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There are so many different types of loans available to Canadian consumers, including installment loans. If you’re ever strapped for cash and need some financial assistance to cover an expensive bill, an installment loan in Saskatchewan might be just what you need to get out of a financial jam. These types of loans can be great for covering college tuition fees, buying a car, or covering a home improvement project, to name a few. Whatever your pressing need for money might be, you may be eligible for an installment loan to cover the cost.
To read about some more types of loans for credit users, click here.
What is an Installment Loan?
Installment loans in Saskatchewan involve borrowing a specific amount of money from a lender, which will need to be paid back in regular installments. Each payment made will not only include a principal portion but also an interest portion depending on the interest rate you are offered. You will be given a specific loan term, which is the length of time that you have to pay back the loan in full. Payments are typically made on a monthly basis, though they can also be bi-weekly or even weekly in some cases.
Want to know how lenders set their interest rates and how to beat them? Look at this.
Qualifying For an Installment Loan
In order for a lender to determine your eligibility for an installment loan, your financial history will be looked at. Important factors that will be assessed include your credit score, your income, and your debt-to-income ratio. All of these factors combined will provide lenders with a clear picture of how easily you’ll be able to cover your payments every billing cycle.
Lenders may also want to know how long you’ve been employed and what your employment status is (ie. part-time, full-time, contract, permanent, etc), which will help the lender assess whether or not you’d be a qualified borrower or too much of a risk for the lender to take on.
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What If I Have Bad Credit?
Typically, lenders like to see applicants with a good credit score of at least 650 before extending a loan. Any less than that will make it more difficult to get approved. Even if you are granted approval, you will likely be offered a higher interest rate compared to borrowers with a higher credit score. Installment loans in Saskatchewan with high-interest rates will make the loan more expensive, requiring borrowers to pay more over the life of the loan.
That said, you may still be able to get an installment loan with bad credit. However, you will probably have more luck working with bad credit lenders in Saskatchewan who work specifically with borrowers who don’t have a high credit score. It should be noted, however, that these lenders will usually charge a very high-interest rate in exchange for their extension of credit and assumption of more risk.
What Types of Situations Would Warrant an Installment Loan?
There are several reasons why you may want to consider taking out an installment loan in Saskatchewan. We recommend installment loans for any one of the following reasons:
To cover the cost of an emergency
To pay for car repair
To pay for college tuition
To pay for home improvement projects
To cover the cost of unexpected travel expenses
To make a large purchase that you need time to pay off
The list can go on and on. There are so many different scenarios where an installment loan in Saskatchewan would make sense and come in extremely handy.
What Are the Different Payment Plan Options?
As mentioned earlier, payments for installment loans in Saskatchewan are usually made on a monthly basis. However, you may be able to work out a different payment plan with your lender. For instance, you could choose to repay your installment loan in bi-weekly, twice monthly, or even weekly payments. The payment plan you choose will depend on your income, your desire to repay the loan faster, and your preferred method of repayment.
Want to find out how your payment history affects your credit score? Read this.
The difference between monthly versus bi-weekly payments isn’t just the fact that you’d be paying more frequently (though less per payment), but also the fact that you’d actually be making the equivalent of 13 monthly payments per year compared to 12 with a monthly payment plan. Since there are 52 weeks in a year, you’d be making 26 half-payments throughout the 12 months. That equals 13 monthly payments (26 divided in half) by year-end.
The reason why this is significant is that you’ll be making an extra payment so you can effectively shorten the length of your loan term by paying down your loan faster.
What’s the difference between secured and unsecured installment loans?
With secured installment loans, the borrower offers the lender a form of collateral. Unsecured installment loans, on the other hand, have no collateral involved. You’re much less likely to qualify for an unsecured loan with a bad credit score. Securing a loan typically means you’ll qualify for more funds and get a better interest rate. The most popular forms of collateral for secured loans are vehicles and homes.
What’s the difference between open-end and closed-end installment loans?
The difference between open-end and closed-end loans can save you hundreds of dollars in penalties. Closed-end loans have a more rigid payment plan. If you’d like to pay off your loan early or make an extra payment, you will be charged a prepayment penalty. Sometimes, this makes paying the loan off early not worth it. Open-end installment loans do not have such a penalty. Generally, open-end loans are much better for borrowers than closed-end loans.
Are installment loans better than payday loans?
Yes. Installment loans cannot exceed 60% annual interest by law, whereas payday loans can have rates as high as 600%. The difference is in the length of the repayment term. Payday loans are typically repaid within 2 to 8 weeks, whereas installment loans can spread out smaller payments over a longer period of time. This makes installment loans much more manageable than payday loans.
What kind of income is accepted for installment loans in Saskatchewan?
Having a steady source of recurring income is a good indicator that you can repay your loan. Whether this recurring income is from employment or from government financial programs shouldn’t affect the decision of most lenders. Alternative forms of income can include CCB, CPP, EI, and more. As with employment income, a lender will typically ask you to submit documents that validate your alternative income, so make sure you have them on-hand when making your loan application.
Applying For the Installment Loan You Need
Installment loans in Saskatchewan can definitely come at the right time when fast cash is what you need to cover a pressing expense. You can tweak your particular payment plan the way you see fit, as long as your lender is willing to work with you and accommodate your needs. But like any other type of loan, it’s important that you understand what your credit score is and how it can affect your ability to get approved for an installment loan and the type of interest rate you’d be offered. Last but not least, get in touch with Loans Canada today to find the ideal installment loan product for you.