Bad Credit Personal Loans in Canada

October 20, 2017 By Samantha 65 Comments

This post has been updated on Oct. 20^th, 2017 to reflect recent developments in the Canadian credit markets.

I see signs of restricting personal credit in Canada everywhere lately. Even secured credit card providers like Peoples Trust has discontinued their popular secured card this summer. The big five Canadian banks have tightened credit issuing and mortgage underwriting. Getting a personal loan if you have a bad credit is no longer an easy task in Canada. You can still get a small bad credit personal loan from alternative lenders, but they come with much higher interest attached, and should be used only as last resort.

Although many Canadians would hate to admit it the real estate boom of the last 15 years is now over. This is not a real estate post, but the fallout of the declining real estate has direct implications on the ability of the average Canadian to access personal credit. The first victims of declining real estate values are of course people who rely on home equity lines of credit and refinancing to pay their bills and expensive to service credit card debt. The rising interest rate environment that we find ourselves in isn’t helping this either.

Finance companies, credit unions, online lending services, and some banks offer secured and unsecured loans to Canadians with bad and no credit. They usually offer short-term loans and a convenient and fast application process.

Getting a Bad Credit Personal Loan in Canada with No Credit Check

Online lending services and payday lenders offer loans for people with bad credit with no credit check. Some finance companies don’t run a credit check but require regular and stable income and look at the customer’s individual circumstances. Another option is to apply for a home equity or secured auto loan whereby your home equity or vehicle serves as collateral. Other loan providers include peer to peer lending services and payday lenders. Peer to peer services feature loans offered by individual lenders who may be more sympathetic and willing to offer loans to individuals with fair or poor credit.

Is There Such a Thing as Guaranteed Approval for Bad Credit Personal Loans

While many lenders advertise guaranteed approval, they usually require proof of income. In many cases, customers must have an active checking account. Guaranteed approval usually means that lenders accept applications from clients with a history of consumer proposals, bankruptcies, credit counseling, seriously delinquent accounts, and past collections. Thus loan providers have more lenient lending and credit requirements compared to banks. Guaranteed approval often means that loan providers accept applications from individuals with different credit profiles, and your credit score is not the most important factor.

How to Get Unsecured Personal Loans with Bad Credit

Comparison shopping is the best way to check rates, lending criteria, types of loans available, acceptable types of collateral, repayment schedules, and other details. Lending services usually request employment information such as length of employment, position held, gross income, monthly income, and employer. If applying together with a co-applicant, they must provide employment and personal information about the co-applicant, including net or gross income, age, and marital status. When applying for a bad credit personal loan in Canada, applicants also provide information such as mortgage payments and mortgage holders, number of dependents, current address, age, and social insurance number. Lenders want to make sure that customers will be able to pay down the loan within the agreed time frame. As a rule, loan providers are unwilling to deal with risky clients with no credit or financial record. This is the reason why they ask for proof of employment and financial stability to ensure prompt repayment. Customers with poor credit and excessive debt, for example, are at risk of default.

Top 5 Bad Credit Personal Loans Lenders in Canada

EasyFinancial, Capital Direct, Prudent Financial, Canada Lend, and Tribecca Finance are the top 5 lenders that offer secured and unsecured loans to individuals with poor credit.

EasyFinancial, for example, offers home equity and personal loans to customers who need cash to pay unexpected or medical expenses, pay a consumer proposal, or consolidate existing loan balances. The company also offers consumer loans to help borrowers repair or establish credit. Customers are offered home equity loans with long amortization periods of up to 40 years. EasyFinancial offers debt consolidation and personal loans to help clients reestablish credit. Clients are offered a bad credit personal loan of $500 to $10,000. The company advertises flexible and convenient payment options.

Capital Direct is another lending service that provides home equity loans and lines of credit to pay one-time, recurring, or unexpected expenses. Borrowers are offered lines of credit with variable repayment schedules and rates and debt consolidation options.

If you are looking for a bad credit loan in Canada, Prudent Financial is a good place to find small loans of up to $5,000. Approval depends on factors such as assets, debt, income level, and employment. The good news is that payments are reported to Experian, Equifax, and other credit bureaus.

Canada Lend is yet another lending service that offers second and bad credit mortgages, debt consolidation services, home equity lines of credit, refinancing options, and other financial solutions.

