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Fredericton, the provincial capital of New Brunswick, has a population of just over 58,000 people, making it the third-largest city in the province, next to Moncton and Saint John. Dividing the city into two parts is the Saint John River, which spans 673 kilometres. Unlike many other coastal cities along the Canadian Atlantic, Fredericton has not been subject to as much economic hardship after the decline of the mining, fishing, and mill industries in the late 1990s. Instead, the heart of the city’s economy comes from their educational facilities, such as the University of New Brunswick, the oldest public university on the continent. Fredericton is also the location of over 85 kilometres worth of walking trails that run along the Saint John and Nashwaak Rivers, making it the perfect place to get outdoor exercise.
Want to know more about loans in New Brunswick? Take a look at this.
Loan Myths in Fredericton
Regrettably, there are a lot of myths surrounding the loan process. Much of this misinformation is skewed even further through word of mouth. For anyone who might be thinking of applying for their first loan, some of the more frequently heard loan myths might be:
- To increase your chances of getting approval, applying for multiple loans is a good idea. Actually, applying for too many loans at once is not a good thing to do, as many lenders in Fredericton will check your credit report. When they do, a “hard inquiry” will show up on your file and can have a negative effect on your credit score for up to 12 months.
- Loans will only put you in unwanted debt. While a loan is a debt that you need to pay off over a period of time, that debt will likely be used to finance something that’s important to you, like your car or new home.
- Credit cards end up being more expensive than loans. Not necessarily. While irresponsible credit card usage (failure to make payments on time or in full) will put you in a cycle of revolving consumer debt, loans, especially car loans and mortgages can cost tens, even hundreds of thousands of dollars. Make sure you can afford your loan before applying.
- Only banks and other traditional financial institutions will provide you with the loan you need. Actually, there are numerous other organizations known as “lenders”, who can provide you with a loan if your application is rejected by a bank. Just make sure the lender is a legitimate source of loans.
Preparing to Apply for a Loan in Fredericton
It is always important to prepare yourself before the loan application process starts. Because the process can take some time and thought to complete in its entirety, being organized and having all relevant financial documentation ready to go will help things move along smoothly. In fact, there are a few questions you should ask yourself before applying, such as:
- Are your finances in order? Being financially disorganized and already having a bunch of debt on your plate are warning signs for any good lender in Fredericton that you may end up bankrupt if you take on one of their loans.
- Have you done enough research? Finding a legitimate lender in Fredericton with decent interest rates is not always simple, but it is essential. Once you’ve done the proper research and settled on a lender, you can get an idea of how much you’ll be paying in interest and debt payments per month.
- How much will you be able to afford in repayments? Will your current income and savings support you in the event of a financial emergency? Remember, a large loan can take years to finance completely. If you might not be able to afford the payments in the years to follow, you should hold off until you’re making a better income.
- Should you check your credit score? Yes! While your credit score is not a deciding factor for certain lenders in Fredericton, checking it is a good way to know if your financial stability is adequate enough to keep up with payments.
- Do you have any other debts to pay? It is extremely important to pay off any other debts you might have before taking on more. If you pay your other debts (credit card bills, etc.) but don’t have enough left over to finance a loan, wait until you can replenish your finances.
- What is your debt-to-income ratio? Divide your average monthly loan payments (make sure to include the interest charges) by your current monthly income. If the ratio amounts to more than 30-35%, you should probably wait until you can make more money before applying.
Take a look at this infographic for even more information about credit scores and how they’re calculated.
Loans and Your Credit Score
Another important fact about loans that need to be considered before applying is the effect it will have on your credit score. Many people in Fredericton may not realize until it’s too late, that the way they make their loan payments will cause their credit score to rise and drop.
For example, if someone is late on their payments, not making them in full amounts, or missing them altogether, their credit score is going to decrease rapidly. However, if they are paying for everything they owe on schedule, it will be good for their credit score and cause it to increase.
Unfortunately, already having a low credit score can make some people anxious about applying for a loan. If you’re in a similar state, there’s no need to be nervous. As we mentioned above, credit scores are not a factor for all lenders in Fredericton. What most lenders really want to confirm is that you’ll be able to keep up with the allotted payment schedule. So, if you have a low credit score, but a solid source of income and low amount of debt, you’ll have a higher probability of getting approval. Just make sure that your lender is legitimate and reporting your progress to at least one of Canada’s major credit bureaus (Equifax or TransUnion).
For some ways of fixing or improving your credit score, check this out.
FAQ’s
- Are there ways that I can increase my chances of approval in Fredericton? Yes indeed, such as:
- Check your credit. Reviewing your credit report and credit score will help you determine if you are financially safe enough to afford the future debt that comes with a loan.
- Research, research, and more research. Remember, there are a lot of loan scam artists out there. Always confirm that a lender is legitimate and listed in the B.B.B. (Better Business Bureau) database.
- Look into online lenders. Another thing to research might be online lenders. They could suit your lifestyle needs better than a bank or other traditional lending company.
- Organize and update your personal/financial documents. Disorganization might make your lender think you are at risk of financial problems.
- Previous debts should be paid prior to applying. Any debt you have is only going increase dramatically with the addition of a loan.
- Does a low credit score equal automatic rejection? While banks will often examine your credit score during their application procedure, there are many lenders in Fredericton that won’t. If your finances are in order, your chances of approval will be better.
- Do loans change your credit score? Yes, they certainly do. If you are being responsible during your payment period by making on-time and complete payments, your score will increase. Any late, short or missed payments will cause it to decrease.
- Loan or credit card? This varies according to your expense. Both loans and credit cards can work for different financial situations. For example, smaller expenses, like groceries, can be paid for with a credit card if the monthly bill is easily afforded. However, cars and houses can cost a small fortune to finance. In this case, a loan might be more beneficial.
- I have no credit history. Will I be rejected? Not necessarily. A credit history is simply a record of your credit product usage, like your credit cards. While a positive credit history can be beneficial for your application and your financial future, it’s not always necessary.
- Why did my bank deny my application? Banks have more rules and regulations when it comes to their borrowers. Low credit scores and other financial/debt problems can be the cause of an application being rejected.
- Do all lenders ask for an advanced deposit? Absolutely not. Be careful, if a “lender” asks for a deposit before approval, they are illegitimate and trying to scam you! It is illegal to ask for any amount of money before you are approved for a loan. Don’t give these scam artists any information about you or your finances and walk away.
- When can I expect to receive my loan? 24-hours to a few business days is the common waiting time. Remember, filling out your application honestly and efficiently will speed things along. The time it takes to receive the money may also vary according to the size of the loan you’re asking for.
- Can I make early loan payments if I have the means to do so? Unfortunately, the majority of lenders will not allow early payments. If they do allow this, be careful, because they might charge a hefty penalty.
The Best Financing For Your Needs in Fredericton!
If you’re currently in the market for a personal loan in Fredericton, you’ve come to the right place. Loans Canada can help find you the best loan for your unique needs.
