loan often comes with a higher interest rate, you may get approved faster.
Step 4: Apply for a personal loan
After doing your research and gathering your information, it’s time to actually apply for a personal loan. Applying for a personal loan in Canada can be easy using LendingArch and only takes a few minutes. The good thing about using LendingArch is that you can see a myriad of options that won’t hurt your credit.
Based on your financial history, LendingArch will match you up with the best loan offers available. These offers have a high likelihood of approval and have the best rates.
You can compare your options and then get a better understanding of your future payments based on your repayment terms.
Once you see the various personal loans available, you can choose a lender that fits your needs. You also also choose a repayment term and interest rate that looks best to you.
After selecting one of the options, you’ll then complete the application and finalize the details of the personal loan. And voila! In a matter of hours, you can be approved for a personal loan and have the money on hand.
When you have the funding you need, you can do as you please — consolidate debt, pay for an emergency, or fund a major purchase. No more worrying about where the money will come from. Just make sure that you stay on top of your payments.
There are times in life that you may need additional money – and fast. A personal loan is a great option.
The application process is easy, you’ll receive quick funding, and the interest rate will usually be lower than the rate offered by your credit card. Not only that, but you can do what you want with your newfound money.
Better yet, LendingArch offers the best rates, a simple application process and multiple loan options. So, are you ready to get the best personal loan in Canada? We thought so.