Believe it or not, banks always advertise personal loans but rarely do they ever issue them. Banks get a lot of volume and so their aim is to avoid risk and stick to secured, conventional lending. For banks, avoiding riskier personal loans is a strategically advantageous move.
In Canada, the two main lenders for personal loans traditionally were Citi Financial and Wells Fargo. However, Wells Fargo pulled out of Canada back in 2009 and with that, the main personal loan lender that has since remained is Citi Financial. The problem? As the large banking institution that Citi Financial is, their regulations and application approval requirements are tough to beat. This leaves a lot of individuals out of luck when looking for a personal loan.
When a loan is secured against an asset, a lender like Citi Financial will be more willing to lend you the money. With the loss of Wells Fargo in this market Citi Financial has found itself operating with a significant competitive edge, and this might add to the reason why they make their application approval process so tough.
Individuals looking for unsecured personal loans are likelier to find financing from more unconventional lenders, such as private lenders.
Size of Personal Loans Available
Generally speaking, if you are searching for a personal loan it is unlikely that you find financing for a loan exceeding the $10,000 limit.
Personal loans are intended to be short-term in nature, which is why they are smaller in size. A larger loan would have to come with collateral and that’s why you normally only hear about long term loans being secured against property, as is the case with mortgages or home equity loans.
Payday Loans vs Personal Loans
There is no denying that payday loans come with hefty fees and high interest rates. Some individuals find themselves with no other alternative, in which case a payday loan may be the right way to go. Nevertheless, if a payday loan is not something you are willing to consider then a personal, unsecured loan will prove beneficial to you. These loans are provided at about 1/10th of the rate of a payday loan and for similar terms.
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