More than 70% of consumers face some kind of debt and may even take out a loan to manage it. If you face debt, you’re not alone. In some instances, you may find that a loan is just what you need to regain control of your finances.
Keep reading to learn more about the types of personal loans in Canada.
Benefits of Loans
You could need cash for a home improvement. Alternatively, you may need to finance a wedding. You could even want to consolidate high-interest debt.
In these instances, you may consider a speedy personal loan.
You can fill a void in your budget by getting a loan and using it wisely. Even better, you may not have to risk your home or assets. Your interest rate for a personal loan will vary depending on your income and debt-to-income ratio.
Types of Personal Loans
A personal loan is a lending arrangement. It’s an installment loan where you’d receive a fixed amount of money in a lump sum.
You typically don’t need to secure a personal loan. However, the lender might impose restrictions on how you use funds depending on the loan type.
Whether a lender approves you for a personal loan relies heavily on their perception of your integrity. It also relies on how the lender perceives your ability to repay the loan. The lender must believe you’ll repay the loan based on the conditions you both agree on.
You can seek several kinds of personal loans. You can better figure out which kind of loan is best for your circumstances by understanding a bit more about them.
Let’s look closer at the types of personal loans available in Canada.
Angel Investor Loan
You could have a great business concept but not qualify for a traditional business loan. In that case, you may seek an angel investor loan. In this instance, an angel investor might provide funding for your business.
You’ll need a strong credit rating to qualify for this kind of loan. You’ll also need a business plan that looks profitable. What’s more, your plan should show your business will generate revenue within a reasonable amount of time.
If you can meet all these qualifications, an angel investor might give you loan terms that rival those of a bank-issued personal loan. Most often, you’ll also receive competitive terms compared to most title loans.
A consolidation loan can help you reorganize your personal debt. The idea of a consolidation loan is to combine multiple debts into one monthly debt. This kind of arrangement is easier to manage.
You can usually find a consolidation loan with a competitive interest rate. In most cases, you’ll find the interest rate is much more cost-effective compared to paying your debts individually.
It’s also likely you can lock in your monthly installment payments at a better rate. If so, you’ll end up paying less each month than you would if you paid your debts individually.
Secured Personal Loan
A secured personal loan requires you to put up collateral. The collateral would serve as a security for the money you borrow.
You can use the funds to make purchases. You’ll have access to your purchase while you’re settling the debt.
For instance, a car loan is a well-known type of secured loan. A lender will consider the car as security until you’ve paid the loan in full.
Some people have less than ideal credit. Still, they may need cash fast. They may consider a title loan for these reasons.
A title loan is typically a short-term arrangement. You must have the title to a vehicle or similar property to receive one.
You must settle the balance of your title loan in full. Once you do, the lender will return the title to your possession.
Unsecured Personal Loan
You may have an exceptional credit rating and history. In that case, you might consider an unsecured personal loan.
With an unsecured personal loan, you won’t have to pledge assets or other types of collateral. Your excellent financial history is all you need for a lender to decide you’re worth the risk.
Still, you may find interest rates are higher with unsecured loans. The higher interest rate justifies the risk of lending money without collateral.
If you have a small financial issue, you may consider a payday loan. Typically, a payday loan is enough money to pay one or two bills. It can help you solve small money problems.
Most people receive a payday loan within 24 hours after approval. In some instances, a lender may even deposit it directly into your bank account.
You shouldn’t use a payday loan to buy things you don’t need. They have considerably high interest rates. Accordingly, you should reserve payday loans for emergencies.
If you’re wondering, “How do I find loans near me?” we know the perfect lender.
How to Get a Loan
You now know more about the types of personal loans in Canada. If you’re looking for the best personal loans around, Loanz.com makes it easy to apply.
We even let you connect your bank account for fast verification. What’s more, you can receive approval in real-time.
Some of our clients receive funding in just 15 minutes. More importantly, your interest rate will remain the same throughout the life of your loan. Get started with your personal loan today.