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Most adults living in Calgary will need to, at one point in their lives, apply for a loan. There are mortgages to buy houses, auto loans to buy cars and, of course, personal loans for all sorts of other expenses. Personal loans, one of the most versatile types of loans, come in the form of a one time deposit from your lender.
Here are just a few expenses you can pay for with the help of the right personal loan:
- Vacations and travel-related expenses.
- Repairs/general maintenance on your home or vehicle
- Renovations/additions to your house or other real estate property.
- Repeating costs (groceries, utilities, insurance, taxes, etc.)
- Expensive purchases (furniture, appliances, etc.)
- Medications, elective surgeries, and other medical issues that aren’t covered by your health insurance.
If you’re a Calgary resident and are interested in more information about applying for a personal loan in the province, we have all the information you need.
Applying for a Personal Loan in Calgary
Some people find the personal loan application process to be a bit tricky, but it doesn’t have to be that way for you. When you’re about to apply for a personal loan, the key is to be prepared for the process using some of these simple steps:
1. Compare Lenders in Calgary
Unfortunately, there are many predatory lenders across the province and country that will try to take advantage of you by charging ridiculously high-interest rates and fees. There are also many scam artists posing as lenders to steal your financial information. So, it’s essential that you research multiple lenders and make sure they are legitimate and gave a good reputation.
Need some debt relief from predatory loans? Look for it here.
2. Organize Your Finances
Before applying for a personal loan in Calgary, ask your lender what factors of an applicant’s financial profile they typically examine during the application process. This will often include your bank/income statements, personal information, debt history, etc. Have these elements updated and ready to go to make the process smoother. Show your lender that you’re dedicated and ready for the responsibility of a personal loan.
Here’s what your bad credit lender will look at when assessing your loan eligibility.
3. Request Your Credit Report
As a Canadian credit user, you are entitled to one free annual copy of your credit report (you can always request another copy for a small price). Since your lender may also check your credit, it’s best to go through your report and check it for errors that might be harming your credit score.
4. Evaluate Your Assets
Living in a large city like Calgary, you likely own a vehicle. Offering it (or another valuable asset) up as collateral, is a huge help when you have bad credit, want a lower interest rate or a larger loan amount. While your lender will perform their own evaluation of your assets, getting a professional to appraise them beforehand is a good way to ensure that you’re getting a good deal. However, your lender will hold the rights to your asset until your loan is fully paid off, meaning it could be repossessed if you default on too many payments.
Has your car been repossessed? Click here to learn how you can get another car loan.
5. Find a Cosigner
Another optional but helpful thing to do before you apply is to find a trustworthy and financially strong borrower to co-sign your loan application. This is another way to receive a lower rate and a higher loan amount when bad credit or an unfavorable income prevents you from approval. Be sure to inform them about the risks of being a cosigner, namely that the responsibility of the loan will fall to them if you can’t afford your payments. This can damage their credit/finances if they also default.
Check out this infographic to learn more about how your credit score is calculated.
The Minimum Credit Score Required For a Personal Loan in Calgary
While some lenders in Calgary don’t perform credit checks during the approval process, this may not be the case for your personal loan. Depending on the size of your loan and your lender’s standards, your credit score (ranging from 300-900), may need to be 650 or above to receive the best chances of approval and the lowest interest rates available.
Don’t understand your credit score or credit rating? Take a look at this.
If your score is lower than that, don’t give up, approval is still possible. However, your interest rate may be higher due to the fact that a low score may signify to your lender that you are a risky borrower. That higher rate could cause you severe debt in the long run, so consider improving your credit score before you apply.
When a Personal Loan Helps Your Credit Score
Speaking of credit score improvement, did you know that you can use your personal loan for that purpose? That’s right, your credit will be affected positively if you take the proper precautions, such as:
- Choose a lender in Calgary that will report your progress to Equifax or TransUnion
- Pay your other outstanding debts before applying
- After your debts are paid, reevaluate your income and savings
- Calculate your potential interest rate and payments
- Make all your loan payments on schedule
- Avoid non-essential debts until your personal loan is completely paid
Looking for some debt management tips? Check this out.
Getting Approved For a Personal Loan in Calgary
As we said, your personal loan approval chances and interest rate will depend on various elements, like your lender’s policies and your credit score. If you’re requesting a relatively large amount (some personal loans in Calgary can be up to $100,000) your lender might examine your:
- Gross monthly/yearly income
- Recent bank statements
- Employment record, including your previous and current jobs
- Credit rating, payment history, and credit report as a whole
- Overall ability to afford your personal loan costs
- Offering of security/collateral (if necessary)
- Co-signer’s financial strength (if necessary)
If you’re approved, you’ll likely receive your personal loan funds through direct bank deposit. You can then negotiate a payment plan that works for your finances.
When a Personal Loan Beats a Credit Card
Just like any major city, Calgary can be an expensive place to live which means you likely have a wide variety of expenses to cover throughout the year. So, if your expenses are closer to the $1,000-$5,000 range, you might be wondering if a credit card is a better payment method. After all, your credit limit may be high enough.
Credit cards are usually more efficient when:
- You’re buying unnecessary items, such as consumer goods
- You’d like to easily build credit through timely, full payments
- You take advantage of certain benefits (free plane ticket cancellation, points, etc.)
- You’d like the option of making minimum monthly payments (try not to make this a habit, as you could get stuck in the minimum payment trap).
- Your monthly income is large enough to cover your monthly bills and still have some money remaining for your savings
Look here to see what happens when you stop paying your credit card bill.
Personal loans, on the other hand, maybe more beneficial in Calgary when:
- You have much larger expenses to cover
- You’d prefer to know exactly how much your loan payments will cost
- You want less risk of theft, fraud, overspending, etc.
- You’re more comfortable with a set loan amount and payment date, rather than a revolving credit limit
- You want to avoid higher interest rates and credit card debt
- You want the option of offering collateral in exchange for even lower rates.
Trying to increase your credit score without increasing your credit card debt? Click here.
Apply With Loans Canada Today!
If you’re a Calgary credit user and you’re looking for the best personal loan in town, Loans Canada can help. When you apply with us, you’ll be quickly introduced to the right lender for your personal and financial needs.