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📅 Last Updated: October 4, 2021 ✏️ Written By Bryan Daly 🕵️ Fact-Checked by Caitlin Wood
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As a Canadian citizen and resident of Red Deer, you can gain access to many different kinds of financial tools, such as credit cards, lines of credit, and loans. Although your cards and income may be sufficient when dealing with your daily expenses, a loan can also be healthy for your finances.
That said, a loan is also a serious responsibility, so it’s important to choose the length of your payment term wisely. If you’re dealing with an unexpected expense or even looking to improve your credit, a short term loan might be perfect for you.
Do you know what the true cost of borrowing is? Find out here.
How to Earn Approval for a Short Term Loan in Red Deer
Like many loan types available in Red Deer, a short term loan is a lump sum of money that’s given to you via direct deposit soon after you’ve applied. That sum can then be paid off through divided installments with interest.
In this instance, the loan amount would be relatively small, maybe a few hundred to a few thousand dollars, and have a short repayment term of 1-2 years. This makes any short term loan a good starter product if you’re trying to diversify your credit history and pay off smaller, singular expenses.
Avoid these common loan application mistakes.
Despite these loans being somewhat easier to manage and apply for than more specialized credit products in Red Deer, it’s still important to make sure your finances are in order. This is because all lenders will inspect various parts of your financial background to determine if you are qualified.
Before you apply for a loan Red Deer, be sure to:
- Shop around for the right lender
- Get a quote and factor all loan costs into your budget
- Consolidate any unpaid debts
- Save up a decent sized emergency fund
- Collect as much income as possible
- Check your credit report for errors, fraud, or identity theft
- Organize bank states, pay stubs, or other proof of viable income
- Improve your credit score (if it’s below 650)
The healthier your finances look, the easier it will be to receive approval for a larger short term loan amount, a lower interest rate, and more favourable payment conditions. If you’re still unqualified when you want to apply, it may help to provide some form of security, such as collateral or a cosigner to strengthen your application.
Wondering which lenders allow co-signers? Find out here.
How to Avoid a Loan Scam in Red Deer
Before you apply for a short term loan in Red Deer, it’s also essential to know where exactly your money would be coming from. Unfortunately, there are many predatory lenders and scam artists out there who are looking to swindle you in some way, so you must proceed with caution and do plenty of research.
A particular danger with online lending, scam artists are now able to set up convincing websites, then steal your money and use your identity to commit fraud. Predatory lenders may be even trickier because they can technically be real businesses and will instead coax you into paying far too much for an otherwise unfavourable loan. Since either situation can harm your finances and credit, you must learn to spot the red flags.
Never trust a “lender” if they:
- Don’t have a physical address and valid business license
- Aren’t listed with the Better Business Bureau
- Have vague or incomprehensible information about their products
- Use manipulative or aggressive sales tactics
- Charge more than $15 per $100 you borrow (the maximum rate in Alberta)
- Demand “loan insurance” before your loan is approved and deposited
- Don’t have a trustworthy reputation or good customer reviews
- Offer you a 100% guarantee of approval, regardless of who you are
No legitimate lender in Red Deer will ever make those kinds of claims or refuse to give you all the information concerning your loan, because such practices are illegal in Canada. If anything about a supposed lender seems fishy, walk away.
For more information about dealing with loans scams in Canada, click here.
Differences Between a Short Term Loan and a Payday Loan
While short term loans are a bit easier to come by, they can still be somewhat hard to qualify for if you have bad credit (a credit score under 600) or a low income. If that’s the case, another type of short term product you can apply for in Red Deer is a payday loan.
Payday loans come in small lump sums of $100 – $1,500 and are some of the easiest products to get approved for. As long as you’re least 19 years old, have a bank account, steady employment, and an Alberta address, you’re pretty much good to go. Typically, funds are deposited into your account within 24 – 48 hours, which also makes them a viable option for emergency situations.
The biggest difference between these two products is the repayment term itself. While a traditional short term loan in Red Deer can be repaid over 1 – 2 years, a payday loan must be fully repaid after 14 days. The money is usually withdrawn from your account automatically and a hefty penalty will apply if you don’t have sufficient funds. This can lead you into a cycle of debt if you’re not careful. While one payday loan is acceptable under dire circumstances, it’s best if you don’t rely on them to get by.
Check out this infographic to learn more about the payday loan cycle of debt.
Benefits and Drawbacks of Short Term Loans
As we conclude, let’s have a quick summary of the potential benefits and drawbacks of a short term loan. With that knowledge, you’ll be able to seek out the right loan for you or, if necessary, find a different alternative.
Benefits:
- Low responsibility/risk compared to larger loans
- Shorter repayment terms mean you’ll be out of debt faster
- Complete payments help build, diversify, and improve your credit
- Can be found through most lending sources
- Many lenders in Red Deer allow you to adjust or accelerate your payments
- All loan costs can be calculated in advance, helping you budget
Drawbacks:
- Because of their shorter repayment terms, higher rates may apply
- Defaulted payments can result in unmanageable debt and financial damage
- Bad credit/weak finances lead to a more expensive, less favorable loan
- Scamming, identity theft, fraud, and predatory lending are possible if proper research isn’t conducted beforehand
Learn how to find the best personal loan for your unique situation, click here.
Recommended Uses for Your Short Term Loan in Red Deer
Even though a short term loan can be much easier to handle than say, a mortgage or a car loan, significant effort is still required on your part to make sure things go as smoothly as possible during the repayment process. Not to mention, lenders in Red Deer want you to be responsible with the money they’re potentially letting you borrow.
Only use your short term loan for essential costs, such as:
- Consolidation of consumer debt
- Groceries and other household supplies
- Home repairs, car accidents, and other urgent expenses
- Alternative/cheaper transportation (bike, bus, train, etc.)
- New furniture, appliances, or other large purchases
- Unexpected travel
Get Your Short Term Loan Now!
If you’re looking for the best sources for short term loans in Red Deer, there’s no better place to go than the Loans Canada network. We take pride in helping you find the right credit products and debt management solutions for your financial situation. All you have to do is contact us today or apply below.
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