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As someone who regularly uses credit, you’re likely to discover many different loans, credit cards, and lines of credit in Lethbridge, any of which can benefit you in a number of ways. In fact, having access to these kinds of financial tools is necessary if you’re living in a city like Lethbridge that has a relatively high cost of living.
Although you, as an Albertan, are probably making a decent income, it’s not always the best idea to rely solely on your savings and credit cards. It can also work to your advantage to throw a personal loan into your credit product mix.
Did you make a mistake on your personal loan application? Find out here.
When to Choose a Personal Loan Over a Credit Card
As we mentioned, there are plenty of different credit products that you can access in Lethbridge, as well as throughout the rest of Canada. While each comes with its own set of benefits and drawbacks, two of the most widely used products are the personal loan and the credit card.
Traditionally speaking, a personal loan will be deposited as a lump sum of liquid cash directly into your bank account soon after your application is approved. That sum is then typically divided into equal installments, then paid off over several months to several years. Depending, of course, on how much you borrow and what your finances look like.
Most of the time, your personal loan would be accompanied by a fixed interest rate, which wouldn’t change during your repayment term (although variable rates are often possible). Because of this, you’ll often have an easier time calculating your total loan costs and fitting them into your budget accordingly.
All this can make a personal loan in Lethbridge the more beneficial product if you have larger, short-term, and singular costs, such as:
- Tuition, books, and other educational costs
- Car accidents and general repairs
- New appliances or home repairs
- Vacations and unexpected travel plans
- Elective surgeries and medical bills
Whether you live in Lethbridge or anywhere else in Canada, credit cards are easy products to acquire and are more beneficial if you’d prefer to have a revolving credit limit to withdraw from as needed. Here, rather than having fixed installments, you would only have to pay interest on the amounts you borrow from month to month. Not to mention, you’re allowed to make more than one monthly payment, which is an efficient way of building and improving credit. Some cards even come with perks, such as roadside assistance, reward points, and travel insurance.
Then again, being that it’s harder to calculate how much you’re paying at the end of each month, credit cards can cause you to accumulate a lot of high-interest consumer debt. Although the option of minimum payments can also be a huge advantage, your credit score can decrease with every bit of unpaid debt you have.
All these benefits and drawbacks make credit cards a better alternative when you have smaller, ongoing, or recurring costs to deal with, such as:
- Memberships and subscriptions
- Groceries and household supplies
- Utility, cell phone, and internet bills
- Fuel and regular vehicle maintenance
- Concerts and other recreational activities
What’s the difference between a line of credit and a credit card? Find out here.
How to Earn Favorable Loan Conditions in Lethbridge
Similar to any credit product, applying for a personal loan in Lethbridge is all about timing and financial aptitude. The healthier your finances look and the less risky you are as a candidate, the more money you can get approved for and the lower your interest rate will be as a result. There are also several kinds of lending institutions in Lethbridge you can borrow from, each of which has different standards for who they are willing to approve.
For instance, banks and other prime lenders in Lethbridge usually have strict regulations for their borrowers. More often than not, you would need to have a decent income, a steady job, a low amount of unpaid debt, and a credit score above 650 in order to be approved for a favourable loan product, repayment terms, and rates.
On the other hand, private, alternative, and bad credit lenders in Lethbridge are more willing to approve when you have lower financial strength. However, your personal loan would likely be smaller, come with a higher interest rate and less forgiving repayment conditions, potentially making the whole ordeal more expensive. It’s important to consider these risks if you’re planning to apply with a subprime source.
Here’s how to earn the best personal loan conditions in Lethbridge:
- Find stable employment and earn as much income as you can
- Save up a decent emergency fund
- Pay off all of your outstanding debts
- Check your credit report for signs of error, fraud, or identity theft
- Provide recent bank statements or other proof of your income
- Fill out your application honestly
- Improve your credit score as much as possible
How to get the best personal loan for your needs this year, click here.
If you’re looking for a larger personal loan with a better rate, you can also provide your lender in Lethbridge with some security, which you can do with collateral or a cosigner. This is especially helpful if you present a larger borrowing risk due to low financial health or a bad credit score (under 600).
By offering collateral, you would be allowing your lender in Lethbridge to claim temporary ownership over one of your assets, such as your house or car. Because the lender then has something to sell if you go into default, your loan conditions will be more favorable. Just be careful, as this could mean your asset would be seized if you break your contract and/or miss too many payments in a row.
If you don’t want to endanger your collateral or don’t have any to offer, you can also find a stronger borrower to cosign your application, which would lead to similar results. However, in doing so, your cosigner would be agreeing to take over your loan payments if you can’t afford them, which can put you both under significant financial strain.
Take a look at this infographic for more information about credit scores in Canada.
How to Improve Your Credit With a Personal Loan
One of the best things about a personal loan is that you can use to build and, if necessary, improve your credit report and credit score. After all, healthy credit will help you gain access to a larger loan and a better rate, now and whenever you apply in the future. Here’s how you can do it:
- Find a reputable lender in Lethbridge that reports your payment activity to at least one of Canada’s two major credit bureaus (Equifax and/or TransUnion).
- Only apply for a loan amount that you can comfortably afford over time, even in if you lose your job or suffer some other kind of financial emergency.
- Make all your payments on time and in their full designated amounts.
- Avoid unnecessary debt that would jeopardize your ability to make payments.
- If you’re denied at first, don’t re-apply too many times within the same few months (each hard inquiry decreases your credit score).
Look here to see more ways of improving your credit score this year.
Call On Loans Canada To Find a Lender In Lethbridge!
If you’re looking for the best personal loans, lenders, and rates in Lethbridge, don’t hesitate to contact the experts at Loans Canada. We’re committed to helping you find any credit product or debt relief solution you can think of. All you have to do is contact us for more information or apply below when you’re ready!