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📅 Last Updated: March 6, 2024 ✏️ Written By Lisa Rennie 🕵️ Fact-Checked by Caitlin Wood
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There comes a time in many consumer’s lives in Manitoba when a little extra cash could definitely come in handy. Despite our best efforts, sometimes large and unexpected expenses may drop on our laps that we’re not always able to cover in entirety. In cases like these, a short term loan in Manitoba can prove to be a real life-saver.
As the name suggests, a short term loan is one that must be paid back in a relatively short period of time, generally, anywhere from one to two years.
For some helpful information about loans in Manitoba, click here.
What’s the Difference Between a Short Term Loan and a Payday Loan?
Based on the definition of a short term loan in Manitoba that was just described above, many might think that it sounds very similar to a payday loan. That’s because both loan types are usually only made for a very short period of time before the balance must be repaid. But while there are certainly similarities between the two, there are also many differences.
Payments
The biggest difference between short term loans and payday loans is the number of payments that are made to pay off the loan in full. Typically, short term loans are paid back in installments over the length of the loan term. On the other hand, payday loans require the loan amount to be paid back in one lump sum, often by the next payday, hence the name.
If you are confident that you’ll be able to repay the full amount of the payday loan by the time you get paid, then a payday loan could work. Otherwise, you may be better off sticking with a short term loan in Manitoba.
Interest Rates
Interest rates are something that you should think about before you take out any loan, especially a payday loan. These loans are notorious for charging exorbitant interest rates, some as high as 500% APR. While short term loans can also charge high rates depending on the lender you choose in Manitoba, they don’t come anywhere close to the rates charged by payday lenders.
Check out this infographic for a better picture of the payday loan cycle.
Approval
Short term lenders in Manitoba will want to look at your financial information before approving you for a loan. Usually, this involves looking at your credit score, income, and employment status, or any combination of these. While it’s still possible to get approved for a short term loan in Manitoba with bad credit, you may need to look at alternative lenders and be willing to accept a higher interest rate.
Payday loans, on the other hand, are relatively easy to get approved for and require little more than for you to be an adult, a resident of Canada, and have an active bank account. But, just keep in mind that simply because a payday loan may be easier to get approved for doesn’t mean it’s the best or the right option for you.
Read this to know more about payday loans in Manitoba.
Why Take Out a Short Term Loan in Manitoba?
You can literally take out a short term loan to finance any number of things, but there are some really good situations where they would make a lot of sense:
- To pay for an emergency
- To pay for travel expenses
- To make a large purchase
- To repair your car
- To make home improvements
- To build credit
How to Increase Your Odds of Loan Approval in Manitoba With Bad Credit
In order to qualify for a short term loan in Manitoba with bad credit, there are a few steps you should take:
Pull your credit report – You may have an idea of what your credit score is, but you can find out for sure by pulling your credit report. Doing so will also give you the chance to find any errors and have them rectified in order to give your credit score a boost.
Look here to discover how you can get a free annual copy of your credit report.
Pay down your current debt – Many lenders in Manitoba may turn you down for a short-term loan if your debt load is too heavy. In this case, you may want to buckle down and pay down as much of your current debt as possible.
Choose the right lender – There are many lenders in Manitoba who work specifically with bad credit borrowers, so you may want to work with such lenders to boost your chances of approval. These types of lenders can also be easily found online. Just be sure to steer clear of lenders who “guarantee” your approval, as they can turn out to be nothing more than scammers.
Take steps to improve your credit score – The best way to apply for a short term loan in Manitoba is to go in with a high credit score. If possible, take steps to improve your credit score before applying for a loan by doing the following:
- Making sure your payments are on time and in full each month
- Not maxing out your credit card
- Making more than the minimum payments of your credit card
- Leaving old credit accounts open, especially if they still have an outstanding balance.
Looking for even more information about your credit score? Click here.
Pros and Cons of Short Term Loans
There are definitely some advantages to taking out a short-term loan in Manitoba, but there are also some drawbacks.
Pros:
- Easy and quick approval
- Access fast cash for pressing needs
- Helps improve your credit score over time
- A wide variety of lenders to choose from
Cons:
- Higher interest rates compared to conventional loans
- Risk of increasing debt
- Potential to get sucked into a scam
For more good and bad aspects of short term loans in Canada, read this.
Frequently Asked Questions
How long do short-term loans last?
There’s a wide variety of short-term loans. Typically, they range in size, up to $1500. Payments are generally spread out over 2 to 8 weeks, with some going up to 12 weeks. Credit cards, payday loans, and personal loans make up the most common types of short-term loans. Because of their shorter terms, loan providers offer short-term loans at higher rates than long-term loans. Personal loans and credit cards sit between 10% and 36% APR, not exceeding the maximum allowable 60% rate. Payday loans are treated differently, having the shortest terms means they can charge upwards of 500% or more in annual interest.
Am I eligible for a short-term loan in Manitoba if I have poor credit?
Yes, some lenders will extend a short-term loan to those with bad credit. A lot of providers forego a credit check for short-term loans. They will instead determine your ability to repay the loan using other metrics. You may be required to provide additional documents, such as pieces of ID, proof-of-address, paystubs, and bank statements. Securing your short-term loan using collateral is another way you can be approved despite having bad credit. Likewise, backing a secured credit card with a security deposit is another way to get short-term credit while also rebuilding your credit history.
Are there prepayment fees on short-term loans?
Paying off a short-term loan before it’s due will generally save you money. A good example is the grace period on credit card purchases where you pay no interest if you pay in full before the next due date. That said, be careful with cash advances on your card because they do accumulate interest from day one. With payday loans, most provinces bar lenders from charging borrowers a prepayment fee. Personal loans with flexible or open-end contracts will have no prepayment penalty. On the other hand, loans with fixed-term or closed-end contracts will have a penalty for paying early. It’s best to contact your lender to determine which kind you have.
Get the Short Term Loan in Manitoba You Need
If you’re currently dealing with an unexpected expense or are looking for a quick loan in Manitoba, you may want to consider a short term loan. Loans Canada to help you find the right loan product and match you with the best lender. Contact us today!
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