Personal Loans Prince Edward Island
Save time and money with Loans Canada
Written by Bryan Daly
Best Personal Loans Prince Edward Island 2020
A personal loan can be a very useful financial tool when used responsibly. Residents of Prince Edward Island can take advantage of these loans for a wide variety of reasons, from covering the cost of unexpected expenses to paying for large purchases. If you’re currently looking to apply for a personal loan in Prince Edward Island, Loans Canada can help.
Personal Loans and Credit Cards: What’s the Difference?
Before applying for your personal loan in Prince Edward Island, it’s good to get an idea of how it will differ from your other financial products, namely your credit cards.
- Come in the form of cash, usually deposited directly into your bank account (ask your lender how they plan to transfer your loan funds)
- Are often a better choice when you want an amount of money that surpasses the spending limits of most credit cards
- Often have lower interest rates than the average credit card
- Are divided into equal payments, spread out over a predetermined schedule
- Give you the option of using your valuable assets (car, house, land, etc.) to secure more money and a lower interest rate
- Come with a credit limit that you can borrow from (and payback) as needed
- Have a set payment period of 30 days
- Come with a minimum monthly payment, which you can follow to avoid penalties
- Are often a better way to pay for small to moderate consumer/retail expenses, such as groceries, clothes, gifts, etc.
- Sometimes come with added benefits, such as travel/reward points
- Usually, come with higher interest rates than most personal loans in Prince Edward Island
- Don’t give you the option of offering an asset as collateral
How Much Can I Get and What Can I Use it For?
The amount of personal loan money you’re approved for hinges on your lender’s preferences, as well as your ability to pay it back on schedule. For that reason, your lender might inspect your:
- Financial information (bank statements, savings, debt and payment history, etc.)
- Employment information (employment record, current job, regular income, etc.)
- Credit information (credit score, credit rating, credit report, credit history, etc.)
- Assets (optional)
- Co-signer’s financial, employment, and credit information (optional)
If approval is reached, you can use your personal loan for:
- Any larger expenses that you don’t want to charge to your credit cards
- Any unexpected costs that need immediate attention
- Voluntary or necessary medical costs that aren’t insured by your Medicare
- Household repairs, renovations, additions, landscaping, etc.
- Vehicle-related costs (purchase, fuel, repairs, insurance, registration, etc.)
- Travelling, vacations, holidays, etc.
To learn the difference between a payday loan and a personal loan, watch our video.
Your Credit: How it’s Affected by a Personal Loan
Before you apply for a personal loan in Prince Edward Island, one very important consideration to take into account is how your credit fluctuates in accordance with your loan payments. Here’s what a basic loan-to-credit agenda might look like:
- After you’re approved, your lender will begin relaying your payment activity to one of Canada’s major credit reporting agencies (Equifax and TransUnion).
- The agency they do business with will then compile your information into a “credit report”, which is a record of all your credit accounts and the transactions you’ve made (good or bad) over a certain number of years
- On-schedule, full payments = a rise in credit score and improved credit report
- Late, short or missed payments = a penalty fee, followed by a drop in credit score and damaged credit report
- The health of your credit directly affects your ability to get approved for loans and various interest rates in the future
Your Credit Score: What’s the Minimum Number for Approval?
In PEI and the rest of Canada, credit scores range from 300-900. The closer to 900 your score is, the better.
- 650 or above (good credit) = better chances of approval and a lower interest rate (costing you less over time)
- 650 or below (moderate to poor credit) = worse chances of approval and a higher interest rate (costing you more over time)
Before applying, it’s essential to raise your credit score as much as possible by:
- Paying down your other debts on time and in full
- Lowering your credit utilization ratio below 30-35% (your ratio = total debts / credit limit)
- Requesting a free copy of your credit report and disputing any errors you find
For more methods of improving or fixing your credit score, read this.
Applying: What Else Can I Do For Better Chances of Approval?
Every lender’s loan application process will be slightly different. So, when you find yourself a legitimate lender (look them up in the Better Business Bureau database to be sure they aren’t scammers), ask them to clarify their own procedures.
Generally speaking, however, there are a few measures you can take to make yourself look better to your lender (raising your creditworthiness), such as:
- Pay down all your other, more pressing debts
- Try not to take on any more unnecessary debt
- Have a stable source of employment/income
- Arrange all your personal and financial information for inspection
- Find a co-signer (if your credit is poor)
- Get an idea of what your assets are worth (if you’re applying for a secured loan)
What Does Loans Canada Recommend?
Our team is always on the lookout for new clients to set up with the best sources for personal loans in Prince Edward Island. Prior to applying, however, we recommend that you carefully consider how much loan money you want, what you’ll use it for, and your ability to finance your payments. When you’re ready, all that’s left for you to do is apply below!