If you’re a resident of New Brunswick, there are plenty of reasons you might need a loan today or sometime in the near future. One of the more commonly seen loan types amongst New Brunswick borrowers is the short term loan. Once you’ve been approved, a short term loan can be very beneficial in more ways than one.
What Can I Use a Short Term Loan For in New Brunswick?
A short term loan is a standard financial product that you can apply for with almost any lender in New Brunswick, conventional banks and alternative lenders alike. If your application is approved, you’ll be extended a certain amount of loan money, which you’ll repay through scheduled installments.
The loan amount you’re approved for in New Brunswick depends on elements such as your:
- Credit score/credit report (to determine your overall creditworthiness)
- Gross monthly/yearly income (to calculate your chance of defaulting)
- Employment history (to verify that you’ll be able to hold down a steady job over the course of the loan)
- Payment history (to see how good you’ve been and will continue to be at dealing with your other debts)
Once approved, you can use a short term loan for almost anything in New Brunswick like:
- Build or improve your credit health
- Cover the cost of a financial emergency or unexpected expense
- Make a large purchase that your credit cards or income can’t handle
- Pay for home repairs, renovations or other homeowner-related costs
- Pay for car repairs or other vehicle-related costs
- Go on vacation
- Pay down your existing debts
- And much more!
Do you know what the true cost of borrowing is? Check out this infographic.
Is it Better to Get a Short Term Loan or a Payday Loan in New Brunswick?
During your search for the right credit product, it’s possible that you’ll hear about payday loans and how they could be a better way of financing the things you need. Don’t be too hasty! Payday loans, while convenient, can be a major hazard to your finances, especially if you don’t handle them responsibly.
Payday Loans Might Work Best in New Brunswick When:
- You’ve got a financial emergency that needs to be dealt with immediately (payday loans usually come with same day approval)
- You have extremely bad credit (payday loans require no credit check)
- You’re making enough income to justify the short payment term (payday loans are meant to be paid back within 14-days of approval)
- Your income would also cover the high-interest rates that accompany payday loans (in New Brunswick, payday loan lenders are allowed to charge a maximum of 15% interest or $15 for every $100 borrowed)
To know more about payday loans in New Brunswick, read this.
Short Term Loans Might Work Best in New Brunswick When:
- You want to save money over the course of your loan (short term loan payments, fees, and interest rates are much more reasonable)
- You want the option of negotiating the length of your payment schedule
- You don’t want to rely too frequently on your credit cards
- You need to borrow more than $1,500
- You want better, safer approval terms (payday loans often come with very steep penalties for defaulting and other non-negotiable costs)
- You have decent credit (a credit score of 650 or above will earn you a lower interest rate, saving you money over time)
How much short term loan money will I receive? This depends on the health of your credit and finances, as well as your lender’s guidelines in New Brunswick. However, generally speaking, short term loans come in sums of $5,000 or less.
How long will my loan term be? The length of your own payment term may also vary according to your lender’s specifications and your own financial needs. Usually, short term loans are meant to be paid off within 1-3 years.
What will my interest rate be? Interest rates for short term loans tend to vary according to your creditworthiness. If you have a good credit score and income, you’ll receive a lower interest rate. If you’ve got a bad credit score (620 or under) and income, your interest rate will be higher (if you’re approved).
Is there a way to get guaranteed approval? Unfortunately not. While improving your credit score and income will increase your chances of approval, there is no real way of guaranteeing it 100%. If a lender ever offers “guaranteed approval” in exchange for an advanced deposit (which they might call “loan insurance”), walk away! They are most likely a fake lender trying to scam you.
Looking to improve your credit? Arm yourself with the knowledge you need.
How Can I Get a Better Chance of Approval in New Brunswick?
Even if you have bad credit and a low income, you can still be approved for a short term loan in New Brunswick. While banks and other conventional lenders in New Brunswick have strict borrowing policies and might deny your applications, there are many alternative lenders whose clientele is mostly made of bad credit borrowers. However, you may be given a higher interest rate with these lenders to compensate for the risk they’re taking on you.
Look here to find out what bad credit lenders look at when considering you for credit.
Here are some ways of increasing your chances of approval:
- Shop around for the right lender. Remember, every lender in New Brunswick is different in the way they do business. If you think your lender’s rates are too high or their company seems untrustworthy, take some time to search for one that offers better terms and has a more solid reputation. Shopping for low-interest rates? Consider this.
- Improve your credit score. Paying your bills on time and in full is essential for the health of your credit score. Late, short and missing payments can damage it and show your lender that you’re an irresponsible borrower. So, the best way to alleviate this situation is to take the time to improve your overall payment history, raising your credit score in the process. Here are some ways of improving or fixing your credit score.
- Pay down your credit card bills. Some of the easiest credit products to both use and misuse are your credit cards. Paying down your outstanding debts and reducing your credit utilization will gradually raise your score.
- Check your own credit. While not all lenders in New Brunswick check your credit, many do. One way to be certain of your own credit strength is to request a copy of your credit report (free once a year) and credit score (for a small fee).
- Dispute errors you find. When examining your credit report, you might discover informational errors (in your profile or made by another lender), many of which can harm your credit score if they go uncorrected. If you find any, make a formal dispute request to your credit bureau (Equifax or TransUnion). If the error is confirmed, they should fix it and your credit score should improve gradually.
- Create a budget. While doing so won’t improve your credit or approval chances outright, making yourself a proper budget is one of the first, most important steps you can take to save yourself money and make your payments easier to afford. Want to see Loans Canada’s guide to budgeting in 2018? Check this out.
What types of short-term loans are there?
Is there a penalty for paying off a short-term loan early?
Can I get a short-term loan if I have bad credit?
For All Your Short Term Loan Needs, Try Loans Canada
If you’re a New Brunswick resident looking for some much needed financial support, our Loans Canada Team can help you. Simply apply below and you’ll be quickly connected with the right sources of short term loans every time!