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Whether you live in Windsor or any other part of Ontario, life is likely expensive and sometimes hard to predict. That’s where personal loans can help. Consumers can use the funds obtained through a personal loan to be used to pay for certain expenses that they may not be able to cover on their own. Keep reading to learn everything you need to know about personal loans in Windsor and whether or not this product is the right fit for you.
What Can the Funds From a Personal Loan Be Used For?
You are free to use the money that you get from a personal loan as you see fit, which can include any of the following:
- College tuition fees
- Home renovations
- Car repairs
- Travel expenses
- Medical emergencies
- Family vacations
- Large purchases
This list can go on and on. That said, it’s wise to think long and hard about what you intend to use the funds for, as a personal loan is a serious financial obligation that you will be committing to. So make sure you don’t add more debt to the pile for a frivolous expense.
When filling out a personal loan application, make sure you avoid these mistakes.
How Are the Funds Accessed?
If you are able to get approved for a personal loan in Windsor after applying, the funds will be distributed shortly afterward. Usually, the funds for a personal loan are deposited into your bank account, after which you are free to access the money loaned.
What Do Lenders Require to Approve a Personal Loan Windsor Application?
In order for you to get approved for a personal loan, you’ll need to meet certain criteria that the lender will stipulate, which typically include the following:
Healthy credit – One of the factors that lenders in Windsor will assess before they approve a loan application is your credit score. A healthy score will increase the chances of approval at a lower rate, while a lower score will lower the odds of loan approval. Generally speaking, lenders like to see a credit score of at least 650 to 680 (learn more about what your credit score range really means).
Stable income – Your lender will want to make sure that you are financially capable of making your payments every month without trouble, so your income will be looked at to make sure you can comfortably cover your loan payments along with any other bills that you have.
Bank statements – Not only will you need to prove that you have a steady income, but you may also have to show that you are financially responsible with your cash flow, which is why bank statements may need to be provided. Having sufficient funds in your bank account will give the lender some reassurance that you’ll still be able to make your loan payments even if your income takes a hit.
As a side note, no legitimate lender in Windsor will ever ask for access to your online banking. Bank statements can be printed or sent electronically, a lender does not need your banking login information.
How Much Money Can I Borrow?
While a personal loan is meant to provide you with some money that you need to cover a certain expense, it’s not meant to hand over as much money as you please. The amount that you are eligible to borrow will come down to your financial health and history, which is a direct indication of how likely you will be to repay your loan.
If you have a high credit score, assets, low debt amount, and a stable income, for instance, the amount you may be able to borrow may be higher than if your financial profile was sub-par. Further, the lender that you deal with will also play a role in how much you can borrow, as some lenders in Windsor may have different ideas of how much they believe would be prudent. Also, if you have a valuable asset that you can use to collateralize the loan, the loan amount you get could be higher.
To learn more about how secured personal loans work, click here.
Using a Personal Loan to Boost Your Credit Score
Not only can you use a personal loan to access funds needed to pay for a large expense, but you may also use it to give your credit score a boost. If you make your payments diligently every month without missing one, you could be improving your credit score while making use of funds you may need when money is tight.
That said, the only way this will work for you is if you take out a loan amount that you can afford to repay. The payments you make every month must be within your financial comfort zone, otherwise, you could be setting yourself to not only be unable to improve your credit score, but you could even be making it worse if you start missing payments.
While you’re paying back your personal loan, don’t take out any other loans that could add more debt to the pile and make it even more difficult to make payments on time. If improving your credit score is on the agenda, consider taking out a personal loan amount that you’re comfortable repaying and make sure you make timely payments every month.
How Do I Apply For a Personal Loan in Windsor?
There are certain steps you need to take to apply for a personal loan in Windsor, and that starts by filling out and submitting a loan application. But in addition to completing this paperwork, you will also have to submit certain documentation, including:
- Letter of employment
- Bank statements
- Statement of assets and debts
What Credit Score is Needed to Secure a Personal Loan?
The credit score requirements for a personal loan in Windsor are not unlike what is expected to secure any other type of conventional loan. As already mentioned, you’ll likely need a score of at least 650 to 680 to get approved for a personal loan, but a higher number is even better.
If you have a score that’s under this threshold and still need a personal loan, you may have to seek out a lender who deals with bad credit borrowers. It should be noted, however, that bad credit loans typically come with higher interest rates, which makes these loans more expensive.
We Recommend a Personal Loan For…
As mentioned, there are so many different ways to use the money obtained through a personal loan. That said, certain applications are better than others. At Loans Canada we generally recommend personal loans to be used for any of the following:
- Emergency expenses
- Medical bills
- Car repairs
- Home renovations that will increase the value of your home
- Post-secondary education
Credit Cards Vs. Personal Loans
After all that, you may be thinking that using a credit card to cover the cost of a large purchase or unexpected expense is just as, if not easier than applying for a personal loan. While you aren’t wrong, there are definitely some differences.
The Cost of Interest
Indeed, credit cards can be seen as a type of loan. You’re approved to spend up to a certain amount, as long as it is eventually paid back. And whatever amount is spent will be charged interest, which will continue to accumulate on the outstanding balance.
That said, you may also want to think twice about racking up your credit card bill in order to pay for a high-priced expense. The interest rates that are typically charged on credit cards are usually quite high. It’s not unusual for credit card interest rates to be as high as 20% or more. And the higher your outstanding balance is, the more interest you’ll be paying. That interest will continue to mount and accumulate until the entire outstanding balance is paid off.
The Minimum Payment Trap
Charge too much to your credit card can create a cycle of debt that can be difficult to get out of. Even if you don’t spend anything on your credit card one month, an outstanding balance will still be charged interest. And if you’re only making minimum payments every month, that outstanding balance will only increase because of that interest charged.
Further, spending too close to your credit card limit can increase your credit utilization ratio, which is one of the key factors that play a role in your credit score. A high credit utilization ratio – which is basically the amount you spend against your credit relative to the actual credit limit – can be bad for your credit score. So, if you get too close to your credit limit, your credit score could take a hit.
Sure, a credit card can be a convenient way to pay for something, especially if you need or want it now but don’t have the funds to cover the cost right now. But it could also put you further into a debt that you may find extremely difficult to climb out of.
As such, you may want to consider a personal loan instead. If you have decent credit and your income is sufficient, you could get yourself a personal loan in Windsor at a much lower interest rate, which can make it more affordable and easier to pay off.
Need Help Finding The Right Personal Loan in Windsor?
After careful consideration of your finances and what you need the money for, you may have decided to apply for a personal loan in Windsor. If that’s the case, Loans Canada is here to help put you in touch with a lender who can offer you exactly what you’re looking for. Get in touch with Loans Canada today!