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We could all use a little extra cash from time to time, but for some Canadians, that money is more than just a few bucks. In some cases, a unexpected expense might need to be covered right away. And in others, that extra expense might be a bit too much for what your bank account can handle.
No matter what you need the financial assistance for, a personal loan in Brampton may be able to help. Let’s take a closer look at these types of loans to help you determine if it’s the right one for you.
How Do Personal Loans Differ From Credit Cards?
Many consumers in Brampton turn to their credit cards when they need to pay for an expense that they don’t currently have the cash to cover it. Depending on how much their credit limit is, they may use some or even all of it. Credit cards can be an option when it comes to paying for a big expense, but only when used responsibly.
Granted, credit cards are great for collecting points and rewards. You might be collecting points for travel or gas for your car, but you’ll also be mounting your credit card debt, which isn’t a good thing. When you live in a city like Brampton where cost of living is expensive, you want to avoid collecting any unmanageable amount of debt, because costs add up. And when you consider the sky-high interest rate that you’re likely paying, credit cards don’t really make the most affordable choice when it comes to paying of long-term loans.
Not only that but spending too much on your credit card will increase your credit utilization ratio, which is not a good thing for your credit score. Generally speaking, spending any more than 30% of your credit limit is not advised.
Further, spending too much against your credit card can also put you in a potentially dangerous loan cycle which can be really difficult to get out of. If you can only make minimum monthly payments each billing cycle, your credit amount will continue to increase, making it more and more challenging to pay down.
Instead, a personal loan may be the better way to go. Personal loan rates in Brampton are typically a lot lower compared to credit cards. While you may be paying as much as 20% or more in credit card interest, you could pay significantly less with a personal loan. The rate will vary from one borrower and lender to another, but you can expect to pay less than 10% on a personal loan.
Of course, you’ll need to be eligible for a personal loan before you take one out. Your lender in Brampton will want to look at your assets, debt, income, and credit score before you can secure a loan. But once you’ve been evaluated and approved, you can use your loaned funds to cover that expense that’s been plaguing you.
What Can a Personal Loan Be Used to Cover in Brampton?
The funds you receive from your lender in Brampton can be applied to virtually anything. Whatever the expense maybe, the money you get from your loan may be used to cover it. That can include any one of the following:
- Travel expenses
- Home renovations
- Car repairs
- Medical bills
- College/university tuition
The list can go on and on. That said, it’s important to take out a loan only for an expense that you classify as an absolute necessity. Further, you should only take out a loan if you are comfortable with the payments that will need to be made to pay off the loan amount.
How do secured personal loans work? Find out here.
How Are the Funds Supplied?
After the lender evaluates your finances and approves you for a personal loan, how will the funds get to you? Generally speaking, the funds are deposited directly into your bank account shortly after loan approval, though different lenders in Brampton may have different ways to supply the loaned funds to their clients.
What Do Lenders in Brampton Look For When Evaluating Borrowers
As mentioned earlier, lenders will want to take some time to evaluate loan applicants when determining whether or not to approve their applications. In order to get approved for a personal loan in Brampton, certain criteria will need to be met, including the following:
Good credit – Your credit score will be one of the first things that your lender will look at before agreeing to loan you money. Generally speaking, a credit score of at least 650 to 680 will be needed to secure a personal loan from a conventional lender. Any less than that will make it more difficult to get approved. If that’s the case, you may have to turn to a bad credit lender to get those funds.
What makes a credit score “good” in the eyes of a lender? Click here to learn more.
Good income – You’ll obviously need to be making enough money to be able to handle an additional loan payment every month, so your lender will look at your income as part of their overall evaluation.
Stable job – Not only should your income be sufficient, but your actual job should also be stable. Your lender will be a bit wary if you work on a contract basis and could have your hours cut at any time.
Bank statements – Your assets will play a role in your ability to secure a personal loan, so your lender will want to look at what you’ve got in the bank. A decent amount of money in your account will reassure your lender that you have funds available to cover payments.
How Much of a Loan Can You Get in Brampton?
Obviously, you have a reason to consider applying or a personal loan in Brampton, and that reason will indicate how much you need to borrow. But how much can you actually receive?
The loan amount that your lender will agree to lend to you will depend on a few things, including the following:
- The lender – Each lender in Brampton will have their own way of evaluating applicants and how much they’re willing to loan to each borrower.
- Your credit score – The higher your credit score, the higher your chances of getting a higher loan amount.
- Your ability to pay back the loan – Your lender needs to be convinced that you can pay back the loaned amount and will base their decision largely on this factor,
- Collateral – If you can supply a valuable asset to serve as collateral, you may be able to take out a larger loan amount.
Using a Personal Loan to Boost Your Credit Score
If your credit score could use a boost, you may be able to use a personal loan to help improve it, as long as you use it responsibly. And here’s how to do it:
Make sure your lender reports payments to the credit bureaus – The personal loan you take out should come from a lender who reports your payments to the major credit bureaus. With each timely payment, credit bureaus will be notified, which can have a positive impact on your credit score.
Be on time with your payments – Being responsible with each loan payment can help give your credit score the boost it needs.
Take out only as much as you can comfortably repay – Only take out a loan amount that you can afford to pay back comfortably. If you can make timely payments each month, this will be good for your credit score.
We Recommend Personal Loans in Brampton For
When living in a city like Brampton, costs can add up. From food to transport to housing, there are plenty of things that you can use the money for when you take out a personal loan. But it’s important to be smart about where you spend the money. Taking out a personal loan is a big commitment, and if you fail to repay it, you could land yourself in hot water.
Here are some things that we recommended taking out a personal loan for:
- Emergency expenses
- Medical bills
- Home renovations that can add value to your home
- Auto repairs
- Post-secondary tuition
No matter what the reason for taking out a personal loan may be, it’s still important to ensure that you’re financially capable of making all your payments on time.
In Need of a Personal Loan in Brampton?
After careful consideration of what you need the money for and your ability to make timely payments, Loans Canada can help you choose which lender in Brampton to work with and which loan type is best for you. Get in touch with Loans Canada today.