Facing a financial crisis is troubling for many and not everyone is able to make the necessary arrangements. The best way to meet the requirement in minimum time is getting a personal loan. This is one of the most common loans availed by people in Canada. You just need to meet the requirements of the lender (banks, financial institutions, private lending companies, etc.) for loan approval. The process is very quick and easy. You just need to apply online and wait for the lender to respond. These personal loans are mainly of two types, secured personal loans and unsecured personal loans. You can get these loans to fulfill your any need.

How Personal Loans Work in Canada?

Personal loan, as the name suggests can be obtained for any personal need. It can be a wedding, meeting financial emergencies, paying credit card bills, home renovation or repair, etc. Online personal loans are easily available in Canada. Once you apply for the loan and your application is approved, you receive the amount in your bank account. Now, you need to pay back the loan in the pre-decided time period in certain installments along with interest. 

The interest rates vary with the service provider. Some offer fixed interest rates that stay same for the whole term while others offer variable rates that keep changing with time. 

Personal Loan Options in Canada

1. Secured Loans 

These loans are secured by collateral. This collateral can be a home or a car. If the borrower is not able to pay back the loan, the lender uses collateral to cover the losses. These loans commonly include the following:

• Pawn Loan (the collateral here is an asset like jewelry)

• Title Loan (the collateral here is a car loan)
• Secured personal loan

2. Unsecured Loans 

These loans do not require collateral as guarantee. However, if the borrower does not pay back the loan, the lender has the right to file a lawsuit against the borrower.

Another clause that is mainly included in the loan agreement is the right of offset. This allows the lender to claim money from borrower from his other accounts with them. They can also ask the affiliate parties for amount from the account in the name of the borrower or other accounts he/she shares with others.

Applying For A Loan In Canada – Essentials To Know

To apply for personal loan is Canada, you should first know about the eligibility criteria. There are certain requirements one needs to meet to qualify for personal loans. Below mentioned are the major requirements.

• You should be a resident of Canada or reside there.
• You should be of age of majority (18 or 19).
• You should have a valid Id proof (passport, driving license or any photo ID proof).
• You should have a bank account in your name.
•  You should have a proof of residence like utility bill
• You should have a good credit history.
• You should have an income proof.

To obtain personal loan with best interest rates, the minimum credit score requirement is 650.

Apart from these basic requirements, there are several other things that need your attention. Some of them are as follows:

• Look around for best interest rates and terms
• Provide correct personal information
• Seek approval
• Check the loan papers thoroughly
• Receive the money in your account

Why should you apply for a personal loan?

Personal loans are the best way to fulfill the quick need for money in different situations. These have become more common as they are easily available at best interest rates. One can get these loans to meet emergency situations like medical emergency, car repair, home repair, pay credit card bills or a debt, plan a dream wedding, etc.

Best Alternatives to Personal Loan

If you do not meet the eligibility criteria to apply for a personal loan, there are several other alternatives that you can use to meet your financial needs. The best ones are discussed as follows:

1. Personal Line of Credit

It is similar to that of a personal loan but there are some differences. In a personal loan, you receive the approved amount in your bank account. However, in personal line of credit, you can borrow only the money you require to fulfill your need. If your requirement is less, you will get a small amount than the approved amount. Also, as soon as you pay back the money, the credit is available again. Another thing about personal line of credit is that you only need to pay the interest on the amount you have borrowed unlike personal loan where you have to pay the interest on the entire loan amount.

2. Credit Cards

You can use credit cards to meet your needs as per the credit limit available to you. This is a convenient way to meet the emergency requirements. The only drawback is the high interest rates which are charged if you miss paying the credit card bill every month.

Easiest Way to Borrow Money in Canada

The easiest way to borrow money in Canada is applying for a personal loan. There are many banks and financial institutions that provide online personal loans. You just need to fill the application, submit the required documents and get the loan approved.

Conclusion

Getting personal loans in Canada is easy and a convenient way to borrow money to fulfill the urgent financial needs. Both the secured and unsecured personal loans are available allowing borrowers to get one that meets their requirements.