Bad Credit Loans

Bad Credit Personal Loans in Canada

March 10, 2019 By Samantha 79 Comments

This post has been updated on Mar. 10^th, 2019 to reflect new developments in the Canadian credit markets for people with less then perfect credit.

I receive many request daily from people who want to borrow small amounts of money short or medium term, people who usually have nobody else to turn to because they have bad credit. It breaks my heart reading these requests, but I’m not in the business of lending money and unfortunately I can’t help them out. The way I’m trying to help out is by educating people to avoid debt whenever possible, or at least to use forms of credit that won’t cripple them financially down the road. I understand that when you have a poor credit and the rent is overdue, or you have an emergency, sometimes you have to bite the bullet and borrow from a private lender that demand high interest on their loans, but such bad credit loans should be dealt with swiftly to avoid going into a never ending debt spiral.

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.

Canadians Live Beyond Their Means

A survey conducted by the Canadian Payroll Association reveals that around 48 percent of Canadians live paycheck to paycheck. This is a troubling fact which shows that many people are financially vulnerable. Cheap credit partly explains why half of the respondents do not have an emergency fund for a rainy day. Yet, the fact that many Canadians spend their entire earnings and borrow on top means that they live beyond their means. A recent survey by the Canadian Imperial Bank of Commerce confirms this. The survey shows that 50 percent of respondents are unwilling to downgrade and trim unnecessary and non-essential spending. This is a worrisome finding in light of the fact that essential expenses such as rent and groceries already eat up a large percentage of households’ disposable income.

People who live paycheck to paycheck often carry a balance and only pay the minimum. Many have multiple credit cards and other debt such as personal loans and mortgages. They never set a monthly budget and short – and long – term financial goals. The problem with living large is that many people are unable to save at least 5 percent of their disposable income. This puts them in a vulnerable position when faced with a major crisis such as loss of income or employment, divorce, or prolonged illness. Then many are forced to resort to high-interest rate loans to pay bills and make ends meet.

Using Payday Loans

A survey by the Financial Consumer Agency shows that 4.3 percent of Canadians resorted to payday loans in 2014, up from 1.9 percent in 2009. The majority of respondents or 45 percent borrowed to pay emergency expenses such as car or household repairs while 41 percent used the money to pay expenses such as electricity, water, and heating bills. And while 70 percent of respondents used their paycheck to pay off the balance, 7 percent of people admit that they took a new loan. Others used their credit card, sold something of value, used an overdraft, or borrowed from family or friends. One of the main problems is that many people are not aware of the fact that payday loans come with very high interest rates. Some 43 percent of respondents admitted that they were not aware of this. The majority of respondents or 88 percent reported that they were unable to access a line of credit. Poor credit rating and history are major obstacles for many borrowers who are forced to resort to costly alternatives.

Accumulating Too Much Credit Card Debt

According to an Ipsos poll, Canadians owe over $8,530 in consumer debt on average, and 14 percent of respondents carry balances between $10,000 and $24,999. It is obvious that Canadians tend to accumulate excessive card debt, and data by Bankruptcy Canada confirms this. Some 75 percent of people carry a balance on a monthly basis while 25 percent pay it in full. The problem with credit cards is that many opt for products with high interest rates just to take advantage of complimentary bonuses, discounts, and rewards points. Many are also tempted to make card purchases just to collect points.

Credit History Problems

A good score is one in the range of 660 – 700 but data by Refresh Financial reveals that some 20 percent of Canadians have scores that are below 600. Data by Equifax Canada shows that close to 3 percent of borrowers have a very low score below 520, which puts them in a high-risk category. At the same time, this is not surprising given that 65 percent of Canadians check their score once a year or have never bothered to check it. What is more, people of working age hold 2.2 credit cards on average. Card debt also makes for about 5 percent of the total debt carried in Canada. The problem is that it accounts for 15 percent of all monthly payments and increases to 88 percent if borrowers were to pay off the balance in full.

Poor credit rating is a serious problem for many Canadians because it leaves them with few options for accessing new credit. Brick-and-mortar financial institutions are often unwilling to approve customers with financial problems as they are viewed as less trustworthy. In times of financial hardship, life crisis, or emergency, borrowers with poor credit are forced to resort to payday lenders and pawnbrokers. And the problem is that this often leads to a spiral of debt.