Secured Bad Credit Loans

Issuers provide secured loans to customers with bad and good credit. Loans are offered to borrowers with defaults, mortgage arrears, foreclosure, and missing loan payments provided that collateral is used to secure the loan. Collateral in the form of caravan, motorcycle, vehicle, real estate, or another valuable asset is required to secure the loan. Lending services advertise flexible repayment terms and schedules, easy application, and pre-approval options. The repayment term varies based on the borrower’s financial circumstances. The main benefit is that clients are offered larger amounts and lower rates compared to unsecured loans. At the same time, many lenders require that applicants are homeowners to qualify. The maximum loan to value ratio varies by issuer. When applying for a bad credit personal loan in Canada, clients fill in contact information, marital status, mortgage balance, collateral worth, amount requested, and other information. Some financial companies also ask about pay interval and employment (self-employed, student, housewife, employed, etc.)

Unsecured Bad Credit Loans

Some issuers offer unsecured credit in the form of short term loans with higher-than-average rates. There are loan providers that offer acceptable solutions but it is more difficult to get approved. One idea is to apply together with a co-signer. This can be a friend, relative, parent, coworker, or another person with good or stellar credit. Co-signers are 100 percent responsible for timely loan repayment and are taking a huge risk. It is also possible to get approved for a loan with less than perfect credit provided that you have stable income. Writing a loan application letter also helps. Include details such as repayment term and schedule and loan purpose and explain your financial situation. When applying for a loan, customers are asked to bring documents such as their financial and loan statements and income tax forms. Lenders are also interested in the applicant’s housing history, employment status, credit card debt, and outstanding loan balances. Customers also choose a loan term that can vary from 3 months to 10 years. They specify loan amount and purpose, for example, vehicle or furniture purchase, debt consolidation, home improvements, and others. Some lenders also offer loans for back to school expenses, funeral expenses, small rent arrears, holidays and travel, Christmas and wedding expenses, and unexpected expenses. With some lenders, you need to provide housing information, i.e. tenant of employer, housing association, living with parents, furnished or unfurnished tenancy, or homeowner.

So You Have Bad Credit but Need to Get a Car Loan?

May 29, 2015 By Samantha 12 Comments

There are finance companies and other establishments that offer bad credit car loans to consumers with damaged credit, and the prospects are often better for such applicants compared to borrowers with no history. In times when the economy is improving, more lenders are willing to accommodate customers with different credit profiles, and new players quickly expand and gain a market share. What is more, lenders have different criteria, and your credit profile is not the only factor they take into account. Your score is a more important factor when you apply for a larger loan, for example, a mortgage because financial establishments take more risk. Even if you are considered a moderate- or high-risk borrower, some finance companies will be willing to offer a near-prime car loan.

Car Loans in Canada

Bad credit car loans are available from finance companies, credit unions, and banks and major banks such as the Royal Bank of Canada, Toronto-Dominion, and others. Consumers are offered old and new auto loans with variable and fixed rates and flexible amortization and repayment schedules. Some banks advertise secured options with lower interest rates. Finance companies also offer funding and advertise quick processing and approval. While banks take longer to review and process applications, finance companies advertize quick approval within 1 or 2 business days. There is an option to apply together with a cosigner, but many lenders are unwilling to approve applicants with a history of bankruptcies. Many finance companies in Canada also run a credit check.

Loan Types – Options and Differences

Secured Bad Credit Car Loans

Lenders usually offer lower interest rates compared to unsecured financing because the vehicle itself guarantees repayment. The rate can be as low as 4 percent but this depends on your credit profile. Financial institutions usually offer funding in the amount of $20,000 – $30,000, and the interest rate is usually fixed over the repayment term. Secured car loans for people with questionable credit are offered with:

• 95 – 100 percent approval rate
• No down payment required
• Or lower down payment compared to unsecured options
• Varying amounts based on the collateral

Unsecured Bad Credit Car Loans

This option is more expensive because of the lack of collateral and the higher risk involved for lenders.

• Less risky for applicants
• Higher down payment
• More difficult to find
• Interest rate of 7 – 10 percent or higher

Compared to secured options, finance companies offer smaller amounts. Even if the borrower defaults, the vehicle has not been pledged as collateral and cannot be repossessed. Besides, lenders take even more risk by offering loans to borrowers with damaged credit, and the terms are less competitive.

