Personal Loans in Canada – Everything You Need to Know

You never know when you will be short of funds and need to borrow money. And to close these financial gaps, a personal loan is the least costly and safest way for you. Only individuals are eligible to get personal loans in Canada. In fact, many banks and lending companies have a condition on how an individual can use a personal loan. There are different types of personal loans and the terms and interest rates of these loans can vary wildly.

Why must you consider getting a Personal Loan?

There can be many reasons for you opting to get a personal loan, like:

• Making a down payment on a new home
• Consolidating credit card debt
• Paying for school or a wedding
• Covering medical expenses
• Replacing expensive household appliances
• Buying a car
• Funding home repairs or improvements

What is the Eligibility for Getting Personal Loans in Canada?

Below are the eligibility criteria for getting personal loans in Canada.

• You have to be at least 18 years old.
• You must be a resident of Canada.
• You need to have a bank account.
• You must present proof of your identity with your photo ID, driver’s license or passport.
• You must have proof of residence like your utility bill.
• You need to present your proof of income like your recent pay stubs.
• You must also show the proof of your regular monthly expenditure like the rent or mortgage payments, utility costs, etc.
• You must have some Canadian credit history.

If you meet the above-mentioned requirements, you will become eligible for getting personal loans in Canada. But if you want to get the best conditions and interest rates, you will require:

• A credit score ideally over 650.
• A low debt to income ratio (should be below 36%.)
• No history of bankruptcy.

What are the Types of Personal loans?

• Unsecured Loans
  These personal loans are unsecured because to get this loan, you don’t put anything collateral that will guarantee the loan. To get an unsecured loan, you will have to pay a higher interest rate and need to have a better credit score.
• Secured Loans
  To get a secured loan, you will have to put something up as collateral like your car, your house or valuable jewelry. These generally have lower interest rates but you may lose your collateral if you don’t make your loan payments.
• Reverse Loan/Cash Secured Savings Loan
  It is also called the backwards loan because this is the amount that you deposit and later withdraw it as a loan. This type of loan helps you in building your credit score and saving a lump sum at the same time.