The residents of New Brunswick rely on credit products just as much as any Canadians. They apply for credit cards, mortgages, vehicle loans, and of course, personal loans. What is a personal loan, you ask? Excellent question! A personal loan is a predetermined amount of money that you can borrow from a lender, then reimburse over time, usually through monthly, semi-monthly, weekly or bi-weekly payments.
It’s 2018! Here’s how you can get the best personal loan for your finances.
Are Personal Loans Better Than Credit Cards?
Another good question! Much of the time, New Brunswick consumers turn to their credit cards when they need to cover an expense. This is a good choice when:
- The expense is not too huge. With most moderately priced consumer goods and other basic costs, a credit card is a quick, efficient method of payment.
- Your goal is to earn rewards. Many types of credit cards come with added perks (travel points, discounts at retail locations, etc.).
- You prefer not to use cash or debit. With these payment methods, you’re spending your money immediately, whereas a credit card gives you an additional 30 days to save up before you need to make a payment.
- You’re trying to finance something over time. If your expense is too big for your income to cover, you can buy it with your card, then pay it off over time through minimum monthly or short payments.
Don’t recognize a charge you found on your credit card bill? Look at this.
All this being said, a credit card might be a bad choice when:
- You have a very large expense or overall bill. While sticking to your minimum monthly payments will save you from late penalties, you’ll be building debt through interest. If you can’t afford to pay your whole credit card bill at once, you could find yourself in debt for months, even years.
- You’re trying not to overspend. Because of the convenience of credit cards, it’s all too easy to use them for every expense that comes your way. This can make it difficult to follow a budget, once again putting you in debt.
- You want to avoid high-interest rates. Since credit cards don’t involve any collateral, card companies often charge high-interest rates, which can end up costing you much more in the long run than a personal loan would.
Take a look at this infographic for everything you need to know about the true cost of borrowing.
When Should a Resident of New Brunswick Use a Personal Loan?
As beneficial as credit cards can be, there are plenty of financial situations in New Brunswick where using a personal loan might be a better option. For example:
- When you’re trying to save money in interest. Depending on your lender in New Brunswick and the strength of your income/credit, personal loans often come lower interest rates, potentially saving you a lot of money over time.
- When you’re trying to pay for a very large expense. All credit cards come with a credit limit that you can’t go over without incurring a penalty charge. On the other hand, some lenders in New Brunswick allow you to borrow up to $100,000 in personal loan money (depending on their specifications)
- When you want to know exactly how much you’ll pay. Since personal loans aren’t a form of revolving debt (like credit cards), you’ll be able to calculate exactly how much your payments will cost you over time, as long as you factor in the interest rate you’ve been approved for.
Want to know the difference between a payday loan and a personal loan? Watch this.
What Other Costs Can a Personal Loan Take Care Of in New Brunswick ?
Even today in New Brunswick, there are still plenty of stores, restaurants and other locations that don’t accept credit cards. However, a personal loan is liquid cash that can be deposited directly into your bank account (ask your specific lender how they transfer funds). You can then use your money to pay for just about anything, including:
- A pricey, but worthwhile vacation
- New furniture, appliances, or other household items
- Repairs or modifications for your vehicle
- Renovating and/or maintaining your house or another piece of property
- Medical procedures, medications, or other health costs
- Other necessities (utility costs, groceries, tuition, emergency expenses, etc.)
What Does the Application Process Look Like in New Brunswick ?
After you’ve confirmed that your lender is licensed and well established in New Brunswick, it’s time to apply. Since lenders are businesses like any other, they’ll need to confirm your eligibility by examining your financial profile. This may include:
- Pulling 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.
- Examining 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.
- Evaluating 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.
Can I Increase My Chances of 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.
Will a Personal Loan Affect My Credit?
Whether you live in New Brunswick or Toronto taking out a personal loan will affect your credit. Like all credit products, the way you’re using your personal loan will have a direct effect on your credit. For instance, completing all your payments on schedule will build your credit score and improve your overall credit profile. Defaulting will have the opposite effect, ruining your credit in the long run. The more good credit you build, the more opportunities you’ll have to be approved for future credit products, and the more you’ll save in interest over time.
Why was my personal loan application rejected?
Should I use a personal loan to consolidate my credit card debt in New Brunswick?
How big of a personal loan can I get in New Brunswick?
Why Should I Choose Loans Canada?
When it comes to personal loans in New Brunswick, look no further than Loans Canada! We have a team ready and waiting to set you up with the best lenders and loans in New Brunswick that meet your financial needs. Get started today!