What Happens if You Have Bad Credit

Finding auto financing with competitive terms can be a challenge if you have poor or no credit. Some banks are willing to accept applications from borrowers with а borderline score provided that they have stable income and good debt to income ratio. If your score is low, you may want to look into non-traditional lenders because they have more lenient requirements. They will factor in the condition of the vehicle, the length of the term, amount required, down payment offered, etc. Auto loans for people with poor credit are available online as an alternative to the frustration of dealing with banks and dealerships. Some lenders offer auto financing to consumers with a history of repossessions, consumer proposals, maxed out cards, written off accounts, collections, and late or missed payments. This is one alternative for consumers with bad credit and major issues who plan to purchase a vehicle. Another option is to try and improve your credit profile and apply with your local union or bank.

What Are Bad Credit Car Loans

Basically, this is a subprime or near-prime vehicle loan with a higher interest rate compared to standard solutions. The term varies from lender to lender and is usually between 36 and 72 months. Some finance companies offer terms of up to 8 years. A longer term, however, means paying more in interest charges. The monthly payment is based on the term, APR, and other factors. When applying for a bad credit car loan in Canada, consumers must be employed to qualify.

There are two types of financing offered, new and used car loans, and the latter usually go with higher rates. Both options are available through some finance companies, regardless of your credit profile. Some non-traditional lenders even offer financing to customers with past bankruptcies but this is rather unusual.

Find a Poor Credit Car Loan in Canada

There are several options to look into, your local bank, your insurance company, bad credit lending services, and peer to peer lenders. If you are an existing customer, your local bank is your first stop because it is more likely that their loan officers treat you favorably. The same goes for your insurance company. A non-traditional lender is yet another option but make sure that you deal with an established and reputable finance company. To improve your chances of getting approved, you may want to bring some documents with you, including personal references, photo ID or driver’s license, and utility bills such as electricity, water, gas, or other bills. Make sure you bring recent pay stubs as well. If bad credit lenders are not an option for you, you can check with peer to peer lending services. What you do is create a profile on an online platform of your choice and post a listing that indicates the purpose and loan amount. There are investors that are willing to offer auto financing to consumers with a less than perfect score. The interest rate varies but if you are lucky, you can get a loan with a rate of about 7 percent. Finally, one option to improve your chances is to offer a significant down payment. You may ask your family for a loan or draw on your line of credit.

Buying a New Car – Should You Lease or Finance?

January 28, 2015 By Samantha Leave a Comment

People buy new vehicles for different reasons – they need a second car, their lease expired, or their old vehicle broke down beyond repairs. New vehicles are equipped with safety technology such as rear-view camera, blind spot monitoring, and lane departure warning. One of the main reasons to buy a new vehicle, however, is that banks and dealerships offer better interest rates compared to rates on used vehicles. Some finance companies even offer no-interest auto loans but think of factors such as higher auto insurance premiums, high repair bills, and depreciation. People usually buy a new vehicle because of the high trade-in value, luxury features, power, and fuel savings. If you own an older model vehicle and parts are unaffordable or unavailable, this is yet another reason to buy a new vehicle. If the engine is damaged and needs replacement, this makes sense only if all other parts are well maintained and in perfect condition.

What Factors Do Financial Institutions Take into Account to Offer Car Financing

Type of Vehicle

The vehicle’s market value is obviously an important factor and so is the vehicle type. Other factors that financial institutions take into account are the cost per month, repair and maintenance costs, and the expected depreciation of the vehicle. The cost to own, for example, depends on the model and make as well as fees and taxes, insurance, fuel, and other aspects.

Credit History

Тhe applicant’s credit and payment history are important aspects for banks. Credit rating is based on factors such as types of revolving and installment credit, number of accounts, length of credit history, and others. It is used by financial institutions to assess creditworthiness, reliability, responsibility, and financial health.

Applicant Details

The applicant’s details are also taken into consideration. Bank clients fill in details such as housing payment, time at current residence, social insurance number, housing status, and citizenship. Clients are also asked about their monthly mortgage or rent payment and income and employment details, including annual income and employment status. In general, financial institutions look at a number of factors which have different weight depending on the lender of choice. Some financial institutions also offer the option to apply together with a co-applicant.

Down Payment

A larger down payment is looked favorably by dealerships and financial establishments. The amount of the down payment depends on the value of the vehicle. If you have bad or average credit, a large down payment means more favorable terms on the car loan and interest rate. If you have good credit, putting 20 percent down will get you a competitive interest rate. You still owe 80 percent of the vehicle’s asking price, plus interest.

