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Sometimes it can be tough to make ends meet, especially if a situation arises that suddenly increases your financial obligations or puts a squeeze on your income. In times like these, getting some financial help can be useful.
This is where personal loans can help. By getting access to a little extra cash in the form of a loan, you’ll be able to cover any last-minute costs that your bank account might not be able to cover. Let’s dive deeper into how personal loans can help residents of Thunder Bay cover the cost of unexpected expenses or make large purchases.
Personal Loans Vs Credit Cards
If you have a credit card, you can always use your available credit to cover whatever expenses you have to pay. As long as you don’t spend any more than your credit limit, you’re free to put your expenditures on credit and pay them off when your credit card bill is due. You may even be able to collect points or rewards with every dollar spent, which can be a positive thing, as long as you use your credit card responsibly.
However, racking up your credit card bill is not always a good idea, unless you’re in an absolute emergency. By maxing out your credit card, you’ll be subjecting yourself to interest charges, especially if you are unable to pay off the bill in full at the next billing cycle. And considering how steep credit card interest rates tend to be, that can cost you a pretty penny.
Further, spending your entire credit limit amount – or close to it – means you’ll be increasing your credit utilization ratio, which is potentially bad for your credit score. This is just one of a few different factors that play a role in your credit score and combined with other negative factors, you could be taking a hit on your score if you’re not careful.
You also need to consider the possibility of getting stuck in a cycle of credit card debt that can be difficult to get out of if you are unable to make your credit card payments in full. Making minimum payments will do nothing to pay down your debt. In fact, it will only cause your outstanding debt balance to grow because of the continued accumulation of interest.
For more information about the minimum payment trap, check out this article.
While a credit card might be an option in an urgent situation, it might not be the best choice for most other scenarios. In this case, a personal loan in Thunder Bay might be the better alternative. These loan products typically come with lower interest rates than credit cards, as long as your financial profile is healthy. Rates will vary from consumer to consumer and lender to lender.
Of course, you will have to qualify for a personal loan before you get approved or one. Your lender will look at your income, assets, debts, and credit score before you can secure a personal loan in Thunder Bay. But once you do, you can use that money to cover any pressing expense you may have.
What Can You Use a Personal Loan For in Thunder Bay?
There’s virtually no limit to how you can use the money you obtain through a personal loan in Thunder Bay, which can include any of the following:
- Home renovations
- Car repairs
- College tuition
- Medical procedures not covered by OHIP
- Travel expenses
- Urgent expenses
This list is by no means exhaustive. That said, it’s important to be mindful of what you are spending the money on, as taking out a personal loan means adding more debt to the pile. So be sure the reason you’re taking out a personal loan is worthwhile.
How Are the Funds Provided?
If you get approved for the loan in Thunder Bay, the funds will be provided to you shortly afterward and deposited directly into your bank account within a couple of days. While every lender is different in terms of how the funds are distributed, this is typically the most common way.
Can you refinance a personal loan in Thunder Bay? Check out this article to learn more.
What Are the Criteria to Secure a Personal Loan Thunder Bay?
In order to get approved for a personal loan, you’ll need to meet certain requirements, including the following:
Good credit score – One of the first things that lenders will look at when assessing a loan application for a personal loan is the borrower’s credit score. A good score will increase the likelihood of loan approval and a low rate, while a lower score will make it more difficult to get approved.
Good income – Your lender will want to make sure that your current income is sufficient enough to cover the loan payments along with all the other debt obligations you have. As such, your income will be assessed.
Stable job – In addition to looking at your income, your lender will also want to ensure that the job you have in Thunder Bay is stable. Generally, that means a job that is full-time and ensures regular hours week after week for the long haul.
Bank statements – The lender may also want to take a look at how much money you have in the bank and what type of valuable assets you own. This can come in handy in case you’re ever unable to make a payment from time to time due to financial issues.
Looking to apply for a personal loan? Try to avoid these application mistakes.
How Much Can You Apply For?
Depending on the cost of the expense you have on your plate, you’ll want to take out enough to cover the expense in full. But that said, you’ll need to get approved for that amount. Your lender won’t arbitrarily hand out an exorbitant amount of money that’s not justified. A number of factors will come into play that will impact how much you can take out with a personal loan, including the following:
- Your lender – Different lenders in Thunder Bay have different protocols when it comes to how much they are willing to loan out.
- Your credit score – A higher credit score will increase your odds of getting a higher loan amount.
- Your ability to repay the loan – The lender needs to feel confident that you will be able to make your payments on time every month before you are approved for a specific loan amount.
- Collateral – If you have a valuable asset that can back up the loan, your lender may be more open to extending a higher loan amount.
Using a Personal Loan to Improve Your Credit
A personal loan is typically used to gain access to much-needed funds to pay for a certain expense. But it can also be used to help improve your credit score. If you are responsible with your payments and make them on time each month, each payment made will be communicated to the credit bureaus who are responsible for reporting credit scores.
With every timely payment that you make, your credit can be given a boost. If your credit score could use some improvement, a personal loan may be a great credit-building option for you.
Check out this infographic to learn more about what affects your credit score.We Recommend Personal Loans in Thunder Bay For…
As mentioned, you can literally use the money from a personal loan for just about anything. But that doesn’t mean you shouldn’t be selective on what you use the money for. Taking out a loan means adding more debt to the pile, being responsible for another loan payment, and potentially impacting your credit score if you’re not responsible with your payments.
That’s why you should only use the money for legitimate things that are justified. Here are some valid ways to spend your personal loan funds:
- Home renovations that add value to your home
- Car repairs
- Emergency expenses
- Medical bills
- Post-secondary tuition
In Need of a Personal Loan in Thunder Bay?
If you’re in need of some extra cash, a personal loan in Thunder Bay may be just what you need. If you’re ready to apply for a personal loan, call Loans Canada, and we’ll put you in touch with the right lender for you. Get in touch with Loans Canada today.
