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📅 Last Updated: October 4, 2021 ✏️ Written By Lisa Rennie 🕵️ Fact-Checked by Caitlin Wood
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Most loans – whether they’re car loans, mortgages, or personal loans – are usually different forms of installment loans. They’re named as such because of how the money is repaid. Rather than paying back loaned funds in one lump sum – which is typically the case with payday loans – the total amount would be repaid over time.
If you’re in need of some financial help in Ottawa, an installment loan may be extremely helpful. Keep reading to find out all about installment loans in Ottawa to see if they’re right for you.
Installment Loan Payment Plans Available in Ottawa
With installment loans, you’ve got different payment plans available depending on your needs and what your lender in Ottawa is able to offer you. Your payment plan options include:
- Weekly – One payment per week
- Biweekly – One payment every two weeks
- Semi-monthly – Two payments per month
- Monthly – One payment made once a month
Keep in mind that the option you choose will depend on your situation in Ottawa, what you’re comfortable with, and what your lender is able to offer you. Some lenders in Ottawa only offer one option while other lenders offer some or all.
Do you know what the true cost of borrowing is? Find out here.
Can You Get an Installment Loan When You Have Bad Credit?
While lenders prefer to work with borrowers who have good credit, there may be a possibility to get approved for an installment loan in Ottawa even if your credit score is less-than-perfect.
That said, it might be more difficult for you to get approved with a bad credit score. And even if you do get approved, the interest rate that your lender in Ottawa will offer you will likely be a lot higher than it would be if your credit score was high.
A bad credit score probably means you’ve had a history of missing payments, making you a riskier borrower. Most conventional lenders in Ottawa will likely not want to work with bad credit borrowers.
However, there are plenty of alternative lenders available in Ottawa who deal exclusively with bad credit borrowers.
Rather than focusing solely on credit, these alternative lenders in Ottawa will look at other factors associated with your ability to secure an installment loan, such as your income, assets, debt load, and your most recent payment activity.
If you’re able to show that you’ve made strides to be responsible with your payments, make a decent income, and are able to put down a large down payment toward your loan, you may have a better chance of getting approved.
In many cases, you may also be required to put collateral upfront in order to secure the loan.
Lenders in Ottawa will also look at your debt-to-income ratio, which is basically the amount of debt you have relative to your income. In other words, your debt-to-income ratio refers to how much of your monthly income is dedicated to paying your monthly bills.
A high ratio might make it more difficult for you to get approved for an installment loan or any other type of loan, while a low ratio will make it easier for you to get approved because more of your income will be available to pay off your new installment loan.
No Credit Check Installment Loans
If you have a good credit score, then you’ll likely have no problem allowing lenders to see your credit score when applying for a loan. But if your credit score is lagging, you might be hesitant for lenders to see what your credit score is.
While conventional lenders will require a credit check to be conducted before supplying a borrower with the loan, there may be other lenders who deal with bad credit borrowers and may not require a credit check. In this case, other factors will be looked at as mentioned above, including your income, assets, debt, and down payment amount.
Take a look at this infographic to learn more about credit scores.
Long-Term vs. Short-Term Installment Loans
In terms of the actual amount of time that you have to repay your installment loan, you can choose either a short-term versus a long-term installment loan.
Long-term installment loans are attractive to many borrowers in Ottawa because it gives them much more time to pay off the entire loan amount. As such, the monthly payment amounts are much lower, making them more affordable and easier to fit into borrowers’ budgets.
On the other hand, long-term installment loans are more expensive over the long run because more interest will be paid toward the entire loan amount. Further, long-term installment loans will take longer to pay.
Short-term installment loans may be attractive to some borrowers in Ottawa because the loan can be paid off in a much shorter amount of time. Further, borrowers in Ottawa can save plenty of money in interest because of the shorter time frame within which to pay off the installment loan.
The downside to short-term installment loans in Ottawa is that monthly payments are much higher as opposed to long-term installment loan payments.
Short-term loans, the good and the bad, click here.
Payday Loans Vs. Installment Loans
Payment loans and installment loans in Ottawa are similar in that they both provide much-needed funds to borrowers to cover pressing costs. However, that’s basically where their similarities end.
There are a few key differences between payday loans and installment loans, including the following:
Payment term. Payday loans must usually be paid back in an extremely short timeframe. There’s a very quick turnaround time between the distribution of the approved funds and when the money must be paid back.
These types of loans must usually be paid back within a two-week timeframe; generally, by the time the borrower gets their next paycheck.
Installment loans, on the other hand, have a much longer payment term. Borrowers typically have anywhere from a few months to up to a year or more to repay their loan amount.
When it comes to payday loans, it’s important to know your rights.
Payment frequency. Payday loans must typically be repaid in full in one lump sum, plus any interest charged on the loan amount. In contrast, installment loans allow borrowers to repay the full loan amount in chunks rather than paying in one lump sum, whether it’s on a monthly, semi-monthly, biweekly, or weekly basis.
Interest rate. Payday loans are notorious for charging extremely high-interest rates, usually in the three-digit range. Instead, installment loans usually come with much lower interest rates, making them a lot more affordable.
Loan amounts. Payday loan amounts are usually made for no more than $800 to $1000, while installment loans in Ottawa often allow much higher loan amounts – as much as a few thousand dollars – depending on what the lender offers and the borrower’s financial health.
Installment Loans to Consolidate Debt
Do you have several debts in the works that you’re struggling to pay down? If so, you may be looking for a way to deal with them effectively, and installment loans may be able to help by consolidating your debt.
Debt consolidation in Ottawa refers to taking out one large loan in an effort to pay off several smaller loans. The idea behind debt consolidation is to pay down high-interest debt, which can, therefore, save you money.
Further, having only one loan as opposed to several makes money management much simpler and streamlined. An installment loan can be taken out to consolidate all other smaller debts to make things more affordable and easier to manage.
Will a debt consolidation loan look back on your credit report? Find out here.
Looking For a Loan to Cover an Expense in Ottawa?
If you’re looking for a loan to help you cover an urgent expense in Ottawa that your current bank account is not adequate enough to cover, perhaps an installment loan may be able to help. If you determine that you’re financially capable of making loan payments after careful assessment of your financials, an installment loan may be able to help.
Call Loans Canada today and we’ll put you in touch with a suitable lender in Ottawa who can offer you an installment loan product that best suits your needs.
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