Have you ever faced rejection from traditional lenders or major banks, even though your financial history was good? People with good credit scores after receiving a rejection from credit unions feel that there is no source left for them. If you are also thinking so, then you are wrong.
Well, the landscape of unsecured personal loans is now evolving. Alternative lenders work with both borrowers having good or bad credit scores. The lending institutions such as Canadian Cash Solutions have brought multiple opportunities for people having good and bad credit scores.
What Is An Unsecured Personal Loan?
An unsecured loan is the one in which you do not use any collateral and lend you money by considering your credit score only. Usually, you need a good or excellent credit score to get approval for the loan. Most lenders allow borrowers with bad credit scores to get up to $1500 only. But with loan lenders, you can get up to a good amount of personal loans.
Within no time, you’ll get to know if you qualify for a loan or not. Many Canadians find it difficult to get small personal loans with immediate decisions and thus they feel stressed. But now they need not worry as getting instant decisions for unsecured personal loans is possible.
Where Can You Use An Unsecured Personal Loan?
You can borrow small personal loans based on your creditworthiness. To get a large amount, you can use any asset as collateral and get the required money. It may seem that getting approval from this loan will not be easy. But this is not true. You will get approval on the same day of applying for the loan. Not only you’ll get instant approval, you can also pay back the loan in monthly payments as low as possible.
Several lenders in Canada are helping people with this loan opportunity. The best part of this loan is that you can use the funds on almost everything including:
- Buying a new vehicle or other asset
- For renovation of your home or office
- For booking a vacation
- For paying-off any high interest debt
- For paying your utility or medical bills
- On your child’s education
- For debt consolidation
What Are The Characteristics Of An Unsecured Personal Loan?
A personal loan is a method by which you can borrow a specific amount from a loan company near you. If you get the approval, the amount will be given to you through any preferred mode of payment. Then you have to repay it through monthly installments before the due date along with the interest. Let’s have a look at the features of unsecured personal loans:
Loan Amount – The size of the loan depends on factors like the lending institutions and your financial history. If you have a good credit score, a low debt-to-income ratio, and good income, you may get multiple opportunities and numerous options. Further, the amount lenders offer as a loan varies from one lender to another.
No collateral – An unsecured personal loan is called so because in order to qualify for this loan, you do not have to offer anything as collateral. But if you want to get a huge amount of money, you may have to use something as security.
Interest Rate: Unsecured personal loans do not have anything as security and the lending institution feels it risky to lend a large loan amount. Therefore, the interest rates are a little bit higher than other loans such as a home loan, a car title loan, etc. The number also varies with the lending institutions. The interest rates of this loan ranges from 5% to 60% APR.
Loan Term: The period of the loan depends on the lending institution, the borrower’s financial history, and the loan amount. It is possible that some lenders keep the loan term short so that they get their money back faster.
What Is Required To Get The Approval For A Personal Loan?
Everyone has their own requirements and thus it is important to find a lender who fulfills your requirements. To qualify for this loan, you must meet the below mentioned criteria:
- You should be of legal age as per your province
- You must live in the city where the lender provides this loan
- You must be employed and must be with the same employer for at least 3 months
- You must provide a proof for your stable monthly income
- You must have a bank account in the Canadian bank and open from last three months
- You must provide details such as your name, contact details, email address, and government issued identity card.
What Are The Benefits Of Getting A Personal Loan?
Since you know what personal loans is it’s time to understand how they can benefit you over other types of loans? Here are some of the benefits:
- Flexibility and versatility
The first and major advantage of a personal loan is the flexibility and versatility that this loan offers. Some loans come with restrictions and you can only use them for defined purposes. For instance, if you take out a home loan you can use the funds for buying only a home. You can use personal loans for different purposes from consolidating loans, paying medical bills, financing a trip.
If you want to make a big purchase and you don’t want to get bogged down in money usage, a personal loan can be a great option. Before applying, you should check with the lending institution about permitted areas of funds usage.
Also, when you are applying for a personal loan, you do not need to inform the lending source about your spending motive, thus opening up more opportunities.
- Low interest rates
Many personal loans lending institutions offer some personal loans at low interest rates in the market as compared to traditional loans. As these loans come at very high-interest rates. Borrowers having a good or excellent credit score qualify for a personal loan that gives them a huge amount of loan at low interest rates.
Paying a low interest amount will help you save more money in the long run and also reduce your overall financial stress.
- Collateral is not required
You do not need any collateral to get approval for personal loans. This means you don’t have to keep your car, home or other asset as collateral to get more money. If you are unable to repay the loan based on the terms set by the lending institution, you may have to face significant financial consequences. However, you don’t have to worry about losing your property as a consequence.
- Easily manageable
Consolidating debts is one other reason because of which some people take out personal loans. One such example is multiple credit card accounts. Personal loans that come with single and fixed rate monthly payments are easier to manage than multiple credit cards with different interest rates, due payment dates, etc.
Borrowers who qualify for a personal loan at a lower interest rate than credit cards can streamline their monthly payments and save money.
What Are The Disadvantages Of A Personal Loan?
Personal loans can be a good option for some persons but they may not be the right choice for everyone. Here are some points that you need to consider before taking a personal loan:
- Loan cycle
Many people have this mindset that they take personal loans for paying off their high-interest debts. No doubt, this loan can help you get rid of all the previous debts, but you are still under a debt. If you do not pay the loan payments on time, there are chances that you may fall into a trap.
If you borrow and don’t spend money carefully and mindfully, you will again put yourself in a trap.
- Payment penalty
Some lenders charge you fees for closing the loan account early. This is because they need to cut back and recover the loss that they faced due to making early payments. Whereas some lending institutions allow you to make early payments. Thus, you need to carefully find a lending institution that allows you to close your loan account whenever you want.
If you’re also in a financial crunch and want to get rid of them, you should find a reliable lender. Thus, stop worrying and start finding solutions to your problems.
