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📅 Last Updated: March 6, 2024 ✏️ Written By Bryan Daly 🕵️ Fact-Checked by Caitlin Wood
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Short term loans can be used by consumers in Newfoundland & Labrador as a valuable tool for building and/or improving your credit health, as well as deal with a lot of the expenses that come your way. While they generally range in amounts of $100-2,000, some lenders in Newfoundland & Labrador even offer short-term loans of up to $5,000, along with payment periods of 1-3 years. During that time, you will be paying your loan back in scheduled installments.
Almost any resident of Newfoundland & Labrador can get access to these types of loans, depending on the amount they request, what shape their finances are in currently, and the lender they’re applying with.
Read this to discover what the loan process is like in Newfoundland & Labrador.
Are Short Term Loans Similar to Payday Loans?
In certain respects, yes.
With both of these types of loans:
- You’ll likely be applying for smaller amounts than with other loans and credit products.
- The approval process is less strict than with larger, more, expensive loans (personal loans, mortgages, car loans, etc.). A credit check is not always required by lenders in Newfoundland & Labrador. Generally, proof of a steady income and residency is necessary.
- Approval times are relatively short, making both options good for financial emergencies.
However, short term loans are different (and often more beneficial) because:
- Interest rates, while being somewhat high, are usually still lower than they would be with most payday loans. In Newfoundland & Labrador, payday loan lenders are allowed to charge up to 60% interest ($60 per $100 you borrow).
- Depending on your lender’s specifications and your financial health, you can likely be approved for more money than any payday loan lender in Newfoundland & Labrador ($1,500 maximum for most payday loans).
- Payment schedules are often longer and more negotiable than with payday loans (which only give you 14-days to pay your outstanding balance before penalties are added).
- Loan terms and regulations are less demanding.
- They can be acquired through almost any lender in Newfoundland & Labrador, rather than a specific payday loan source.
- Some short term loan lenders in Newfoundland & Labrador DO check your credit (which is never a requirement for a payday loan).
Your credit matters. Check out this infographic to learn how it’s calculated.
Important Questions to Ask Before You Apply For a Short Term Loan
Before you decide to apply for a short term loan in Newfoundland & Labrador, there are a few questions that should come to mind, such as:
- How much will my loan cost overall? One of, if not the most important question to ask your lender is precisely how much they charge in terms of payments, interest rates, and other fees. Any legitimate lender in Newfoundland & Labrador should tell you this before taking in your application. If they refuse to tell you, stay away from them.
- What will happen if I can’t make my loan payments on time? Again, this depends on your lender. However, it’s best to find out exactly what the consequences for defaulting are (penalties, added interest, etc.).
- Can I use collateral to secure my loan? Generally speaking, most lenders in Newfoundland & Labrador allow you to offer up your assets (home, car, etc.) as collateral in compensation for a lower interest rate and a better chance of approval. Then again, since your short term loan might be relatively small, they may only allow unsecured loans.
- What factors determine my creditworthiness? When considering you for new credit and interest rates, your lender might look at your credit score, income, employment record, and current debt level. While some lenders in Newfoundland & Labrador don’t check your credit, at the very least they’ll want to know you can afford your loan completely, so ask them exactly what personal and financial documents you need to provide.
- Is there a way I can’t guarantee my approval? There are certainly ways you can increase your chances of being approved (improve your credit, earn more income, etc.). However, there is no way to receive guaranteed approval for a loan product of any kind.
- Why did my lender offer guaranteed approval for a price then? Be warned! No real lender in Newfoundland & Labrador and Canada, in general, will ever offer you 100% approval, especially not for a price. If a lender tries to do this, it’s a clear indication that they are fake and trying to scam you. The Canadian Government does not permit lenders to charge any fee prior to them approving your application and depositing your loan money.
To know how you can identify a loan scam, check out this video.
My Lender Has Strict Policies, What Can I Do to Be Approved?
While it’s always good to keep your financial life in order, it’s even more essential when it comes to loan approval. So, let’s assume your lender does perform thorough background/credit checks before approval. Remember, you want to show them that you’re worthy of credit and that you deserve the lowest interest they can offer. Here are a few ways you can make that possible:
- STEP 1: Find the right lender so that you know you’re receiving the best interest rate, loan terms and payment schedule you can find.
- STEP 2: Construct an accurate budget once you’ve confirmed exactly how much your loan will cost you over time. Factor in all your normal expenses to make sure you comfortably can afford both them and your loan, and still have enough money to get by once your loan is fully paid.
- STEP 3: Request your credit report from Equifax and TransUnion so that you can review it for errors to dispute. Any errors you correct should raise your credit score and gradually improve the look of your whole credit profile.
- STEP 4: Raise your credit score as much as you can through timely, full payments on all your other active credit product accounts.
- STEP 5: Eliminate your other pending debts to show your lender that you are and will continue to be a responsible borrower.
I Want To…
I’ve Been Approved! What Can I Use My Short Term Loan For?
Congratulations! If you’ve been approved, you can now use your loan money for almost anything in Newfoundland & Labrador, including but not restricted to:
- Purchases that are too expensive for your credit cards or general income
- Unexpected travel plans, holidays and/or vacations
Other important costs Loans Canada recommends you use your short term loan for:
- Paying down other debts you might already have
- Financial crises that come your way (lack of rent, medical costs, etc.)
- Repairing or maintaining the condition of your home and/or vehicle
- Building, fixing, or boosting your credit and your finances as a whole
If you want, you can also look into installment loans in Newfoundland & Labrador.
Frequently Asked Questions
What is a short-term loan?
Short-term loans come in many shapes and sizes. They are usually $1500 or less. Payments are generally spread out over 2 to 8 weeks, with some going up to 12 weeks. The most common types of short-term loans are payday loans, personal loans and credit cards. Because of their quick turnaround, lenders typically charge higher interest rates on short-term loans. Credit cards and personal loans can vary from 10% to 36% APR (up to a legal maximum of 60%). Payday loans have a special rate that usually exceeds 500% APR, but they have the shortest terms.
What happens if I pay off my short-term loan early?
Early payments on a short-term loan will usually save you a decent amount of money. For instance, paying your credit card in full during the grace period (before the statement due date) means no interest charges. However, be mindful of the fact that cash advances on your card do accrue interest from day one. For payday loans, in most provinces, a lender usually cannot charge you any kind of penalty for paying off your loan early. If your personal loan is based on an open-end contract, then you may pay it off early without penalty. However, if it’s a closed-end agreement, then you may incur a penalty for settling the debt before it’s due. Check with your loan provider to confirm these details.
Am I eligible for a short-term loan in Newfoundland and Labrador if I have poor credit?
Getting a short-term loan with bad credit is still possible. Many personal and payday loan providers don’t use a credit report to make their decisions. They’re more concerned with short-term financial health to see if you can afford the payments. You’ll need to provide documents to verify your identity, address, banking details, and income. Securing your short-term loan using collateral (like a vehicle) is another way you can be approved despite having bad credit. Similarly, a security deposit on a secured credit card will generally negate a poor credit score and will help you rebuild your credit.
For Your Short Term Loan Needs, Always Choose Loans Canada
If you’ve been looking for a good short term loan, you’ve found the right source. Make Loans Canada your go-to spot and we’ll set you up with the best lenders in Newfoundland & Labrador. Click the link below to apply!
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