Sometimes, you may suddenly need extra cash or emergency funds. It might be due to a financial crisis to pay off high-interest debts, medical expenses, home improvements or financing your wedding. Most people apply for a personal loan during these times.

Like the other loans in the market, the interest rate on a personal loan depends on your credit score, monthly income, and debt-to-income ratio. Therefore, before applying for a personal loan in Edmonton, you must learn about its benefits. If you are looking for personal loans Edmonton, head on to Alpine Credits.

Personal loan

A personal loan is an unsecured instalment loan where you get a certain amount, often between $2000 to $50000. As this is an unsecured loan, you do not have to submit any collateral to get the funds.

The loan tenure can range between 1 and 10 years, and you can use the amount for anything. However, you need to clarify with your lender whether there is any restriction on using the money. Moreover, the interest rate on the personal loan is fixed, so you do not need to worry about any changes in the future.

How to apply for a personal loan?

Applying for a personal loan is similar to applying for a credit card.

• First, you need to contact a financial institution or a money lender and inquire about personal loans.
• Then you need to file a personal loan application when you have to provide essential details like personal information, details about your loan and financial information.
• Before approving your loan, the lender will perform a hard credit check, which may temporarily affect your credit score.
• In most cases, if you are eligible, the online personal loan application process will be completed within a few minutes, and you will receive your funds all at once.
• However, most financial institutions and money lenders expect you to have a credit score of 600+ to qualify.

For payment, you must submit a fixed monthly amount to the financial institution until your loan is paid off. This amount or instalment will be a portion of your principal amount and the interest charge.

Benefits of a personal loan

Here is why more Canadians are moving towards personal loans to meet sudden financial needs:

1.    Improves your credit score

Once you apply for a personal loan, you must pay monthly instalments towards the outstanding balance. Most financial institutions report your payment record to three major credit bureaus, which are accepted worldwide: Experian, Equifax and TransUnion.

So, if you are regular with your payments, it can help increase your credit score as your payment history accounts for approximately 35% of your credit score. This also means that your credit score will be affected if you make late payments.

2.    Debt consolidation of high-interest loans becomes easier

With the help of debt consolidation, you can streamline your finances by paying off any previous loans like individual loans or credit card balances using a single personal loan. Not only does it simplify the process, but it also reduces the number of payments you have to make to different financial institutions per month. Debt consolidation using a personal loan might be beneficial as you get a lower interest rate if you have a good credit score.

3.    Personal loans can be used for almost anything

Due to their versatility, personal loans are one of Canada’s most popular financing options. Most people use them to cover everything from auto repairs to home renovation and event-related expenses.

4.    Emergency funds

Application processing time and funding process may vary from one lender to another. But in most cases, lenders send out the funds the next day. So, a personal loan is the best choice if you need funds immediately due to unexpected auto repairs or hospital expenses.

However, you must go through the entire loan application process carefully. The actual time required to process the loan amount will depend on when you are applying, the size of the loan and how quickly the bank or the financial institution lets you access the money after it has been processed.

5.    No need to worry about collateral

Most financial institutions and money do not require any collateral for a personal loan. This simply means that the risk of losing a property is eliminated even if you default on the monthly installment.

6.    Minimum documentation

One of the most significant advantages of taking an online personal loan from Edmonton is that documentation requirements are pretty less. In most cases, you only need to submit three documents which you can easily submit online.

7.    Comparatively lower rates

For most Canadian residents, personal loans come with lower interest rates than credit cards. Most consumers with excellent credit scores can qualify for a personal loan interest rate between 10.3% to 12.5%. Additionally, you might be eligible for a higher loan amount based on your credit report and income history.

8.    Loan duration

Unlike short-term loans like credit card loans and payday loans which otherwise charge high-interest rates, personal loans have a repayment duration of 2 to 10 years, depending on your credit history and your money lender. So in simple words, you will pay lower monthly payments and get a far better interest rate.

9.    Let’s you pay for purchases over time

Most money lenders and credit unions process the personal loan amount as a lump sum amount up front that the borrower can use for anything like making a big purchase or paying off a previous loan. This enables you to make large purchases immediately and then pay for them over time. You do not have to save money in advance, and you can quickly get the product.

Endnote

Before applying, you need to plan how to use the funds and pay monthly instalments with interest. You need to understand the benefits and disadvantages of a personal loan, review and compare alternatives, and then apply for it. If you are ready to apply for a personal loan, you must get quotations from different lenders and financial institutions to compare interest rates and loan terms.