Installment Loans London 2019

As a consumer in London, you must have plenty of different expenses to cover. In fact, the closer you reside to the city’s center, the higher your average cost of living is likely to be. No matter what your living situation is like, it’s always a good idea to have a couple of payment methods at your disposal, such as credit cards and cash.

Then again, credit cards can lead to a lot of debt and using up your savings isn’t great, so it’s often safer to set yourself up with a backup plan, such as an installment loan. Let’s talk about what this product can do for you.

Make sure you avoid these application mistakes when you apply for a loan.

What Expenses Can an Installment Loan Cover?

Generally speaking, an installment loan is a lump sum of money that is deposited directly into your bank account a few days after your application has been approved.

That sum can then be used to fully or partially pay for just about anything. Afterward, rather than draining your savings right away, you can use up your loan, then pay it back through divided installments. Depending on what your finances look like and how much you borrowed in the first place, your repayment plan can last anywhere from several months to several years.

All this said a loan is a serious responsibility that comes with many costs of its own, such as your lender’s interest rate, administrative fees, not to mention the recurring price of your installments.

Therefore, it’s important to budget for these costs accordingly and only spend your borrowed funds on practical items and unexpected events, such as:

  • Groceries and household supplies
  • Home or vehicle-related repairs/maintenance
  • Various taxes and bills (utilities, internet, etc.)
  • Car accidents, house fires, and other financial emergencies
  • Consolidation of outstanding debts
  • Tuition, books, and other educational costs

Personal Loans Application Check List

How is an Installment Loan Different from a Payday Loan?

There are a number of loan types available to Canadian consumers. Two of the most commonly seen are the installment loan and the payday loan. While they are similar in some ways, they are very different when it comes to their repayment processes and overall costs.

Installment Loans

In the everyday financial world, an installment loan is easier to come across, since most lenders offer them in some capacity, whether prime or subprime. The same concept applies; borrowed money that’s repaid in various frequencies.

Interest rates and fees will also vary from lender to lender. For instance, prime lenders are often more willing to give you lower interest rates but are less willing to approve you for credit if your financial health is considered too risky. A subprime lender would likely charge you a higher rate due to the additional risk they would be taking by approving you.

That said, one of the best things about an installment loan is that you can adjust your payment plan to suit your financial needs. Although every lender has a different way of doing business and your negotiating power may be limited if you have healthier finances, most will allow you to choose from several installment frequency options.

Can you refinance a personal loan? Find out here.

Typical Installment Frequencies:

  • Weekly installments (which work out to 52 payments per year)
  • Bi-weekly installments (which work out to 26 payments per year)
  • Monthly installments (which work out to 12 payments per year)
  • Semi-monthly installments (which work out to24 payments per year)
  • Accelerated installments (lump sum or extra payments per year)

In most cases, an installment loan is a safer bet when you need an affordable and effective credit product. However, under the wrong circumstances, they can be a little bit harder to qualify for and stretch your debt out further than the next featured product.

Other Things to Watch Out For:

  • The length of your repayment term can drastically change the total cost of an installment loan.
  • Longer terms can help you stick within your budget because your installments will be smaller. Shorter terms have higher rates but can end your debt faster.
  • The application process will often be more strict and may include an inspection of your income, employment history, credit report/score, and current debts.

Payday Loans

Despite some provinces attempting to reduce their impact, payday loans are still commonly seen online and on the streets of Ontario. Like with installment loans, a basic examination of your finances will take place when you apply. Upon approval, you will again receive a lump sum of money, generally by direct deposit, which then needs to be repaid (with interest) soon after.

However, payday loans are quite different in almost every other respect. Firstly, the requirements to get approved are far more minimal than those of the average installment loan. More often than not, applicants need only have a steady job, active bank account, Ontario address, and be at least 19 years of age in order to qualify.

No credit check will be performed and qualified clients are likely able to collect their money within 24 – 48 hours of approval, while an installment loan can take several business days to be approved and deposited.

