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📅 Last Updated: September 30, 2021 ✏️ Written By Lisa Rennie 🕵️ Fact-Checked by Caitlin Wood
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Do you have an expense that your bank account isn’t adequate enough to pay for? Whether you’re looking to renovate your home or need to take your car into the shop, there could be any number of reasons why you need a lump sum of cash. But like many other consumers in Manitoba, coming up with a few thousand dollars can be a real challenge, especially considering all the other bills that have to be covered every month. That’s where an installment loan in Manitoba can really come in handy, as they can help cover these pressing expenses while allowing for convenient repayment terms.
Do you have too much debt? Here’s how you can start saving.
Installment Loans Explained
Installment loans come in a variety of forms and can be used for any number of reasons in Manitoba. Depending on the lender and your finances, you can take out thousands of dollars as required. Installment loans are named so because they are meant to be repaid in installments, usually on a monthly basis, though other payment arrangements can be made.
With each monthly installment, you’ll not only be paying into the loan amount borrowed, but also an interest portion. This interest amount will depend on the interest rate that your lender in Manitoba offers you. You will be obligated to make these monthly payments until the loan is repaid in full, which you will be given a certain loan term to make that happen.
I Want To…
How Do You Qualify For an Installment Loan in Manitoba?
Like most other types of loans, installment loans in Manitoba require certain criteria to be met in order for borrowers to be eligible for approval. Generally speaking, lenders in Manitoba look at the following factors to assess the eligibility of borrowers:
Credit Score
Your credit score is a crucial part of your financial health and profile and will give lenders in Manitoba a very good idea of what type of borrower you would make. Borrowers in Manitoba with a high credit score are generally favoured because they present less of a risk to lenders. High credit scores typically reflect a history of timely payments in full. On the other hand, borrowers in Manitoba with a poor credit score are a much higher risk for lenders because of their history of missed payments and other negative financial habits.
Wondering how your payment history affects your credit score? Take a look at this.
Credit scores not only impact your ability to get approved for an installment loan, but also the interest rate that you would be offered if you managed to secure a loan.
Income
Obviously, you’ll need to make a certain income in order to be able to make payments toward your installment loan. If your income is not adequate enough to cover these payments, you will not be able to get loan approval.
Do you have a relatively low income? Click here to learn how you can get out of debt fast.
Debt-to-income ratio
This ratio is basically the relationship between your income and the amount of debt that you carry. Lenders will then factor in the added debt of the installment loan into the equation to see how you would be able to carry all of your debt – including your new installment loan payments – based on the amount of money you earn. This number needs to be low enough – ideally under 41% – before lenders will approve you for an installment loan in Manitoba.
For more information about your debt-to-income ratio, read this.
What if I Have Bad Credit?
While it would be nearly impossible to get approved for an installment loan with a conventional lender in Manitoba if your credit score is sub-par, it may still be possible to secure a loan with a lender in Manitoba who deals specifically with borrowers who don’t have a good credit score.
What do bad credit lenders look at when assessing loan eligibility? Find out here.
Instead of relying on credit scores to determine the eligibility of bad credit borrowers, lenders will focus more on your current payment activity and your income. If you have a substantial income and significant savings, this may help override a bad credit score in order to get approved for a loan. Your overall debt load will also be factored into the equation.
That said, you can still expect to be charged a much higher rate from these lenders as a result of your bad credit score, which will make your installment loan more expensive overall. As such, you’d be well advised to take steps to improve your credit score in order to make it easier for you to get approved for an installment loan from a conventional lender at a lower interest rate.
Want to know how bad credit can affect your daily life? Click here.
Frequently Asked Questions
Are payday loans worse than installment loans?
Generally speaking, if you can qualify for either, an installment loan is almost always the better option. Payday loans can have annual interest rates of up to 600%. Installment loans, by comparison, cannot exceed 60%. Payday loans have much higher rates because they are meant to be repaid over a shorter term, about 2 to 8 weeks. Installment loans are repaid over a longer period than this, making the payments smaller and more manageable.
What’s the difference between secured and unsecured installment loans?
You can think of secured loans as being “protected” or “insured” for the lender. Unsecured loans do not have such protection. With an unsecured loan, the lender is extending credit to you without any collateral. If the loan defaults, the lender’s only recourse is to continue trying to collect payments. However, with a secured loan, the borrower offers a form of collateral to the lender. This incentivizes the lender to approve a loan they would otherwise decline. It could also encourage them to qualify you for a higher amount or a better interest rate.
What kind of income is accepted for installment loans in Manitoba?
Credit score aside, a borrower with a steady recurring income has a strong chance of being approved for a loan. Whether it’s from employment or a government program, a regular income indicates a borrower will likely make all their payments. And so, alternative forms of income, such as CCB, CPP, and EI, can be considered when applying for a loan. Regardless of the type of income, a lender will need documents to validate them. Typically, this means providing bank statements and government documents. These will show that the income is being deposited consistently and for how long you’ll be receiving it.
The Installment Loan You Need
If you have financial obligations that need to be appropriately dealt with but don’t have the finances to cover them, installment loans in Manitoba can be extremely helpful. You can take out varying amounts depending on what you require the funds for. As always, make sure you find out what your credit score is, take your current finances into consideration, and get in touch with Loans Canada today to get an installment loan that suits your needs.
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