Getting a loan is not always easy, especially if you have bad credit. Not only this, but an individual can have bad credit for a myriad of reasons: you may be very young and have no credit life yet, as well as you may have started with this very late or simply for different reasons ended up with a bad score. However, many times you need loans for bad credit.
Fortunately, it is currently possible to get loans for bad credit and in this article, we will tell you how to get a loan with bad credit.
Personal loan: the best option of loans for bad credit
When it comes to obtaining loans for bad credit, without a doubt, the best option is a personal loan. A personal loan is a closed-end loan, meaning that you give the money once and then pay it back, which allows you to invest in whatever you want. This is different from a credit card, which is an open credit so the amount of uses and payments you will have to make are not strictly defined or a mortgage, which must be used for the purchase of property and nothing else.
In addition to their freedom, they are useful if you are looking for bad credit loans as they are not only offered by banks, who will usually take your score into account, but by private online lenders. These private lenders allow you to obtain sums of money quickly and without too much paperwork, which is why they have become the preferred choice for those looking for urgent loans for bad credit in Canada.
Private lenders offer convenient installment payments and relatively low interest rates. The key is to look for lenders with good reviews and who will accommodate your specific loans for bad credit needs.
How to get a loan with bad credit?
To get a loan with bad credit, specifically a personal loan with a private lender, the conditions may vary depending on who you choose. In the case of loans for bad credit Canada, at sites like Good Life Loan, you have the requirements that will be listed below.
First and foremost, as with bank loans, you must be a Canadian citizen or have permanent residency. This is a government standard and there are certain exceptions depending on the immigration status of the individual, about this condition you can get more official information here.
Secondly, and also by government requirement, you must be of legal age. Although some banks will give credit cards to minors, it is the parents who will assume responsibility for payment and who must sign. In this case, since it is financing with bad credit, lenders require that the individual requesting the loan be responsible for the loan and, therefore, be of legal age.
In addition, and because they are bad credit loans, instead of the credit score they will most likely ask for an income certificate. Income certificates for loans for bad credit in Canada are usually presented in two ways: through bank statements or with a document made and signed by your employer.
In other cases, you may also be required to establish monthly expenses. This allows the lender to be clear about your ability to pay and how many installments it will be feasible for you to repay the money. The idea of this is that the loan payments do not interfere with your daily life and the fixed expenses you manage.
Other sites may ask for other information, but these are the most common and the ones you should have ready when you begin your search for loans for bad credit.
Benefits of a personal loan as financing with bad credit
As you have already seen, one of the biggest benefits of private personal loans is that they are ideal as urgent loans for bad credit in Canada, so on sites like Good Life Loan, you can simply fill out an online form and be approved in a matter of minutes.
However, they have other benefits. In principle, the fact that it is a single loan allows it to have a fixed interest rate and is easier to pay than other types of loans, such as credit cards.
Also, because they are relatively smaller amounts that are approved quickly, you can pay them off in a short period of time, so they are cheaper in the long run because you won’t accrue interest. Because of this, they are the best loans for bad credit for emergencies, such as home repairs or medical costs.
Also, at reputable sites like Good Life Loan, no collateral is required. This way, you won’t need a co-signer or put-up collateral such as your house or car. This is primarily because they are smaller sums and are quick to pay off.
Finally, a good personal loan site will have much lower interest rates than a regular bank. Especially if you have bad credit, a bank is likely to set a high interest rate as insurance for them. A personal loan, on the other hand, does not change its interest rate based on your credit score.