📅 Last Updated: August 26, 2022
✏️ Written By Lisa Rennie
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Could you use some extra money to cover an expense that your bank account isn’t adequate enough to cover? Then you may want to consider taking out an installment loan for this reason.

Thousands of consumers across Prince Edward Island and Canada turn to loans in order to help them with a significant purchase or expense. For instance, home purchases usually require a mortgage and car purchases typically warrant an auto loan. There are several ways that installment loans in Prince Edward Island can help consumers with many different financial situations and they may be able to help you too.

Struggling with debt on Prince Edward Island? It might be time to consider credit counselling.

What is an Installment Loan?

An installment loan is a type of loan that requires you to pay back the loan in specific amounts every month over the length of the loan term. Depending on the amount of the loan and the lender, the loan term can last from just a few months to as many as 30 years.

Installment loans are ideal for those who require money quickly to cover a pressing expense. While many installment loans may require some form of collateral – such as a home for a mortgage or a vehicle for an auto loan – personal installment loans don’t always require you to secure the loan with collateral (such as a car title).

Applying for an installment loan is usually quick and easy, and notice of approval doesn’t take long, either. It can be the ideal loan when you’re in a financial pinch.

The True Cost of BorrowingHow much does it really cost to borrow? Find out here.

Are There Restrictions on What I Can Use an Installment Loan For?

Unless you’re specifically taking out an installment loan in the form of a mortgage, car loan, or student loan, you can use the money from a personal installment loan in Prince Edward Island for just about anything you require it for.

There are plenty of reasons why consumers take out an installment loan, including the following:

  • To make a large purchase
  • To cover the costs of expensive travel costs
  • To cover the cost of an emergency
  • To fund a home improvement project
  • To repair a car
  • As an alternative to a payday loan
  • To rebuild credit

The list can go on and on. Whatever expense you’re unable to cover on your own can be accommodated with an installment loan.

Here’s how you can rebuild your credit after a late payment.

Where Can I Get an Installment Loan?

One of the more obvious places to start shopping for an installment loan is at the bank. If you already have an account somewhere and do your banking on a regular basis, that may be a good place to start. Your bank will provide you with the numbers that you would likely be approved for, including the interest rate and maximum loan amount.

Want to know how lenders arrive at their interest rates? Find out here.

That said, you don’t have to settle with whatever your bank is willing to offer you. You can then take the information given and shop around with other lenders out there to see where you can get the best deal. However, it is important to be careful of dealing with lenders who may not have your best interests in mind. That’s why it’s always a good idea to do your homework on the types of lenders out there before settling on one.

How Can I Get Approved For an Installment Loan?

Getting approval for an installment loan in Prince Edward Island is much like other types of loans. Lenders will want to make sure that the borrowers they deal with are able to repay the loan within the specified time period, which is why they will scope out borrowers and look at their financial health before agreeing to extend a loan.

When you apply for an installment loan in Prince Edward Island, you’ll be asked for a credit report, income statements, debt statements, and perhaps a letter of employment. All of these crucial pieces of information will give your lender a better picture of what type of borrower you would be.

Ideally, borrowers should have decent credit, earn a good income, and not be drowning in debt. If anyone of these factors is not in good standing, that could pose a problem for loan approval.

Canadian Credit ScoreDo you know how your credit score is calculated? Take a look at this infographic.

What if I Have Bad Credit?

Conventional lenders usually prefer that borrowers have a credit score of at least 680 before approving an installment loan in Prince Edward Island. If your credit score is any less than that, you may have to work with lenders other than your local bank.

Don’t understand your credit score or credit rating? Click here.

The majority of alternative lenders do not require excellent credit to approve a loan, which is why they are often sought-after by bad credit borrowers. Installment loans can be applied for even if you have bad credit or don’t earn a very high income. As long as you’re able to afford the payments to repay the loan in full by the end of the loan term, you may still be able to get approved.

Read this to know what bad credit lenders look at when assessing loan eligibility.

Frequently Asked Questions

Are there penalties for paying off an installment loan early?

This depends on if the loan is open-end or closed-end. Open-end loans are typically lines of credit or credit cards. You can always repay these types of loans early without penalty and to save on interest. Closed-end loans are typically car loans or mortgages, which are types of installment loans. You can pay these off early to save on interest, but you’ll be paying prepayment penalties. While most installment loans are typically considered closed-end loans, many are offered with a flexible contract. This way, your installment loan can behave similarly to an open-end loan. You’ll be able to repay it early and save on interest without penalties.

Why should I secure a loan?

There can be many reasons to secure a loan. Typically, most lenders will consider a vehicle or home as collateral to secure a loan. By giving the lender this form of reassurance, you are likely to benefit from more favorable contract. If you have bad credit, this can mean being approved for a loan in the first place. Even if you qualify for an unsecured loan, securing it can come with major benefits. You can qualify for a higher loan amount, a lower interest rate, or having certain fees waived.

Can I get a loan in Prince Edward Island with poor credit?

It will be more difficult, but it’s entirely possible. Most banks and major institutions will not be willing to extend loans to those with bad credit. You may need to instead seek out alternative lending institutions to get the loan you need. Some lenders do not require a credit check for example. They may instead want to look at your bank statements to see if you have enough income to make the payments. If it is an option, you can also offer a vehicle as collateral to secure your loan. This will increase your chance of being approved if you have poor credit.

Find the Installment Loan You Need

An installment loan in Prince Edward Island can definitely be a real lifesaver when an unexpected expense arises or a large purchase is required that you don’t have the liquid cash to cover. Be sure to get in touch with Loans Canada so we can help you find the right installment loan for your specific financial situation.

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