- Any credit accepted
- Rates from 6.99%
- Doesn't affect your credit
- Loans up to $50,000
- Re-establish your credit
- Apply once, get multiple options
If you’re a credit user living on Prince Edward Island, then chances are you’ve heard about different types of loans and the ways that each of them can influence your finances. One of the most common types is the short term loan.
Meant to be paid off in even segments over a period of 1-3 years, short term loans can be used for almost any expense, including but not limited to:
We also recommend you use your short term loan for more important costs, such as:
Ever wonder what the true cost of borrowing is? Click here.
There are a few general questions about short term loans that you should ask your lender, financial advisor or the other people you know, like:
Can I request any amount of short term loan money? Not quite. Generally, short term loan amounts do not exceed $5,000. These loans should be paid off anywhere from a few months to a few years following approval, unlike a mortgage, which can take over 20 years to pay in full.
What is an interest rate? Since lenders are businesses, they must charge a certain fee on top of their loan payments in order to make a profit. This is known as an “interest rate”. In other words, it’s the cost of borrowing. Before you apply, always ask your lender to calculate exactly how much your loan will cost over time when you factor in the interest rate (plus all other fees).
What do P.E.I. lenders look at when considering borrowers for short term loans? Every lender’s process is different for every credit product they offer. Since short term loans are smaller than others, their approval standards won’t necessarily be as strict as they would for larger loans. However, a typical application process might include an examination of your:
Do all lenders perform a credit check during the application process? Not always. Most lenders only want to make sure that you’ll be able to pay them back in full by your designated due date. That being said, it’s best to improve your credit as much as possible, just in case they do perform a credit inquiry.
What happens if I don’t have good credit? If your lender does conduct credit checks, your credit health can make a huge difference to your approval chances and interest rate. Good credit (a credit score of 650 or above) will help you secure a loan and a lower interest rate, making the loan easier to afford. Bad credit (620 or lower) will have the opposite effect, diminishing your approval chances, raising your interest rate and ultimately making the loan less affordable.
Why did my lender ask for “loan insurance” before guaranteed approval? Unfortunately, it’s because they aren’t a real lender. It is against the law in Canada for any lender to demand payment before your loan is approved and transferred into your bank account. If that’s the case for you, don’t give them any of your information. No legitimate lender can ever give you an absolute guarantee of approval. Walk away and report them to the proper authorities.
Let’s say that your P.E.I. lender does perform a credit inquiry. The healthier your credit looks, the less risky you’ll seem and the cheaper your loan will be. Here are a few things you can do to both improve your credit and make the most out of your short term loan:
Take a look at this infographic for even more information about credit scores.
Before you go applying for short term loans, it’s best to be aware of the positive and negative aspects that come with them, just to be certain you’re making the right choice.
For more information about short-term loans or other financial advice, try credit counselling in Prince Edward Island.
Residents of Prince Edward Island, including yourself, can find plenty of uses for a good short term loan. Here at Loans Canada, we can help you get approved with the right lenders for your financial situation.
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