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Every now and again, we could use a little financial help. In Mississauga, people work hard every day for the money they earn to cover life’s expenses, but sometimes certain expenses are a little too much for our bank accounts to handle. Luckily, there are countless different types of loans available to help consumers cover big expenses, whether it’s a house, a car, or an emergency.
How to Get Approved For a Loan in Mississauga
Before you can get your hands on the funds required to cover your pressing expenses, you will need to meet certain criteria first. Your lender in Mississauga will want to make sure that you are financially capable of repaying them the money loaned – plus interest. Lenders prefer to work with borrowers in Mississauga who have a strong financial profile in order for them to minimize the risks of loan default.
So, how do you go about strengthening your financial health to make sure you’re capable of securing a loan?
Pay down your debt. One of the more important things that lenders look at – aside from your income – is the amount of debt you carry. You might make a decent income, but how much of it is already dedicated to paying off your current debt?
Many factors play a role in your credit profile, including your debt load. If your current debt amount still owing is already a lot for you to handle relative to your income, this could be a problem for your loan application. Lenders in Mississauga may wonder if adding another loan to the pile will just overwhelm you financially.
To help increase the odds of loan approval, do your best to pay down your current debt. Cut back on spending to make more funds available to pay your debt off, and consider focusing on paying down your high-interest debt first.
Debts with high-interest rates mean more money is being wasted on interest payments. By paying these down first, you can free up more money to be put toward the principal portion of your debts instead of the interest.
Make sure your credit score is in good standing. Your credit score is a crucial piece of the pie in terms of loan eligibility. With a good credit score, your chances of loan approval will be higher. Not only that, but you’ll also be able to score a lower interest rate, making your loan more affordable.
Pull your credit report to see where your credit score stands. If it could use some improvement, take steps to give it a boost. Make your debt payments on time, make full credit card payments, and avoid applying for too many loans in a short time to improve your score.
Be truthful on your loan application. There’s no sense in fibbing on your loan application in an effort to make yourself seem more financially fit. Your lender will review all pertinent documents and reports to verify where you stand financially. Being truthful on your loan application will ensure that the process goes much smoother and increases the odds of loan approval.
Put up collateral. Backing up your loan with something of value – such as a car – can make the loan more secure in the eyes of the lender. That way, if you ever default on your loan payments, the lender will have a valuable asset to take in order to recoup their losses.
Get a co-signer. If you’re unable to secure a loan on your own, consider getting a co-signer, who will basically back you up if you ever fail to make payments. If you default on your loan, the co-signer will be responsible for taking over the payments on your behalf.
Do you know what the true cost of borrowing is? Check out this infographic to find out.
Loaned money doesn’t come for free. Lenders who supply loans are in this business to make money, and they do so by charging interest on the funds loaned out. The exact rate that you are charged will directly influence how much money you will owe in total by the end of the loan term.
It’s important to find out what rate you’ll be getting for this reason. As such, you should shop around for different loans from different lenders in Mississauga to see who can offer you the lowest rate. Even just a couple of percentage points can make a big difference in how much you pay in interest.
For example, let’s say you take out a $30,000 loan. At a rate of 4.0%, your monthly payments would be $552.50, and the total interest paid over a 5-year period would be $3,149.74. A rate of 6.0%, on the other hand, would translate into monthly payments of $579.98 and a total interest payment of $4,799.04 over the same time frame.
While the rate you are charged will be largely influenced by your credit score, you may still be able to land a lower rate by comparison shopping. Just keep in mind that a higher credit score, lower debt load, and higher income will give you more negotiating power.
When you take out a loan, it will either be “secured” or “unsecured.” But what’s the difference?
Secured loans. Any loan that is backed by collateral is considered a secured loan. That means that an asset of value is used to back up a loan. In the event that a borrower defaults on the loan payments, the lender has the option to take possession of the asset and sell it to recoup any money they may have lost from the borrower’s inability to repay the loan.
Interest rates on secured loans tend to be lower simply because they’re more secure for lenders. There’s less risk involved in case of loan default because the lender has something of value to take.
Examples of secured loans include:
Unsecured loans. Unlike secured loans, unsecured loans are not collateralized by any valuable assets. As such, there’s more of a risk involved for the lender if the borrower defaults.
These loans are typically more difficult to get approved for and require more stringent lending criteria to be met. They usually come with higher interest rates compared to secured loans.
Examples of unsecured loans include:
Unsecured credit cards
Look here if you’re interested in asset-based leasing and financing.
Be Wary of Loan Scammers in Mississauga
While most lenders are legitimate and reliable, there are some predatory lenders in Mississauga who prey on unsuspecting consumers who are in need of a large sum of money. Loan scams are especially rampant in the world of payday loans. These types of loans come with extremely high interest rates and usually have to be repaid in one lump sum within a short time period (usually two weeks).
It’s important to be vigilant of any red flags that could point to a loan scam, including the following:
The lender doesn’t look at your credit or financial profile. Any lender in Mississauga who says they don’t care what your financial or credit history looks like should be avoided. Lenders don’t usually want to take much of a risk lending to borrowers who aren’t capable of repaying their loans, so not verifying this information is a red flag.
The lender guaranteed loan approval. Lenders in Mississauga who advertise “guaranteed approval” are just putting borrowers in a position to never be able to pay back their loans or climb out of a mountain of debt. These lenders are just looking for borrowers who they can continue to collect interest from without the borrowers ever being able to alleviate their debt load.
The lender requires a prepaid debit card. Some lending scammers in Mississauga may provide you with a prepaid debit card, saying that they need it for collateral, insurance, or fees. Instead, legitimate lenders will charge their associated loan fees from your loan.
If you feel that you’ve been the victim of fraud from a supposed lender, get in touch with a consumer protection agency or regulator for lenders in Ontario.
Alternative Lending Options in Mississauga
It’s common for consumers who are looking to apply for a loan to head to their bank or credit union. But while these are fine, there are other lender options available to consumers who may have trouble getting approved by a conventional lender in Mississauga.
Private lenders. These lenders do not fall under the provincial or federal regulations regarding lending, so they often take on borrowers who are underqualified to get approved for a loan from a traditional lender. They’ll put up their own money to serve as loaned funds and charge borrowers interest on the money as a means of earning a profit.
Want some information about private mortgage lenders? Take a look at this article.
Online lenders. More and more online lenders are popping up on the internet these days. Online lenders make things very convenient for borrowers because everything is done via the internet without the need to physically visit a bank branch. That said, some borrowers might not like the idea of not being able to have any personal face-to-face contact with their lenders.
What Happens if You’re Turned Down By the Bank?
As mentioned, you have other options aside from your bank when it comes to getting a loan. If your bank denies your loan application, you may want to consider applying with an alternative or private lender in Mississauga.
There are also lenders who deal exclusively with bad credit borrowers. These particular lenders focus more on your income, assets, and recent financial activity.
Need a Loan Mississauga?
If you’re in need of a loan of some sort, it can be daunting to choose a specific lender in Mississauga. Let Loans Canada help! We can put you in touch with a lender in Mississauga who is best suited for you and can offer you the exact type of loan and rate you need. Call Loans Canada today.