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📅 Last Updated: September 30, 2021 ✏️ Written By Lisa Rennie 🕵️ Fact-Checked by Caitlin Wood
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Whether you want to buy a house, a car, pay for college tuition, pay for a home improvement project, or cover an unexpected expense, an installment loan in Newfoundland and Labrador can be a big help if your current finances can’t completely cover whatever bill you’re faced with. Installment loans are very popular financial products among Newfoundland and Labrador consumers and are offered by many lenders across the country.
For some more information about loans in Newfoundland and Labrador, read this.
What is an Installment Loan?
An installment loan in Newfoundland and Labrador is a type of loan that is repaid by regular installment payments. The payment schedule will be set, as will the interest rate and loan term. Most payment schedules require payments to be made monthly, though arrangements can be made for payments to be made on a semi-monthly, bi-weekly, or weekly schedule, depending on what your lender in Newfoundland and Labrador agrees to.
Click here to find out how your payment history affects your credit score.
Each payment made will include both a principal and interest portion, and will be made until the loan term ends and the full loan amount has been repaid.
What Types of Installment Loans Are There in Newfoundland and Labrador?
When you think of a loan, you most likely will think of an installment loan. It is these types of loans that require regular payments on a predetermined schedule. Whether the payments need to be made monthly, bi-weekly, weekly, or semi-monthly, the payments are still made in installments.
Many popular loans in Newfoundland and Labrador fall under the category of installment loans, including:
- Mortgages
- Auto loans
- Student loans
- Financing for furniture purchases
- Personal loans
Every payment that is made for any one of these types of loans is due at the same time every billing cycle, so there is no surprise as to when the installments must be made. Regular installments will be made over the term of the loan until the entire loan amount is repaid.
Installment loans in Newfoundland and Labrador feature payments that are exactly the same each pay period because they have a set:
- Amount
- Payment
- Loan Term
- Interest rate (based on a fixed-rate loan)
How Much Can I Borrow in Newfoundland and Labrador?
Installment loans can provide you with a lot more money than a payday loan in Newfoundland and Labrador, and can be made for as much as tens of thousands of dollars, if not more. However, the amount that you can qualify for will depend on a number of factors, including your:
- Credit score
- Income
- Debt load
- Lender
Even if you are approved for a specific amount does not necessarily mean you should take it. Only take out as much as you need, and no more. Taking out too much money that you don’t even require can unnecessarily add more debt than you need, forcing you to have to pay back more money – along with interest. Make sure you only take out what you need and can realistically and comfortably repay the full loan amount.
Wondering how much it will cost you to borrow? Check out this infographic.
What’s the Difference Between an Installment Loan and a Revolving Line of Credit?
Loans are classified as either installment loans or revolving credit. As we’ve already mentioned, an installment loan is a type of loan that requires the balance to be repaid in regular installments over a specific amount of time.
On the other hand, revolving credit involves any account where the balance due fluctuates every month as a result of:
- New charges
- Payments made
- Interest rate applied
Some of the most common forms of revolving credit in Newfoundland and Labrador are credit cards and home equity lines of credit (HELOCs).
Read this to find out how you can access your home equity in 2018.
Will a Credit Check Need to Be Done For Me to Qualify?
Installment loans are known for being somewhat lenient when it comes to eligibility, though lenders in will still want to make sure that you’re financially capable of making your payments on time and in full at each billing cycle.
Having trouble making your loan payments on time? Try this.
While some lenders in Newfoundland and Labrador may not do a credit check, others will. If you know that your lender will be checking your credit, you’d be well-advised to check your credit score and pull your credit report. Reviewing your credit report will give you the chance to not only find out exactly what your score is, but also to look over the information to see if there are any errors. If there are, your credit score could be suffering as a result.
In this case, you would need to contact the credit bureau and have the error investigated and fixed right away.
Here’s how you can dispute an item on your credit report.
If you’re aware that your credit score could be improved, you should take steps to increase it before you apply for an installment loan in Newfoundland and Labrador. If you don’t have time to do this before the money is required, there are loans available specifically for borrowers with bad credit.
It should be noted, however, that applying for an installment loan in Newfoundland and Labrador with bad credit will usually mean being charged a higher interest rate or needing to put up collateral to secure the loan, so make sure to do your homework first on the type of lender you apply with.
Want to know how lenders set their interest rates and if you can beat them? Find out here.
Frequently Asked Questions
Do I need to be employed to qualify for a loan in Newfoundland and Labrador?
The majority of lenders in Canada prefer that their prospective borrowers are employed and earning a steady income. However, even if you are unemployed, you may still be able to qualify for a loan. Some lenders consider non-employment income from government programs, such as EI, CPP, and CCB. Be sure to ask your lender if they consider such income sources before making an application. They may require additional documents with your request, such as bank statements and documents relating to the government program that applies to you.
What’s the difference between an installment loan and a payday loan?
Payday loans are shorter-term with much higher interest rates. Respectively, 2 to 8 weeks and 400-600% APR. Installment loans are generally a better alternative for loan sizes of roughly the same amount. They are legally capped in Canada to no more than 60% APR and payments are spread out over a term exceeding 8 weeks. Whereas payday loans expect you to repay the full amount within the next paycheck or two, an installment loan can give you more breathing room. They are easier to manage with smaller, more affordable payments.
Will I be penalized if I pay off my installment loan early?
This depends on if the loan is open-end or closed-end. Credit cards and lines of credit are open-end loans. There is no penalty for paying off the loan early and you save on paying interest. Mortgages and car loans, which are types of installment loans, are usually closed-end. The expectation is that you pay off the loan over a fixed amount of time at a certain interest rate. Paying it off early means you’ll be charged a prepayment penalty. Some installment loans might have a flexible option that will allow you to pay off the loan early without a prepayment penalty. These types of flexible loans might come with a small drawback, like a slightly higher interest rate.
Is it always better if a loan is secured?
Securing your loan gives your lender confidence in extending credit to you. Borrowers typically offer security with their loan for a number of reasons. For example, putting a vehicle as collateral could increase the loan amount or lower the interest rate. Those with poor credit may have no choice but to secure their loan in order to qualify at all. However, if you only need to borrow a certain amount and you qualify for it without security, then it isn’t necessary to secure the loan.
Find the Right Installment Loan With Loans Canada
Installment loans in Newfoundland and Labrador can definitely be convenient products to get your hands on when money is tight and a big expense needs to be taken care of. Do your due diligence by finding out what your credit score is, reviewing your finances, and calling Loans Canada today to find the right installment loan for your situation.
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