Making Poor Financial and Investment Decisions

Purchasing Decisions

Bad financial decisions are usually the result of poor money management skills and lack of financial literacy. People who are financially literate have good knowledge of basic concepts such as net income, annual percentage rate, amortization, compound interest, certificates of deposit, etc. People with poor money management skills lack basic knowledge and make bad purchasing decisions. They tend to splurge and buy non-essential items such as alcohol, tobacco, and candy even when they are short on cash. Many people cannot prioritize and tell the difference between non-essential and essential spending. Examples of essential expenses include things such as baby items, laundry, health-related expenses, rent, and utility bills. The list of non-essential expenses, on the other hand, includes items such as video games, haircuts, lottery tickets, dry cleaning, vacations, etc. These are things that people normally can live without. Many people make poor purchasing decisions like buying on credit and buying items they don’t really need. They also tend to make impulse purchases that they cannot really afford. Some people also buy expensive things just to show off, whether it is a new phone or laptop, vacation abroad, or a luxury vehicle. Outdoing family, friends, or colleagues is a poor idea, especially for people who live from paycheck to paycheck and buy expensive items on credit.

Investment Decisions

Many people also make poor investment decisions, and the main reasons are that they set the wrong investment goals and have a lower risk tolerance than they think of. Persons who have low risk tolerance and basic knowledge are usually advised to invest in products such as municipal bonds, certificates of deposit, and savings accounts. Those with extensive experience and high risk tolerance often benefit from investing in products such as hedge funds, penny stocks, and futures and options. Other products that help savvy investors to make good profits include leveraged ETFs, junk bonds, spread betting, venture capital trusts, and unregulated collective investment schemes. While high-risk products offer high returns, they are a good choice for people with knowledge of advanced concepts such as contingent deferred sales charge, capital gains reinvest NAV, dollar cost averaging, and Lipper ratings. Finally, savvy people know the difference between short-term and long-term investments. Short-term products include municipal bonds, short-term bond funds, and certificates of deposit. Long-term products are real estate, long-term bonds, real estate crowdfunding, and real estate investment trusts.

Top 12 Best Credit Cards in Canada for 2019

January 12, 2019 By Samantha 16 Comments

This post has been updated on January 12th, 2019 with our most recent reviews and rankings of popular credit cards offered to Canadian consumers.

The best credit cards offered by Canadian finance companies, unions, and banks feature money back, airmiles and bonus points, comprehensive insurance coverage, no or low foreign transaction fees, and plenty more.

	Credit Card	Interest Rate	Annual Fee	Type
1.	Scotia Momentum Visa Infinite	20.99 %	$120	Cashback Credit Card
2.	SimplyCash American Express	19.99 %	No annual fee	Cashback Credit Card
3.	Tangerine Money-Back Credit Card	19.95%	No annual fee	Cashback Credit Card
4.	Scotiabank Gold American Express	19.99 %	$120	Travel Credit Card
5.	BMO World Elite MasterCard	19.99 %	$150	Travel Credit Card
6.	Home Trust Preferred Visa	19.99 %	No annual fee	No Foreign Transaction Fees
7.	Rogers Platinum MasterCard	19.99 %	No annual fee	No Foreign Transaction Fees
8.	Scotiabank Platinum American Express	19.99 %	$399.00	Insurance Coverage
9.	BMO Cashback World Elite MasterCard	19.99 %	$120	Insurance Coverage
10.	Scotiabank L’earn Visa Card	19.99 %	No annual fee	Student Credit Card
11.	Scotiabank Scene Visa Card	19.99 %	No annual fee	Student Credit Card
12.	Refresh Financial Secured Visa Card	17.99 %	$12.95	Secured Credit Card

Best Canadian Cashback Credit Cards

There are credit cards that feature extra cash back during the promotional period as well as no annual fee, generous welcome bonuses, and no categories or limits.

1. Scotia Momentum^® Visa Infinite Card

Offered by the Bank of Nova Scotia, the Scotia Momentum Visa Infinite Card, for example, goes with 4 percent cash back on groceries and gas. The card also features concierge service, travel accident insurance, flight delay insurance, car rental discounts, and a lot more. Optional protection is also offered in case of critical illness, lockout, strike, job loss, or disability. Customers with no credit history are welcome to apply. However, there is a minimum income requirement of $60,000 a year. Supplementary cards are available to earn more cash back.

There are plenty of added benefits for holders. They are offered discounts on wine, vineyard tours, wine tastings, access to exclusive and premier events, hotel room upgrades, and more.

