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When it comes to choosing a lender and a loan, we can almost guarantee that most Canadians want flexibility. Flexibility in the lenders, types of loan products, payment schedules, and interest rates they have to choose from.
While most loans are “one size fits all”, we’re definitely seeing more and more lenders move toward the customization of their lending products to better fit their client’s financial needs. Enter the flex loan, a new type of loan that provides the borrower with the flexibility they need to get on top of their finances makes their payments on time, and ultimately, improve the overall health of their finances. Keep reading for a quick introduction to what you can expect from a flex loan and how they might be able to help you with whatever your financial needs are, now and in the future.
Was your loan application rejected and you’re not sure why? Read this.
What is a Flex Loan?
A flex loan is similar to a typical short-term installment loan, but with the added flexibility that so many consumers want and need. Depending on which lender you decide to work with, you can expect increased flexibility in one or more of the following features:
- Payment schedule. Your lender may provide you with the option to choose from weekly, bi-weekly, monthly, or twice monthly payments.
- Prepayment options. Most lenders charge a fee should a borrower want to pay off their loan ahead of schedule. With a flex loan, many lenders allow their borrowers to make prepayments, penalty free.
- Loan top-up. Because a flex loan is so flexible, many lenders offer the option to top-up a loan should a borrower need access to more money.
- Customizable terms. Depending on your budget you may want to choose a pay off your loan quickly or over several years, flex loans can afford you this option.
Flex loans are simple, straight forward, and user-friendly and can help any consumer who is currently looking for a financing option that will work with, instead of against, their finances.
What Can You Use a Flex Loan For?
Flex loans, like other installment loans, can be used to cover the cost of whatever the borrower chooses. Depending on your financial situation this can be anything from an unexpected cost to a vacation. As we’ve said before, the best thing about flex loans is that they are flexible. They truly can be used for whatever you need. Here are a few of the most popular reasons why a Canadian consumer might apply for a flex loan.
- Medical emergencies
- To make a large purchase
- To cover the cost of an unexpected expense
- Car repair costs
- Debt consolidation
- To pay for repairs to their home
What Type of Lenders Offer Flex Loans?
Flex loans are offered by smaller (sometimes private) alternative lenders who often conduct their business online. These types of lenders have slightly less strict guidelines and thus are able to offer flex and bad credit loans. It’s important to keep in mind that not all online lenders are legitimate and that some fraudulent lender may use the same names, phrases, and terms as legitimate lenders to scam consumers out of their hard-earned money.
Loans Canada, as well as many of our colleagues, have recently noticed an increase in the number of Canadian consumers being targeted by loan scams. If any of the decisions, practices, or requests of a lender you’ve applied with make you feel uncomfortable or seem too good to be true, please do not provide them with any of your personal information, cut off all contact with them, and report them to the appropriate authorities.
Protecting Yourself Against Fraud
The best form of prevention is to be as informed as possible about the fraudulent activity of these scammers. Please watch the video below and read our two PSAs (here and here) concerning fraud that consumers have brought to our attention.
Advantages and Disadvantages of a Flex Loan
With any type of loan or credit product, there are advantages and disadvantages and a flex loan is no different. Here are a few of the most important factors you should take into consideration when deciding if a flex loan is the right option for you.
Yes, you guessed right. The biggest advantage of a flex loan is its flexibility. A flex loan comes with affordable installment payments which means you’ll always know when you need to make your next payment. In addition to installment payments, you’ll also often have the option to make prepayments, which can allow you to pay off your loan sooner.
Flex loans also come with a top-up option. This means you can increase the amount of your loan at any point if you need more funds to cover the cost of something. Flex loans are also a great option for most consumers because they can be used for any number of financial reasons, from debt consolidation to credit improvement.
Flex loans typically come in small amounts, this means if you’re looking to purchase a car or have a lot of debt you want to consolidate under one loan, a flex loan is not the option for you. While flex loans are not as hard to qualify for as say a mortgage or car loan, they do have more requirements than payday loans. Keep in mind thought that ease of approval is definitely outweighed by the negatives when it comes to payday loans.
Flex Loans vs. Payday Loans
Flex loans and other types of installment loans are great alternatives to payday loans (for more information, click here). They offer more flexibility, typically have lower interest rates, and come with installment payments. Payday loans are notoriously expensive and can often lead the borrower into a cycle of debt that is very difficult to get out of.
- Small loans, typically less than $1000
- Must be repaid on your following payday
- Does not help to improve credit
- One-time transaction, no option to top-up or renew
- Extremely high APR, usually around 500%
- Also a small loan but can more significantly more than with a payday loan
- Easy to manage installment payments
- Can be used to help grow your credit score
- Option to increase loan amount
- More reasonable interest rates
Check our infographic for everything you need to know about the payday loan cycle.
How to Get Approved for a Flex Loan
Applying for and then getting approved for a flex loan is simple and straight forward. Here’s what you can exact from the flex loan application process.
- An easy and quick application
- You’ll need to be of legal age in your province
- Speedy approval times
- Convenient and electronic transfer of funds
Remember, choosing the right flex loan provider is one of the most important steps you can take. So do some research and only apply with a lender you feel you can trust.
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