We get it, life happens. Sometimes that means you require cash quickly. And chances are you won’t always have immediate access to the cash you need. So, a great way to get this cash fast is with a personal loan. Now, there’s no denying it’s a lot easier to get a loan if you have a good credit score. But, even for people with excellent credit, there are still a few hoops you may have to jump through. And, if your credit score is lower than ideal, don’t worry! There are ways to get approved for a bad credit loan in Canada. There’s a lot of important information you need to think about before you apply for a personal loan, no matter if you have good or bad credit.
Figure Out Exactly How Much You Need
It may be appealing to attempt to get a loan for more than you need, but don’t forget this is money that needs to be paid back in a timely manner. With interest. Figure out exactly how much you will need and apply only for that amount.
Know What You Need To Have Ready
Most lenders won’t even look at you unless you are at least 18 years of age and a Canadian citizen. And you’ll need to provide proof of a physical address and a valid method to contact you. During the actual application process, you must provide all your bank account information, as well as proof of employment or other income. And, yes, they will most definitely run a credit check on you.
Know What Type Of Loan You Are Getting
There are a few types of personal loans you may be eligible to receive. If you have a low credit score, or are deemed a credit risk, your options may be limited. But here are the most common types of loans offered in Canada:
Simply put, a secured loan is where you offer some sort of collateral in exchange for your loan. A secured loan is usually one of your only options for obtaining low credit loans. The lender feels better about giving you a personal loan because they have the option to seize the collateral if you default on your loan. Larger assets, such as cars, recreational vehicles, or owned property, are the most common types of collateral for these secured loans. Often, when you have a secured loan, you get the benefit of a lower interest rate and possibly a higher credit limit.
A loan without collateral, or an unsecured loan, will usually only be offered to those who have a good credit score. If lenders see that you have a strong credit score, they will trust you to pay the loan back promptly and with few issues. Watch your credit limits and interest rates on unsecured loans. Some lenders will try to give you a rate that’s quite a bit higher than with a secured loan. And, if you have good credit, you should be able to “shop around” for a better rate.
Sometimes your credit score is just too low to get approved for any type of personal loan. So, you may need to look at finding someone to be your “guarantor”. This is essentially a co-signer with an excellent credit score, who agrees to take on the payments of your loan if you default. This is a great way to get a personal loan if you have a low credit score, and it will help you build up your credit score—if you don’t default on your payments. You just need to find someone who not only has a high credit score but who trusts you to be your guarantor.
Get A Few Different Quotes
You may have an excellent credit rating and a financial institution you trust. But, it’s still a very good idea to get a few different quotes from other lenders. Chances are, you will find a better interest rate than with your own financial institution. And, you may even be able to negotiate with the lender of your choice if you have a quote for a better rate from someone else.
Keep Your Eyes Open!
If you are going through bankruptcy, or your credit limit is extremely low, you’re going to have some trouble securing a personal loan. So, if you’re being offered poor credit loans in Canada that seem too good to be true, they probably are. Unfortunately, there are a lot of loan scams out there and you need to be wary. However, there are many reputable sources for obtaining a personal loan—even ones who may offer you a bad credit loan in Canada—but you need to make sure you do some research. Even when you borrow from a reputable lender, it’s still important to read the terms in full. Occasionally, there can be hefty extra costs tacked onto your loan or extremely steep penalties for missing even one payment. So, always read—and, most importantly, understand—the agreement.
The Bottom Line
We understand applying for a personal loan in Canada can be confusing. And getting different quotes—especially if your credit isn’t ideal—can certainly be time-consuming and frustrating. Luckily, at LendingArch, you can enter in just a few details and be immediately matched with compatible loan offers. And, finding out your loan options with LendingArch won’t require a bunch of separate companies checking your credit score, which could damage it further. Once you have your options, you can choose the lender, loan terms, and interest rate that looks the best to you. Then you’ll be able to finalize your application and find out if you’re approved in only a few short hours.
So, if you’re looking for a bad credit loan in Toronto—or anywhere else in Canada—LendingArch can help. You’ll find great options for quick and reputable online loans for bad credit.