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The average home price in New Brunswick is the lowest in Canada, but it is also the province with one of the lowest minimum wages. While the cost of living in NB may not be as expensive as Toronto or Vancouver, there are still many New Brunswick residents who require loans and other credit products to afford things. A versatile credit product you can use in NB is a personal loan.
What Is A Personal Loan?
A personal loan is a lump sum of money, usually between $500 – $35,000, that you can borrow from a lender. Depending on your needs, you can usually choose between a short-term or a long-term loan, though most range between 6 months and 60 months. When repaying your loan, it’ll include interest which legally cannot be more than 60%. Repayment terms can vary, but you’ll usually have the option of monthly, semi-monthly, weekly or bi-weekly payments.
What Can A Personal Loan Cover In NB?
A personal loan is liquid cash that a lender lends to you. These funds are typically directly deposited into your bank account. Once deposited, you can use your money to pay for just about anything, including:
Personal loans can be used to finance a number of things, but it has more advantages than its versatility. A personal loan can help you save money, make things affordable, improve cash flow and potentially improve credit.
Saves Money On Interest
While the interest rate you get depends on your lender in New Brunswick and the strength of your income, credit, and overall financial health, personal loans often come with lower interest rates than credit cards and payday loans. Interest is the biggest cost factor of loan, so a lower rate can save you a lot of money in interest.
Can Cover Large Expenses
All credit cards come with a credit limit that you can’t go over without incurring a penalty charge. With a personal loan, you can get loans up to 35k and more. This makes large expenses affordable as you can spread the costs over many months or years.
Improve Cash Flow
Personal loans are paid in fixed installments over an agreed period of time. With large purchases broken down into affordable and fixed monthly payments, you’ll be better able to budget. Moreover, without having to pay your purchase upfront, you’ll have more cash in your bank to direct to other aspects of your life.
May Improve Credit
If your lender reports your payments to the credit bureaus, it can help build your payment history. However, depending on how responsibly you repay your loan, it may positively or negatively impact your credit.
Cost Of A Personal Loan In New Brunswick
There are numerous factors to consider when calculating the cost of your personal loan. The interest rate, fees, and term length, all impact the total cost of your loan. While a lower interest rate and fees are key components to reducing the cost of your loan, so is a shorter term length.
While longer terms offer lower payment options, it also costs more in interest. In general, it’s recommended that you choose a term based on how much you can afford rather than the lowest payment option (as these typically have longer terms). Below we’ve illustrated how the term length can affect the cost of your loan.
Short-Term Personal Loan
Long-Term Personal Loan
3 Years (36 months)
5 Years (60 months)
Total Interest Paid
Should You Use A Credit Card Instead Of A Personal Loan?
Much of the time, New Brunswick residents turn to their credit cards when they need to cover an expense. This is a good choice when:
The expense is not too big. If you can pay, the amount within the same billing cycle, a credit card can be a better option. However, if you’re planning on carrying the balance over for several months, a personal loan may be a better option as it typically comes with lower interest rates.
When Should You Use A Personal Loan Over A Credit Card?
You have a very large expense or overall bill. If you’re looking to finance a large expense, a personal loan is generally a better option, as it spreads your cost over several months. While you could pay the minimum monthly payments on your credit card, you’ll be accruing high interest on your unpaid balance.
You want to avoid high-interest rates. Credit card companies often charge high-interest rates, which can end up costing you much more in the long run than a personal loan would.
3 Steps To Get A Loan
How To Apply For A Personal Loan In New Brunswick?
Find A Lender
To apply for a personal loan in New Brunswick, you’ll first need to find a lender who offers their services in NB. You can use a loan comparison platform or Google, to help you find one. Be sure to check the lender’s requirements to see if you’re eligible.
Once you find a reputable lender, you can begin the application process, which is often all online. Be sure to have all your documents ready, as many borrowers get rejected due to mistakes in the application. When applying you’ll usually need proof of identity, proof of income, and proof of employment. Your lender may also require your bank statements, and banking details for funding and repayment purposes.
Apply For Loan
Once you have the necessary documents, simply apply for the personal loan. Depending on the lender, it can take a few hours to a few days before you get a response. If approved, you should receive your funds within a few hours to a few days.
What Do Lenders Look For In An Applicant In New Brunswick?
Your Credit. Your chosen lender in New Brunswick may perform a “hard inquiry” by requesting a copy of your credit report and score from Canada’s credit bureaus (Equifax, TransUnion). They do this to see how responsible of a credit user you’ve been in the past and trustworthy you’ll be with your future payments.
Your Finances. They might also examine your income, employment record, bank account balances, and debt payment history. Any personal loan in New Brunswick can take months to pay in full, so they’ll want to make sure that you can comfortably afford all your payments.
Your Assets. Most lenders in New Brunswick will allow you to offer up your valuable properties (home, car, real estate, etc.) as collateral to secure large personal loans. While it’s optional, offering collateral is a way to get approved when your credit isn’t up to their standards. Just be aware that they’ll then have the right to confiscate and sell your asset if you default on your loan payments for too long.
Click here to learn the other consequences of making your loan payments on time.
How To Increase Your Chances Of A Loan Approval In New Brunswick?
Certainly. The more worthy of credit you look, the greater your chances of approval and receiving a lower interest rate will be. You can increase your creditworthiness by:
Improving your finances. Show your lender in New Brunswick that your income is strong enough to cover your payments, interest fees, and any penalties that might occur. If your income isn’t great, ask for a pay raise, get a second job, or try to find one that pays more.
Improving your credit. Prove that you’ll be responsible with the money you’re borrowing. Request a copy of your credit report (free once per year from either credit bureau) and your credit score (for a small fee). A credit score of 650 or above is where most lenders want you to be. If your credit score is lower than that, take some time to better it through good bill payments, disputing errors, etc.
Organizing and updating relevant information. Ask your lender in New Brunswick exactly what personal and financial documents are needed to complete the application process, then organize and update them accordingly. Not only will the process be more efficient, it’s a way to prove that you’re a trustworthy candidate.
Eliminating your other debts first. If your lender sees a long record of unpaid debts or defaulted payments in your profile, your chances of approval will drop.
There are a number of reasons your personal loan application may have been rejected. Usually, applicants are rejected because they don’t meet the minimum requirements to get a loan such as income or debt level. Some may even be rejected for more careless reasons such as filling out the application incorrectly or not providing the right documents. Evaluating your lender’s requirements prior to applying and reviewing your application before submitting is key to reducing your chances of being rejected.
Should I use a personal loan to consolidate my credit card debt in New Brunswick?
A low-interest personal loan is a great way to consolidate high-interest debt like credit card debt. A personal loan will allow you to spread the cost of your debt over a longer period of time, making your monthly payments more affordable.
How big of a personal loan can I get in New Brunswick?
The amount you qualify for is dependent on your financial health. The higher your credit score and income, the more your lender will be willing to lend you. Other factors like your debt level and your employment stability can also affect the amount you can get. In general, personal loan lenders in New Brunswick are willing to lend between $500 and $35,000.
Will a Personal Loan Affect My Credit?
A personal loan can impact your credit, but whether it’s positively or negatively affected depends on the way you handle it. For instance, completing all your payments on schedule may build your credit scores, while defaulting on your loan, may have the opposite effect and lower your credit scores.
Personal loans are versatile credit products that you can use to finance virtually any expense. If you need to cover an expense or purchase, a personal loan can be a great option as it offers you the ability to spread your payments, making it more affordable. Apply with Loans Canada to find the best lenders and loans in New Brunswick that meet your financial needs.