Purchase interest rate: 20.99 percent
Balance transfer and cash advance rate: 22.99 percent
Annual fee: *$120 waived for the first year. For accounts opened by October 31, 2019
Credit limit: $5,000 or higher

2. SimplyCash^TM American Express

The SimplyCash American Express Card is also a great choice to earn cash rewards and goes with supplementary cards, no annual fee, and entertainment and travel benefits. Customers earn 5 percent back during the 6-month promotional period and 1.25 percent back afterwards. Additional benefits include car rental theft and damage coverage, promotional balance transfer rate, shopping discounts, weekend gateway deals, and access to exclusive events such as theater performances and concerts.

Funds advance rate: 22.99 percent
Purchase rate: 19.99 percent
Annual Fee: No

3. Tangerine Money-Back Credit Card

Another option to look into, the Tangerine Money-Back Credit Card goes with no annual fee, 0.5 back on regular purchases, and 2 percent back on select purchases (categories of your choice).

Best Travel Credit Cards

Canadian travel rewards cards feature travel benefits and opportunities, rewards programs, welcome bonuses, double or extra points on travel expenses and gas, and so on. Some cards feature deals and saving opportunities as well as VIP lounge access, travel upgrades, free baggage, and airfare discounts. There are added incentives such as access to luxury airport lounges, car rental and hotel discounts, and comprehensive insurance, including car rental collision, flight delay, and trip delay. Most issuers advertise cards with no blackout dates and other restrictions and limitations.

4. Scotiabank^® Gold American Express^®

The Scotiabank Gold American Express Card is the perfect choice for customers with no credit history and for newcomers to Canada. The card features add-ons and perks such as special offers, access to airport lounges, concierge service, and travel insurance. Concierge services cover things like show and concert ticket reservations, restaurant reservations, and more. The comprehensive insurance coverage includes lost and delayed baggage, flight delay, trip cancellation, travel accident insurance, etc. The best part is that there are no travel restrictions, and points can be redeemed at any time.

Balance transfer rate: 22.99 percent
Cash advance rate: 22.99 percent
Purchase rate: 19.99 percent
Annual fee: $120

5. BMO^® World Elite^TM MasterCard^®

Offered by the Bank of Montreal, the BMO World Elite MasterCard is also a great choice to earn rewards points and take advantage of a host of added benefits. The list of perks includes complimentary lounge access, medical and travel coverage, roadside assistance, and a generous welcome bonus of 35,000 points on purchases over $3,000 during the first 3-month period. Holders earn 2 points on all purchases and 3 points on entertainment and restaurant and travel purchases.

Annual fee: $150
Purchase rate: 19.99 percent
Cash advance rate: 22.99 percent

Best Credit Card with Low/No Foreign Transaction Fees

No foreign transaction fee cards come handy when making purchases abroad or overseas. This is because conversion and foreign transaction fees hike up your card bill. Banks and finance companies offer cards with added incentives such as travel points, complimentary one-time bonuses, no annual fee, money back, and complimentary travel insurance. Some cards also feature cash statement credit, roadside assistance, cash sign-up bonuses, and supplementary cards. There are plenty of perks to look into, including discounts on hotel bookings, extended travel insurance, travel enhancement credit, and a lot more.

6. Home Trust Preferred Visa

The Home Trust Preferred Visa card is one option to consider to avoid foreign transaction fees. In addition to no conversion surcharges, the card goes with guaranteed hotel bookings, complimentary roadside assistance, 1 percent money back, and auto rental loss and collision coverage. There are no cashback limits and restrictions and no annual fee. Emergency cash is also available for peace of mind and so is emergency card replacement. To apply for the Home Trust Preferred Visa customers are asked to provide details such as address and name of current employer, annual income, previous address, etc.

Cash advance rate: 19.99 percent
Purchase rate: 19.99 percent
Grace period: 21 days or more

7. Rogers^TM Platinum MasterCard^®

Another great card with a low foreign transaction fee, the Rogers Platinum MasterCard is offered by the Rogers Bank and goes with a complimentary bonus, money back rewards, and an annual fee waiver. Cash back can be redeemed at different locations, including Fido and Rogers as well as for merchandise, tickets, subscriptions, and more. Points can be redeemed for pre-payed services as well (like Chatr). The Pay with Rewards app by Rogers is a convenient way to redeem money back rewards.

