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📅 Last Updated: August 26, 2022 ✏️ Written By Bryan Daly 🕵️ Fact-Checked by Caitlin Wood
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An installment loan in St. John’s can help you deal with expenses without having to use up all your savings or take on more credit card debt than you can handle. While other types of credit products are beneficial in many ways in St. John’s, an installment loan is a versatile tool that you can use for almost any cost.
Read this for more information about loans in St. John’s.
Paying For An Installment Loan
One of the main benefits of an installment loan is that you can apply for one through almost any kind of lender in St. John’s, whether it’s a prime source (banks, credit unions) or a subprime source (alternative, private, bad credit). A few days after your application has been approved, you’ll receive your loan deposited directly into your bank account.
What’s the difference between a bank and a credit union? Find out here.
However, before you receive your loan, you and your lender in St. John’s will discuss an appropriate payment plan, which allows you to return the amount you’ve borrowed through equally divided installments over a specific payment schedule. The frequency of your installments will depend on your lender’s policies, as well as your own financial requirements. Generally speaking, however, your installments may be:
- Weekly – 1 payment per week (52 payments per year)
- Bi-weekly – 1 payment per 2 weeks (26 payments per year)
- Monthly – 1 payment per month (12 payments per year)
- Bi-monthly – 2 payments per month (24 payments per year)
This is how you can get a loan online with affordable monthly payments.
Additional Considerations
When it comes to the way in which you’ll be paying back your installment loan, there are some considerations you should take into account:
- Not all lenders in St. John’s may offer each of the payment frequencies above. Be sure to ask your lender about their particular policies and payment options before you apply.
- Only apply for a payment plan that you will have no problem keeping up with. For instance, if you have a regular paycheck that comes in two-week intervals, it may be better to choose either bi-weekly or bi-monthly installments. Or, if you’d rather generate as much income as possible before you make a payment, choosing a monthly installment plan might be better.
- Your payment frequency can also affect how long you’ll be in debt for and how expensive your installment loan will end up being overall. For example, extending your loan over a monthly basis can give you time to gather the appropriate funds. However, the longer it takes you to pay off your full loan, the more interest you’ll pay. In that case, making weekly payments will drastically shorten your payment schedule, saving you money in the long run.
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Where Your Credit Score Matters
When it comes to installment loans in St. John’s, the three-digit credit score you have when you apply can make a huge difference in both your approval odds and how expensive your loan will be. In Canada, credit scores range from 300-900 and represent your health as a credit user. As such, the higher your credit score is, the better it will be for the outcome of your installment loan. Here’s what we mean:
Good Credit Score (660-900)
The more your credit score falls within this range, the more responsible you’ll look as a credit user because it generally means that you have little to no trouble making full payments on time. As a result, lenders in St. John’s are more likely to approve you for a larger loan amount at lower, more affordable interest rate.
Look here to see some surprising perks of having a good credit score.
Fair Credit Score (560-660)
The lower your credit score drops, the worse your results will be. Fair credit often signifies that you’ve missed some payments or experienced a few financial problems during your time as a credit user. Your lender in St. John’s might consider you a bit less creditworthy, but not totally irresponsible. So, while you’ll still have little problem getting approval, the amount you’re approved for may be more limited and your interest rate may be slightly higher.
Bad Credit Score (300-560)
Having bad credit may be due to a history of defaulted payments or because you’ve gone through a consumer proposal, bankruptcy, or other financial delinquency. As a result, many prime lenders in St. John’s may not approve your application. Instead, you would have to apply with an alternative, private, or bad credit lender in St. John’s. Be careful, since any lender will consider you a higher risk, your approval may come with a lower credit amount, a less affordable rate, and stricter payment conditions. However, paying your installment loan in a responsible manner is a great way to fix or improve your credit score.
Minimum Credit Score For the Best Results
So, even if you have bad credit, you can still get approved for an installment loan, albeit with a less favourable outcome than a borrower in St. John’s with good credit. That said, a credit score of 650 or higher is what you need when you want to get approved with a prime lender who offers the best rates and payment conditions available.
Check out this infographic to learn how your credit score is calculated.
Applying With Bad Credit
Having bad credit is nothing to be ashamed about. Nonetheless, if you are planning to apply with a credit score under 560, the key is to prove to your lender that you will work hard and pay off your loan in a responsible manner. In fact, doing so is essential when applying for any credit product, no matter what your credit looks like.
When you’re about to apply, prepare yourself by:
- Gathering and updating any necessary personal or financial information
- Bringing several months worth of bank statements that display your income
- Only applying for a loan amount that you can prove you’ll be able to pay in full
- Lowering your debt-to-income ratio (paying off any outstanding debts)
- Offering collateral (house, car, etc.) to be used as loan security
- Getting a cosigner (someone with healthy credit and finances)
- Applying for a guarantor loan (which also involves a cosigner)
Looking for a loan with no credit check? Try reading this.
Installment Loans For Debt Consolidation
As we said, you can use an installment loan in St. John’s to cover any number of expenses, including consolidating some of your outstanding debts. However, this is a specific type of installment loan, known as a debt consolidation loan. Available through most lenders in St. John’s, debt consolidation loans are meant to help you eliminate multiple debts with one swift action.
While consolidating your debts is very important for your financial health, there are a few things to consider before you apply for a debt consolidation loan, such as:
- Debt consolidation loans are not always easy to get approved for
- Generally, a good credit score and income are required when you apply
- Defaulting on your payments can put you in even worse debt trouble
- Various secured (non-collateral) debts will not be eligible for consolidation, including:
- Mortgage payments
- Car loan payments
- Collateralized loans
- Debt from home equity loans or HELOCs (home equity lines of credit)
Payday Loans vs. Installment Loans
Other Ways of Using Your Installment Loan
If debt consolidation isn’t your main goal, there are plenty of other ways to use your installment loan in St. John’s. That said, it’s our recommendation that you avoid consumer goods and other unnecessary items. Instead, it’s healthier to use your installment loan for the essentials, including but certainly not restricted to:
- Unexpected financial emergencies (loss of employment, medical issues, etc.)
- Additions, renovations, or repairs to your home or another dwelling
- Maintenance and repairs for your car or another vehicle
- Toiletries, groceries, and other household supplies
- You or someone else’s educational costs
- As an alternative to avoiding the payday loan cycle
Need an Installment Loan? Choose Our Network!
If you’re interested in applying for an installment loan in St. John’s or anywhere else in Newfoundland and Labrador, always contact Loans Canada first. We can set you up with the right lenders for your financial needs.
