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With Calgary being one of the most expensive places in Canada to buy a home and live in general, taking out loans and having debt is the norm. Whether you want a new truck or SUV to traverse the cold, icy, and snowy winters or an upgraded home, a loan is a necessity for most. One of the most common types of loan in Calgary is an installment loan.
Everyone looking to apply for a loan should read this first.
What Are Installment Loans?
So what exactly is an installment loan? Well, an installment loan is a loan that is repaid over time with a set and predetermined number of payments. The term can range from only a few months up to many decades, in the case of a mortgage. The size of the payments will also vary a ton depending on what the loan is for.
This means that most loans such as mortgages, car loans, and student loans would all be classified as installment loans. So installment loans are something most of us have taken out multiple times and may continue to do so in the future.
Applying for and being approved for an installment loan in Calgary will depend on a variety of factors such as your employment and how much debt you currently have. However, one of the most important factors that go into lenders deciding if they want to approve you for an installment loan or not, is your credit.
Check out this infographic for everything you need to know about your credit score.
Can You Get an Installment Loan in Calgary When You Have Bad Credit?
Your credit is what will allow a lender in Calgary and Canada, in general, to see how you have handled debt in the past. If you have a high credit score and a spotless history, you are less risky and thus will get better terms and interest rates on installment loans. On the other hand, if your credit is bad, you might appear riskier to lenders in Calgary.
This might lead you to believe that getting an installment loan with bad credit is impossible, but that is not the case. While your terms will likely be stricter, there are many borrowing options for those with bad credit.
What are bad credit lenders looking for? Click here.
While some lenders in Calgary will not work with you if your credit is bad, there are plenty of local or alternative lenders that will. They will also often use different methods to qualify a person for a loan, such as:
- Bank statements
- Debt to income ratio (how much debt you have vs. how much you make)
- Collateral (such as putting your car, home or savings account on the line to lower your risk as a borrower)
If you want to try and improve your credit before applying for an installment loan to get a better interest rate, there are a few things you can do to help:
- Always making sure you make your payments on time
- Pay off any outstanding debt that you are overdue on
- Reduce the amount that you use your credit card
- Get a secured loan or secured credit card
Installment Loans vs. Payday Loans
What Should You Use an Installment Loan For in Calgary?
Now that you know all about installment loans, what should they be used for? In general, these installment loans can be used for a variety of different things in Calgary. Here are a few of our recommendations:
- Acting as an alternative to a potentially expensive payday loan
- To pay for an emergency or another unexpected expense like travel, medical issues, or car problems
- To make a large purchase that you cannot pay off immediately such as a home, a car, or your education.
- Rebuilding your credit (as long as you use the loan effectively and intelligently)
So as you can see, there are a variety of different situations in Calgary that can call for the use of an installment loan. Of course, you want to make sure to only get an installment loan that you can afford and that makes sense for you. While it might be enticing to get a larger loan, doing so will leave you on the hook for a lot of money in the future.
The Right Installment Loans For Your Needs
If you have decided that going with an installment loan is the right choice for you, feel free to reach out to Loans Canada for assistance.