Flexibility is a common loan feature borrowers look for when it comes to choosing a loan. Flexibility in payment schedules and interest rates can make a loan affordable. The flex loan is a new type of loan that provides the borrower with the flexibility they need to get on top of their finances. Keep reading for a quick introduction to what you can expect from a flex loan and how it might be able to help you with your financial needs.
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 semi-monthly payments.
- Prepayment options. Most lenders charge a fee when a borrower wants 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, straightforward, 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 Type Of Lenders Offer Flex Loans?
Flex loans are offered by smaller 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.
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Steps On How To Get A Flex Loan In Canada
To find and apply for a flex loan, follow these steps:
Step 1. Compare Lenders
Use an online loan aggregator to quickly find lenders that offer short-term flex loans. You can then compare them side-by-side to see how they stack up against each other. This will help you find the lowest rates and best terms, which can lead to savings and easier-to-manage payments.
Step 2. Check Your Credit Score
If the lender conducts credit checks, you’ll want to know what your score is by pulling a copy of your credit report. Reviewing your report will also give you a chance to see if there are any errors that are pulling your score down. If so, have the errors investigated and fixed by the credit bureau.
If your score is a little low, consider taking some time to improve it before applying for a short-term flex loan. This can help increase the odds of getting approved at the lowest interest rate. Similarly, ensure that all other aspects of your finances are in order such as your income and debt.
Step 3. Submit Your Application
Gather all required documents that your lender requests, such as proof of income, a letter of employment, pay stubs, or bank statements. You’ll also likely be required to provide documents like a driver’s license or passport so the lender can verify your identity. Submit all these documents along with your completed loan application.
Your lender should provide you with notice of approval within a day or two after submitting your application, and you’ll receive the funds shortly after.
Borrow Up To $50,000
Pros And Cons Of A Short-Term Flex Loan
A short-term flex loan offers plenty of perks, but it also has a few downsides that you should consider before applying.
Pros
- Flexibility. A short-term flex loan gives you the freedom to customize the loan according to your needs and finances. For instance, you can choose the repayment schedule that’s most convenient for you, and you don’t need to come up with collateral to back the loan.
- Less interest paid. Since the loan term is short, you’ll pay less interest over the life of the loan.
- Easy approval. Flex loans are easier to get approved for compared to traditional loan types. If you have bad credit, for instance, you can still secure a short-term flex loan, as long as other aspects of your finances meet the lender’s requirements.
- Funds can be used for most purposes. There aren’t usually any restrictions on what the funds from a flex loan can be used for.
Cons
- Higher interest rates. Shorter-term loans often come with higher interest rates. That’s because there’s a shorter window of time for the lender to make a profit on the loaned funds.
- Smaller loan amounts. Short-term loans are generally made for smaller amounts, usually between $2,000 and $20,000. If you need a larger loan amount, you may need to consider a longer-term personal loan.
- Less time to repay. You may find it difficult to come up with the funds needed to fully repay your loan over a shorter period of time.
- Risky. Most online lenders are legitimate and make it easy and convenient for borrowers — especially those with bad credit — to secure a loan. But there are some predatory lenders lurking that may not have your best interests in mind. Keep an eye out for these lenders to keep your money safe.
Flex Loans Vs. Payday Loans
Both short-term flex loans and payday loans come with very short time repayment periods. So, what makes them different from one another?
Loan amounts. Payday loans are usually made for no more than $1,500, while flex loan amounts can be as much as $20,000 or more.
Interest rates. Payday loans come with the highest interest rates in the lending industry, with APRs as high as 500% or more. While these loans also come with high rates, they’re not nearly as expensive as payday loans. Rates typically range around 46.97%, and legally they cannot charge you more than 60% (APR).
Loan terms. You usually only have 2 weeks to repay a payday loan, though sometimes you may have as long as a 60 days to pay up. Short-term flex loans, on the other hand, offer loan terms as long as a year.
Income requirements. Payday loan lenders may not have specific income requirements to meet. They generally just require you to have enough income to cover the loan amount. On the other hand, short-term flex loan lenders will typically look at your income and debt (debt-to-income ratio).
Credit checks. It’s common for payday loan lenders not to conduct a credit check on applicants. Short-term flex loan lenders, on the other hand, usually check your credit as part of the application process. That said, sometimes a credit check is not necessary with certain flex loan lenders.
Security. Short-term flex loans are typically provided by reputable lenders, while the chances of being exposed to a predatory payday loan lender are much higher.
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. 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
- Vacation
- To pay for repairs to their home
Flex Loan FAQs
How much can I borrow with a short-term flex loan?
Can I get a short-term flex loan with bad credit?
How are short-term flex loans secured?
Do short-term flex loans require a credit check?
Bottom Line
Flex loans and other types of installment loans are great alternatives to payday loans. They offer more flexibility, typically have lower interest rates, and come with installment payments. Just 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.