Other Factors

Your debt to income ratio is a key indicator for banks and dealerships as it shows your ability to manage debt payments. The higher the ratio is the less friendly the rates and terms. Customers with lower ratios and higher income levels are favored by prospective lenders and are rewarded with affordable rates and competitive terms. The car loan term is yet another factor – the longer the term, the lower the rate offered. It also makes a difference whether you buy a low-priced vehicle or a low-mileage, high-priced car.

How to Find the Best Offer

There are some tools that help customers to negotiate with banks and dealerships. Services such as carcostcanada.com offer pricing services and detailed reports with cash rebates and incentives, dealer cost information, dealer recommendations, and more. Pricing services advertise guaranteed financing for different credit profiles, from poor to good credit. Reports offer information on lease and finance programs, and there are build and price tools that allow customers to select from different models, makes, and model years. Customers are free to choose from different factory options such as air conditioning excise tax, seat trim, paint scheme, and primary paint and are offered detailed pricing summary with information on the total options price, manufacturer design charges, base price, and total price. Basically, the goal of pricing information services is to help clients to find a new vehicle at an affordable price. These services specialize in new vehicles only because subsidized financing and leasing rates and factory incentives substantially lower the price of new cars. In fact, services claim that new vehicles are actually cheaper because used cars do not qualify for cash rebates and incentives.

Lease or Buy a Car: What’s the Better Option?

Both leasing and financing have pros and cons to consider. Before you make a decision, you may want to look at your savings, monthly cash flow (income and additional sources of income), and whether you drive a lot.

Pros and Cons of Leasing

One of the main benefits of leasing is that you will pay less in down payment on the car loan. This is also a better option if your monthly income is low as the monthly payment is likely to be lower compared to financing a vehicle. Leasing a vehicle also means lower insurance limits. Other benefits of leasing are the low maintenance costs and the fact that clients are not required to make upfront tax payments. On the down side, clients agree on a fixed ownership period meaning that they don’t actually own the car. With a lease, individuals basically rent a vehicle of their choice for a period of 3 – 4 years. This can be a good alternative if purchasing a vehicle is not an option (you need a vehicle over a short period). If you decide to keep the car, one option is to finance the car’s remaining value. And if you go for a lease for business trips, you may be offered tax advantages.

Pros and Cons of Financing

If you drive a lot and go for a lease, you will probably pay more. Financing is a better choice in this case. If you have enough for a large down payment, buying a vehicle may be a better option. Obviously, the interest rate on your car loan also plays a role. If you are offered a low-interest auto loan with an affordable down payment, then buying a vehicle makes sense. The main benefit for borrowers is that the car is theirs to sell or keep once they pay off the loan. On the downside, applicants with a fair or poor credit score are offered unfavorable terms and interest.

Conclusion

If you plan to buy a new car – there are two options to consider, financing or leasing and both are forms of vehicle financing. What matters is which option is within your financing grasp. In both cases you will need money upfront but financing requires a substantial down payment. Leasing a car helps save money. The warranty covers any repairs over the contract duration, be it maintenance, tire rotations, oil changes, or anything else. The main benefit of car financing is that you have equity in the car. This is really a lifestyle choice to make, depending on whether you have good offers on your hands.

Resources:

Car Loan Calculator: https://www.cibc.com/ca/loans/calculators/car-loan-calculator.html
Car Price Comparison: carcostcanada.com

Most Popular Bad Credit Lenders in Ontario

December 3, 2014 By Samantha 34 Comments

Many bad credit loan providers in Ontario, Canada offer financing to individuals with tarnished credit. They offer payday loans, home equity lines of credit, and other types of financing.

Bad Credit Lenders in Toronto and the GTA

Tribecca is a private provider that offers loans to help repair and establish credit, pay medical and unexpected expenses, and consolidate bills. Prudent Financial offers home, consumer, and car loans to customers with tarnished credit. If you are trying to find bad credit loans in Toronto, Mississauga, Brampton and the rest of the GTA, Addison Credit offers financing to debtors with poor credit, newcomers to Canada, and borrowers with a history of repossessions, bankruptcies, and other negative events. If you live in Mississauga or Brampton, Dixie Auto Loans, Easy Financial, and Home Trust also provide loans for people with bad credit. To get approved, customers fill in employment and personal information such as months at employer, gross annual income, and position. Borrowers who filed for bankruptcy or are in undischarged or discharged consumer proposal often qualify.