When it comes to payday loans, do you know your rights? Learn more here.

Payday Loan Amounts and Terms  

As mentioned, perhaps the greatest difference between the two loan types has to do with their costs and repayment processes. Though installment loan sizes and term lengths may vary from lender to lender, most payday lenders only offer loans of $100 – $1,500 and allow you just 14-days to repay your loan (without penalty).

Typically, the full cost of the loan is automatically debited from your account on it’s scheduled due date and hefty penalties will be added if you default. So, despite the fact that an installment loan can lead to your debt being stretch out over a longer period of time, a payday loan can wind up being much more costly.

Other Things to Watch Out For:

  • Being subprime institutions, payday lenders charge some of the highest interest rates in Canada (maximum $15 per $100 borrowed in ON), along with exorbitant cheque cashing and administrative fees.
  • In Alberta, no payday lender is legally allowed to grant you a second loan before your first has been fully repaid. That means no extensions or “rollovers”.
  • Predatory lending and scamming are prevalent when it comes to payday loans. These supposed lenders may charge you illegal rates for substandard loans or simply steal your identity to commit credit fraud.

Warning Signs Include (But Aren’t Limited To):

  • Offering “100% guaranteed approval”, no matter what your finances look like.
  • Charging more than $15 per $100 you borrow.
  • Demanding “loan insurance” or other payment before your loan is deposited.
  • Not having a physical address or a valid business license.
  • Using illegal or offensive tactics when trying to collect payment.
  • Refusing to display all loan costs through advertising and within contracts

How to Break The Payday Loan CycleCheck out this infographic to learn about the cycle of debt payday loans cause.

How Can I Get Approved for an Installment Loan?  

Remember, the installment loan application process will vary depending on where you apply. Some lenders are more strict when it comes to the clients they are willing to approve. Nonetheless, the application process is more or less the same with installment loans, in that candidates with good financial strength, low debt amounts, and decent credit are more likely to get approved for favorable loan conditions.

To increase your chances of approval for larger loans with better rates and payment plans, take some of the following precautions before you apply:

  • Find a steady job and save up as much income as possible.
  • Create a budget and reduce your non-essential expenses.
  • Pay off or consolidate your outstanding debts.
  • Check your credit report for errors, fraud, or identity theft.
  • Keep your credit score between 650  and 900.
  • Ask a friend or family member to cosign your application.
  • Offer collateral (helpful for larger loans and/or low financial strength)

What Are the Pros and Cons of an Installment Loan?

Every credit product, whether it’s an installment loan or otherwise, comes with pros and cons that can certainly affect your current financial situation. Once again, it is essential to do proper research and even speak to an expert before you apply.

For a better idea of whether or not an installment loan is right for you, take a look at the short list of pros and cons that we’ve provided below.


  • Offered by the vast majority of lenders.
  • Adjustable payment plans can be easier on your finances.
  • Responsible payments can improve and diversify your credit.
  • Can be a viable backup plan for high-interest debt or financial emergencies.  
  • Applying with good financial health and loan security (cosigner, collateral, etc.) can lead to more favorable rates and conditions.


  • Higher rates may apply with shorter repayment periods.
  • Predatory lending and scamming are possible if you’re not careful.
  • Low financial strength and lack of security can lead to a denied application or less favorable loan conditions.
  • Defaulting on payments can result in late penalties, added interest, unmanageable debt, and reduced credit.

Need an Installment Loan? Try Loans Canada!

If you’re living in London and in search of the right installment loan for your financial needs, don’t hesitate to reach out to Loans Canada. We’re here and ready to help you find a solution! For more information contact us today or check out our website!     

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Bryan completed the Cinema, Video, and Communications program in Dawson College and holds a Bachelor’s Degree in English Literature & Creative Writing from Concordia University. Bryan covers a wide range of topics for Loans Canada, including cred...

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