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Toronto is one of the largest cities in North America and is a wonderful place to live. However, one thing that isn’t wonderful is the cost of living. Specifically, real estate in Toronto is quite expensive. For example, you could spend tens of thousands of dollars on a down payment and still have a mortgage that will cost you hundreds of thousands of dollars.
Add in things like groceries, entertainment, and car payments and there isn’t a lot of extra money to go around for many people. With many individuals and families low on funds due to such expenses, there is a large need in Toronto (and the rest of Canada, for that matter) for personal loans.
What Can You Use a Personal Loan For in Toronto?
We know that personal loans are very common in Toronto, but what can they be used for? Well, the options are essentially endless as you can use them on whatever you need. Some options include:
- Travel and vacation
- Emergency medical care or medical bills
- Car repairs
- Household improvements
- Unexpected expenses
Of course, loans are used to secure vehicles, buy homes and go to school, but those are generally not seen as personal loans, but auto loans, mortgages and student loans respectively. However, just about everything else (as you can see from the list) can be purchased with a personal loan.
Learn how to get a personal loan when you’re unemployed.
You should only take out a personal loan in Toronto, however, if you truly need one and can afford it. A personal loan can be a great financial tool, but if used irresponsibly, it can cause unwanted and unnecessary amounts of debt. This is why it’s so important that you do your research and fully understand the total cost of the loan before you make your final decision.
Have you ever wonder what the true cost of borrowing is? Click here.
How Big of a Personal Loan Can I Get?
Now that you know what a personal loan can be used for, how large of a personal loan can you get approved for in Toronto? Well, this depends on quite a few different factors:
First of all, it will depend on the lender you choose to work and the type of loans they specialize in. If you’re looking for a small, short-term installment loan then choosing a lender that specializes in these types of loans will help you qualify for the amount you need.
Next, the amount that you are able to repay will help to dictate how much you can get. Someone who makes $30k likely cannot secure the same loan as someone who makes $85k. Furthermore, it’s always in your best interest to take on a loan you can afford, expensive debt is never a good idea.
Opting for a secured loan can often make it easier to get approved for a larger loan. Putting up collateral like a vehicle or piece of property will provide that extra level of security that some lenders need.
Interested in the difference between secured and unsecured debt? Click here.
Lastly, your credit score (which is a snapshot of your overall credit health) will have an impact on whether a lender deems you too risky or not.
What Are Lenders in Toronto Looking For When Approving a Personal Loan?
When it comes to approving a personal loan application, all lenders in Toronto will have their own criteria and set of requirements. But, generally speaking, there are a few points all that lenders always look at during the approval process. If you’re looking to improve your chances of getting approved for a personal loan in Toronto, make sure you consider these factors:
Employment or Income
One of the most important factors that lenders in Toronto consider is whether or not an applicant can afford to make the payments associated with the loan they are applying for. Whether you have a traditional nine to five job, are a freelancer, or rely on another form of income, lenders want to see that you have some form of income.
How do most lenders verify the income you have coming in each month? They often ask for the last three months of bank statements (not to be confused with asking for the login information to your online banking, no legitimate lender would ever ask for that). Having a visual representation of how and when your income comes into your account each month and then your spending habits, gives a lender a more comprehensive look at how you manage your finances.
Proof of Address
Most lenders in Toronto will want to see that you have a Canadian address and are in fact a resident of Canada. Usually, a government issues I.D. with your address will be required duing the application process.
Check out this infographic to learn how your credit score is calculated.
Credit Score Required For a Personal Loan in Toronto
Understanding how your credit score impacts your chances of getting approved for a personal loan is very important. In Canada, your credit score will range from 300 to 900. So, just what sort of a score do you need to get a loan in Toronto?
Generally, any credit score over 750 is excellent and you should have no trouble securing whatever loan you need. A score of 680 is often required for a mortgage, but some lenders are more flexible than that, especially for a smaller personal loan.
All lenders in Toronto will be different in terms of the credit score they require and some will also be more than willing to work with those who have bad credit. However, be aware that the better your credit score, the better the terms of your loan will be.
Thankfully, your credit score is only one thing that lenders will continue when evaluating you for a loan. Other things they consider include:
- Your credit report and credit history
- Your income and employment
- How much debt you currently have
Did You Know a Personal Loan Can Help Improve Your Credit Score?
While we wouldn’t suggest that anyone living in Toronto take on debt for no reason, playing off a personal loan has the added benefit of helping you rebuild your credit. The most important thing to remember is what you need to make sure you lender reports to one or both of the credit bureaus. If your lender doesn’t report your payments, your credit score will not be positively affected. So, if you’re already in the market for a personal loan but need a little boost to your credit score, make sure the lender you choose will report your on-time payments to the credit bureaus.
Helping You Find the Right Personal Loan
Finding the right personal loan in Toronto isn’t always easy, especially if you’ve dealt with past financial issues or are currently struggling with less than great credit. The good news is there are lots of options personal loan lenders in Toronto to choose from. If you’re interested in seeing what your options are, Loans Canada can help by matching you with a loan that will work for you and your budget.