Short Term Loans in Canada are commonly referred to as payday loans.
In a report from the Financial Consumer Agencies. Short term loan applications saw a big increase, from 1 in 50 Canadians in 2020, to 1 in 25 in 2010.
Short term loans, however, can come with a sting in the tail.
Taking Short Term Loans in Canada
Before you sign on the dotted line or click the accept button you need to be absolutely certain about the interest rate and the repayment schedule, because this is where things can get confusing. The terms you’re offered may look affordable, but are they?
Typically a short term loan has to be re-payed within 2 weeks if you borrow larger amounts that could extend the repayment period to 2 or 3 months.
Pay particular attention to the annual percentage rate (APR) of your loan. If you are borrowing with the intention of paying back within a few months, the APR may appear to be unimportant. An example of those deceptively low repayment figures will reveal the true cost. You want to borrow $500 and pay back over 90 days, with a monthly repayment of $258.25. That’s an incredibly high 1112.24 APR.
With typically high APR’s of between 500 and 1000%, with administration costs on top, that loan doesn’t look so attractive. Using an on-line APR calculator is one way to find out the real cost of a short term loans in Canada.
Canadian Legislation for Short Term Loans
In Canada, it is a legal requirement to display the annual percentage rate of any loan. Though take a look at a typical creditor’s website and it may not be that easy to find. One certainty with a payday loan is the interest rate is going to be high. Looking at payday lenders sites, some will quote you a fee for every $100 that you borrow, (some Provinces have set this amount at between $15 and $18, though not all so it pays to check), though not all lenders charge fees.
Short term loan in Canada have been undergoing a legislative shake-up.
Payday lenders, in particular, have not been seen in a favorable light, with accusations of exploiting the low paid and financially unaware. Many Canadian provinces have put caps on the fees the lender can charge and extended the length of repayment schedules. This is good news for the borrower but has caused a minor crisis in the short term loan in Canada industry. Some of the smaller companies saying the new lower rates are making it very difficult to make any money for themselves.
Bad Credit Short Term Loans
Getting loans with bad credit score in Canada isn’t easy. You’re in credit rehabilitation and you’ve sworn off loans for now. But who knew what would happen? Sometimes there’s no option but to try to get a loan. So how do you get one? Alternative money lenders are always there, but their interest rates are high.
Mainstream finance companies are the better option. Some banks and finance companies have lending options for customers trying to recover their creditworthiness. At least for short-term loans in Canada and reasonable amounts. Even if you have a bad credit history, most companies will grant loans on evidence of regular income.
They need to know you can pay back within the agreed time. Many offer flexible payment options.
Loan Options With Bad Credit in Canada
Rebuilding financial credibility is hard. Needing another loan adds to stress. But there are solutions. Short term loans in Canada for reasonable amounts can be arranged.
Bear in mind that in the absence of a sound credit rating, the institution will find another way to establish evidence of your ability to pay. No lending institution will take on a blatant risk. You will have to provide evidence of employment and regular income. The lenders must be satisfied that you’re capable of repaying the loan within the stipulated time.
They may ask for someone with a sound credit rating to sign as your guarantor, so should you default, the guarantor will be obliged to repay your loan. Should you ask someone to sign as your guarantor, please remember that this will be a risk for the other person. In some cases, you may need to pledge your home equity or car to secure the loan.
Bad Credit Personal Loans in Canada | No Credit Check
So if you default, they will hold your property. If these terms seem harsh, remember that prompt repayment of your loan will go in your favour. Once your loan is repaid, your property will be restored. And your credibility as a borrower will have gone up. Secured loans might even be a better bet than unsecured loans in Canada.
The interest rates on unsecured loans can be rather high. Certain finance companies are known for being positive towards giving loans to borrowers with no credit check loans or bad credit ratings.
They’re listed here, in no particular order:
- Tribecca Finance Corporation
- easyfinancial Canada
- Prudent Financial Services
- Capital Direct
These are all reputed finance companies.
Solution for Loans in Canada
As you can see, securing loans with bad credit score in Canada is possible. In Canada loans can help in emergency situations. They’re not an easy option, but if you’re diligent about repayments, things should work out well.