People need money to run their lives. Some people in Canada take a loan for investment, some borrow money to meet their monetary needs, and some of them take a loan to get rid of financial problems. So whatever is your reason to take a loan, you should be aware of the different types of loans and other options that can help you like car title loans. Which loan type is best for you depends on your financial situation and your own personal preferences.
A loan is a debt that must be paid back with interest. When taking a loan, you agree to give the lender money or property (such as your home) and you promise to pay it back with interest over a specific period of time. Loan types vary based on factors such as the amount borrowed, when the funds are due, how the funds are dispersed, what happens if you make a late payment, and who is responsible for paying the interest.
Find out all about the different types of loans available to different Canadians. Several options are available such as car title loan and bad credit car loan Toronto for people with poor credit history. Read on and get ready to take charge of your financial life.
Ways To Get Money In Need
- Borrow money from near and dear ones: You can borrow money from friends who can help you out in your financial crisis. You can get a loan from family members, friends and colleagues in need. However, you have to return the money to them but the benefit is you don’t have to pay interest to them. But when you borrow money from family members, make sure that you are not giving it to a third party as the lenders may not be able to recover their money in case of any loss incurred by that person. You should know that this type of loan has no interest rate and it is also not registered in any institution.
- Increase source of income: You can get a loan from banks, credit unions, and other financial institutions such as moneylenders to pay your debt. You can also make use of the internet for searching for such lenders. If you are interested in taking a loan to increase your income, you have to do it only when you have sufficient cash flow.
- Take a loan: The last option is to take a loan. You can take a loan for your business, property, and also to meet other financial obligations. However, before you take money from any lender for any purpose, you should understand the terms and conditions of the loan and you should not make extra payments as it is legally binding. Bad credit car loan Toronto is one of the best options to get money if you have a poor financial history.
Loan Types in Canada
There are several kinds of loans that can be secured by assets and property securities like RRSPs (Registered Retirement Savings Plans), stocks, bonds, etc. The use of a loan is not limited to these. The lender may ask for collateral to secure the loan. The different types of loans are as follows:
- Home Loan – These are loans that can be secured by a Canadian house, vehicle, RV, boat, land, etc. These loans are called mortgages and you have to pay back the money you borrowed after the time period of 5 years or more.
- Personal Loan – A personal loan is also secured by collateral, such as a home, car, or boat. So, in this loan, the borrower gives the lender assets of a vehicle or property as collateral until the loan is repaid. The loan period may also be longer than 5 years.
Auto Loan – An auto loan is given for buying a new or used vehicle including RV’s and boats. These are usually provided by banks and can be secured with either two or four-wheelers as collateral. The borrower agrees to pay the loan back after a certain period of time.
- Credit Card – The most common form of loan in Canada are credit cards. They allow Canadians to borrow money to meet their monetary needs from one or more lenders in order to pay their credit card bills or enjoy new products, services, and entertainment without making payments for a while. Credit card companies offer the convenience of unsecured debt because they do not require a borrower to pledge any property as security for the loan. VISA, MasterCard, and American Express are examples of credit cards.
- Unsecured Loans – These types of loans are given to people who have no valuable assets. It is the most popular form of borrowing in Canada and repayments are made on a monthly basis without any restrictions. You may need to pay higher interest rates to get these types of loans as compared to secured ones.
- Car title loans – Another best way to get a car title loans with bad credit history, no job history, or if you are in need of cash for some other reason. If you have your car and have proof of insurance then you can apply for a bad credit car title loans in Toronto at Quick Cash Canada. This is one of the best ways to get money in a situation when you need it on an urgent basis. The benefit of this loan is that the lending institutions will not keep your vehicle, they will just keep the car title with them. This means that you are all free to use your vehicle even in the loan term.
Common Requirements For All Types Of Loan
No doubt each type of loan is different from one another. However, there are certain common requirements that must be fulfilled before you can qualify for a loan in Canada. These requirements are as follows:
- You have to be a Canadian citizen or have permanent resident status and live in Canada.
- Must be working or be self-employed with a steady source of income.
- You should have an active account at a bank or credit union. In addition, your credit rating should be good enough to show that you can repay the lender soon after the loan is approved.
- You should have no financial problems at all.
- You should have a valid driver’s license from Canada.
What You Should Consider Most Important In The Loan Application Process?
The following are some of the important things that borrowers consider most important in the loan application process:
- Repayment Time – The borrowers want to get the loan as soon as possible and would be willing to pay a higher interest rate or a higher monthly payment in order to do so. In this case, borrowers who have intermediate or good credit ratings can get the loan in a very short period of time.
- Interest Rate – The Canadian Bankers Association has several recommendations that encourage lenders to look for borrowers who want to pay back the money as soon as possible. This means that they will offer a lower interest rate in order to make the borrower pay it back quickly. The higher the interest rate, the more money you would have to pay back over a longer period of time.
- Loan Amount – The borrowers who want to get the loan as soon as possible would take a loan amount that is not too large. So, the bigger the amount of money you are looking to borrow, the lower your chances of getting approved for a loan.
- Credit Rating – The borrowers must have a good credit rating in order to get approved for any kind of loan in Canada. It is important to be careful when you are borrowing money due to the fact that bad credit can lead to a financial disaster if it never gets corrected.
What Is The Better Option For You?
The loan option that is better for you depends on your requirements. If you want a loan and you need a small amount of money for the short term, you can go for a payday loan or personal loan. If you need a large sum of money for the long term, you should go for a secured loan such as a bad credit car loan Toronto. And if you’re looking for an option that can help you borrow money even with poor credit or no permanent income source, you should take car title loans Toronto.
Above all, you should pay attention and research in detail about the lending institution from which you’re going to take a loan. Remember, you should make a thorough investigation about the interest rate that the lender is going to charge after taking your loan. And finally, make sure that the lender is a reliable one by checking on their track record before taking a loan.