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📅 Last Updated: October 13, 2023 ✏️ Written By Bryan Daly 🕵️ Fact-Checked by Caitlin Wood
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Life comes with many recurring expenses, especially in Victoria, where the cost of living has been slowly increasing along with the city’s popularity. Although such costs can often be dealt with using cash or credit cards, sometimes they can be too large to handle with conventional means. Now and again, an alternative form of financing is required to cover high-cost items with an affordable payment plan. If that’s the case for you, a personal loan might be the perfect solution.
Where Can You Get A Personal Loan In Victoria?
One of the best things about personal loans is that you can find them through many different lenders throughout Victoria. Generally, they are available with both prime lenders, such as banks and credit unions, as well as subprime lenders, like alternative and private lenders.
- Banks – The Big Five Banks and other traditional financial institutions offer personal loans in Canada. Banks usually have strict requirements for approval, but they often charge much lower interest rates than subprime lenders.
- Credit Unions – Credit Unions also offer lower interest rates but you have to be a member to be eligible.
- Private/Alternative Personal Loan Lenders – Private and alternative lenders also offer personal loans, but they usually charge much higher interest rates. However, they have flexible requirements making them easier to qualify for if you have bad credit or poor finances.
How Much Can You Borrow Through A Personal Loan In Victoria?
The amount you can get approved for is typically based primarily on your income, debt-to-income ratio, credit health, and the value of your assets (if you offer any). However, most lenders offer personal loans as low as $500 up to $35,000 and more.
How Will You Recieve The Personal Loan In Victoria?
Your personal loan will either be deposited as a lump sum directly into your bank account or via e-transfer. Although wait times will vary from lender to lender in Victoria, you can expect to receive your funds as early as 24hours up to several business days following the approval of your application.
How To Repay Your Personal Loan Back In Victoria?
Personal loans are installment-based, meaning you will pay back your money in equally divided payments, plus interest and fees. While many borrowers choose to pay on a monthly basis, many lenders in Victoria will give you the option of paying in weekly, bi-weekly, or accelerated installments. Payments are generally repaid through automatic debits by the lenders.
Requirements For A Personal Loan In Victoria
Each lender has its own requirements for a personal loan in Victoria, but there are still some common factors each lender will generally consider.
- Income and Employment – Lenders usually like to see that you have a steady source of employment and income
- Credit – Your lender will also evaluate your credit to assess your creditworthiness.
- Security – Some lenders may require you to provide collateral to secure the loan or a cosigner to reduce your risk.
Will Adding Security Help Improve My Odds Of Approval?
Although providing security is usually optional, it can be helpful if you’re applying for a significant amount of money or you don’t have good credit. When you offer up an asset, such as your house or vehicle, or when someone with strong finances co-signs your application, it lessens the risk for your lender.
In the case of collateral, they would have something to sell if you default on your loan. As for your cosigner, they would agree to take over your payments if you can’t afford them. When less risk is imposed, your lender in Victoria should be more willing to offer you a larger loan amount with a lower interest rate.
Do I Need Perfect Credit to Be Approved in Victoria?
Again, this depends mainly on the lending institution you’re borrowing from. As we said, the average bank may reject your application if you have bad credit. On the other hand, a private, alternative, or bad credit lender in Victoria might not. There are even some lenders in Victoria that don’t check your credit during the application process, wherein your income and employment status would be more important.
Your Credit Reports
Compiled by Canada’s two major credit bureaus, Equifax and TransUnion, a credit report is a detailed personal profile that every credit user has. Within the report, you’ll find records of all your credit-related transactions over a set number of years. It also contains the credit ratings for every active account you have. If you have a credit history filled with good payments and all the ratings on your accounts are high, the results for your personal loan approval will be positive. However, the opposite effect could occur if you have a bad credit history and low credit ratings.
Your Credit Scores
Your three-digit credit scores are a more simplified way of showcasing your creditworthiness. Ranging from 300 to 900, your scores fluctuate according to your credit habits. While it’s tough to gain a perfect score of 900, most lenders will approve your application and give you a decent interest rate when your score is 660 or above.
Improving Your Credit With A Personal Loan
Making on-time loan payments can you work toward building healthier credit. Keep in mind that all credit scores react differently, your scores may be affected differently than others.
If you’re specifically looking to build better credit, keep these tips in mind:
- Set up automatic deposits, so you never miss a payment date.
- Make sure your lender reports your payments to at least one of the credit bureaus.
- Don’t request more money than you can comfortably afford. Being able to keep up with payments is important.
- Avoid any unnecessary debt throughout your payment plan. Remember, any payment you miss could affect your credit negatively.
When Is It Better To Use My Credit Card In Victoria?
A credit card qualifies as revolving credit. So, rather than having a predetermined sum of money, you’ll have a revolving credit limit that you can withdraw from whenever you need to. Similar to a personal loan, you’re typically given the option of making payments on a monthly basis. However, there are situations where the benefits of your credit card will outweigh those of your personal loan (and vice versa).
A credit card might be a better option when you:
- Have recurring costs (gym membership, utility bills, internet plan, etc.)
- Want the option of minimum payments when you can’t afford full balances
- Want to build credit faster by making more than one payment per month
- Are looking for travel insurance or other perks that come with some specialty cards
- Want to earn cash back rewards
- Are just starting to use credit and need some basic experience
- Only want to pay interest on the amounts you’ve withdrawn
A personal loan might be a better option when you:
- Want to diversify the types of credit accounts listed in your credit report
- Have singular costs that are larger than the average credit card limit
- Would like to access lower interest rates than many credit cards have
- Are trying to consolidate high-interest debt
- Would like some practice managing a loan
Any Recommended Uses For A Personal Loan in Victoria?
You can use a personal loan for almost any expense in Victoria. That said, remember that any loan is a serious responsibility. Therefore, it’s best to only use your personal loan for essential things, rather than smaller unnecessary costs.
Examples of essential costs (recommended):
- Home repairs, car accidents, or other financial emergencies
- Voluntary surgeries or other health costs not covered by medical insurance
- Unexpected travel
- Paying your property taxes and home insurance
- Groceries and/or household supplies
- Tuition, textbooks, and other educational expenses
Examples of non-essential costs (not recommended):
- Cigarettes/alcohol
- Restaurants or take-out food
- Cable TV, streaming services, and other subscriptions
- Concerts, movies, and other outings/events
- Clothes and other consumer goods
Personal Loan FAQs
How do I know which personal loan is the right option?
First, you need to decide what your needs are. How much money do you need to borrow? How large of a monthly payment can you afford? Is getting approved right away important to you? These are just a few of the questions you need to ask yourself. Then compare multiple lenders that offer what you need.
What credit score do I need to get approved for a personal loan in Victoria?
This depends on the lender, but generally speaking 660 and over is considered a good credit score, which means you should be able to get approved for the personal loan you want. Anything below this, you may experience difficulty or need to provide security or a cosigner.
What’s a good interest rate for a personal loan in Victoria?
This depends on both your credit and financial situation. Lenders use a variety of factors to determine what interest rate they will offer you. This includes your credit scores, debt-to-income ratio, income, etc.
Need a Personal Loan in Victoria? Let Us Know!
Looking to compare lenders and choose the best personal loan option for your unique needs, Loans Canada can help. We’re committed to helping all Canadians, regardless of their credit, find the financial products they need. Contact us today for more information or apply below when you’re ready!
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