Where to Find Bad Credit Loans in Ottawa

Customers looking to apply for a car loan in Ottawa can do so at Drive Time Ottawa, Easy Financial, and BHM Financial Group. Lenders take into account factors such as term of residency, length of employment, stable income, and income level. To apply, customers present information such as proof of vehicle ownership, proof of residency and income, and ID. References increase your chances of getting approved.

Lenders in Hamilton for Individuals with Poor Credit

Fitzgerald Motors, Prudent Value Cars, and Ezee Credit offer financing to customers. To apply, clients provide information about their income, occupation, marital status, housing cost, and address. Residents who are employed full-time usually get approved. Customers with a history of credit counseling, consumer proposals, and bankruptcies usually qualify.

Unsecured Loan Lenders in London, Windsor and South Western Ontario

Issuers such as Ezee Credit and Prime Motors of London provide loans to customers who are new divorcees, borrowers poor or no credit exposure, and bankruptcies. To apply, customers provide information such as occupation, main source of income, income before tax, SIN, and others. Companies such as DollarsDirect and Strickland’s offer loans to individuals with less than perfect credit in Windsor. Applicants with missed card payments, multiple collections, no credit, closed accounts, and missed payments are not turned down at DollarsDirect.

Who Offers Bad Credit Loans

Try Banks

Banks offer loans to customers with poor credit history but they usually qualify for secured financing such as home equity lines of credit and home equity loans. Canadian lenders offer rate quotes based on information such as the amount required, credit score, and loan purpose, for example, medical expenses, relocation and moving, car financing, home purchase, home improvement, or credit card refinancing. When applying for loans, customers provide information such as additional and individual income, date of birth, and address. Individuals with stable employment have a better chance of getting approved. Those who offer collateral are more likely to get a loan with bad credit.

Credit Unions

Credit Unions help people with bad credit and offer low-cost financing to their members. The best options are community-based and employer-affiliated unions that operate as community banks and are owned by their members. They are willing to discuss their customers’ personal and financial situation. Credit unions look at customers more personally and are more willing to work with them. They make a decision on whether to lend or not based on the borrowers’ promise to repay and their individual circumstances.

Go Online to Search for Bad Credit Lenders

Another option is to check places like the yellow pages and kijiji. Online bad credit lenders list their ads and advertise loans for bad and no credit. You will find cash advance and payday loan listings, credit and debt counseling services, and other loan providers. There is an option to sort by location and category to find providers that offer bad credit auto loans, consumer loans, and other financing options.

Use Debt Consolidation Lenders and Services

Debt consolidation is another option for individuals who are looking for financing. Lenders and services offer consolidation loans to borrowers with multiple revolving and installment debts but the rate can be higher if you have tarnished credit. There are many benefits to debt consolidation, and issuers advertise no hidden fees, no prepayment penalties, flexible payment schedules, and competitive rates. Other benefits include easier budgeting, no collection calls, and credit score improvement if payments are made on a regular basis. The loan amount varies but some providers offer up to $35,000. Issuers usually offer several consolidation options with different rates, fees, and payment terms. Some issuers offer terms of 1 to 5 years so that customers get rid of debt faster and save on interest. Lenders offer the option to consolidate loans, overdrafts, credit card accounts, and other balances. While debt consolidation companies offer loans to individuals with tarnished credit, they usually require proof of income such as pension or salary.

Try Payday Loan Lenders

Payday lenders are considered a last resort because they provide loans with short terms and extremely high rates. At the same time, this is often the only choice for people who are short of cash and face an emergency. Payday lenders offer other benefits such as quick approval, easy application, and less stringent requirements compared to brick-and-mortar banks. Just avoid controversial providers that charge broker fees. There are con artists that use fraudulent websites and request details such as credit card numbers and identification. They make unauthorized withdrawals, and customers find their account emptied. Other than that, there are reputable payday lenders that offer emergency cash. The money can be used to pay bills, utility bills, groceries, credit card balances, fees and charges, and other expenses.

Other Providers

Loan brokers and providers such as MoneyMart, Lending Tree, Prosper, Lending Club, and Citifinancial also offer bad credit personal loans in Canada. Customers with consumer proposals, history of poor credit, and loans in arrears qualify.