When it comes to personal loans, Canadians have many options available. Banks, credit unions and select alternative lenders all offer competitive rates if you have excellent credit. However, each lender may have different terms and conditions, making it essential to shop around before committing to a loan.
The most common reasons borrowers obtain personal loans include debt consolidation, funding home improvements, significant purchases or managing healthcare costs not covered by insurance. According to the latest Finder: Consumer Sentiment Survey Q2 2023, these are among the top five reasons Canadians plan to take on additional debt in the next three months.
Borrowing Confidence: A Comprehensive Guide to Canadian Personal Loans
A canadian personal loan is a lump sum of money that you pay back in installments over a set term, along with interest. Typically, the amount you borrow is based on your credit score, with higher scores earning lower interest rates. There are two types of personal loans: secured and unsecured. A secure personal loan requires collateral, such as a car or home equity, while an unsecured personal loan does not.
To qualify for a personal loan, you must be a resident of Canada above the age of majority and provide proof of income to cover your monthly expenses. You may also need to supply your banking information, so the lender can deposit loan funds into your account and send you your monthly payments. Additionally, most lenders will run a credit check to assess your financial stability and calculate your debt service ratios.