Foreign transaction fee: 2.5 percent of the amount/
Balance transfer and cash advance rate: 21.5 percent
Purchase rate: 19.99 percent
Annual fee: none

Best Credit Cards with Insurance Coverage

Insurance credit cards feature comprehensive coverage, including medical, emergency travel, baggage loss, trip cancellation, and other types of coverage. Providers offer a host of added benefits such as free travel, money back, exclusive shopping and travel offers, and no or low annual fees. Customers gain access to tickets for music and theatre performances, fine dining experiences, perks at resorts and luxury hotels, concierge, and more.

8. Scotiabank Platinum American Express^®

This credit card by the Bank of Nova Scotia allows users to collect rewards points for select and everyday purchases. They earn 1 point for each dollar on regular purchases and 4 points per dollar on entertainment and dining, grocery purchases, and gas. There are no travel restrictions, and points can be redeemed at anytime and anywhere. The card also goes with a large minimum credit limit of $10,000. Users are offered 7 types of insurance coverage, including trip interruption and cancellation, emergency medical, lost and delayed baggage, flight delay, etc. Added benefits include premium concierge, VIP pass for exclusive events, complimentary lounge, and a lot more. Customers also enjoy access to special events and experiences, including dining, theatre shows, films, music, and shopping.

Purchase rate: 19.99 percent
Balance transfers/cash advances: 22.99 percent
Annual fee: $399.00

9. BMO^® Cashback^® World Elite^® MasterCard^®

Also a great card with comprehensive coverage, the BMO Cashback World Elite MasterCard goes with a host of benefits and incentives, including cash back, supplementary cards to earn more. Customers are offered insurance coverage, including extended warranty and purchase protection, collision damage waiver on car rentals, as well as out of country and out of province emergency medical coverage. In addition, holders earn 1.5 percent back on all purchases charged on the card. Cash can be used in the form of credit or held in an investment or savings or checking account. The minimum income requirement is $80,000 for individual cardholders and $150,000 for households.

Interest rate on purchases: 19.99 percent
Interest rate on cash advances: 22.99 percent
Annual fee: $120

Best Student Credit Cards

Many banks in Canada offer student credit cards, including Scotiabank, TD Canada Trust, RBC, and others. Student cards feature multiple benefits such as competitive interest rates, no annual fee, and rewards points. Users earn points on pharmacy and grocery purchases, gas, bills, and more. Some cards offer extra points on entertainment, restaurant, and travel purchases. The best part is that banks have lenient requirements when it comes to credit rating.

10. Scotiabank L’earn^TM Visa Card

Scotiabank offers a student Visa that allows customers to build credit with responsible use and timely payments. Applicants with little credit exposure and no credit history qualify and so do newcomers to Canada. The card goes with no annual fee, money back, car rental discounts, and other benefits. Optional protection for unexpected events is available, including death, critical illness, loss of employment, and others. Students also earn cash back at a rate of 1 percent. The minimum credit limit is $500, and the grace or interest-free period is 21 days or longer. Applicants are asked to provide personal and school information such as expected graduation date, start date, and name of college, university, or another institution.

Cash advance rate: 22.99 percent
Purchase rate: 19.99 percent

11. Scotiabank Scene^® Visa Card

Also a great card by the Bank of Nova Scotia, the Scotiabank Scene Visa Card allows customers to earn rewards points on select and regular purchases. Users earn 5 points per dollar at Cineplex, both online and at Cineplex theatres, and 1 point on regular purchases such as clothing, transportation, groceries, meals, and so on. Thus, customers who spend $200 on movies a month will earn a total of 1,000 points. During the first 3 months, the first $500 spent on regular purchases earn a bonus of 2,500 points. Points can be redeemed in different ways – for meals, movies, and more. There is a minimum annual income requirement – $12,000.

Annual fee: none
Cash advances: 22.99 percent
Purchase rate: 19.99 percent

Best Secured Credit Cards and Credit Cards for Bad Credit

Secured cards allow customers with poor and tarnished credit to rebuild their history and rating. This is good news for customers with missed and late payments and a history of delinquencies, foreclosures, and other negative events. Making regular and timely payments over a certain period of time allows borrowers to rebuild credit and apply for loans and cards with beneficial terms. Some secured cards go with higher interest rates, but this is not always the case. The credit limit varies and is usually equal to or lower than the deposit made. The deposit acts as a guarantee of timely payment. This is the reason why customers are approved without credit check. What is more, some providers offer the option to add an authorized user free of charge. Other benefits include Visa and MasterCard benefits, no annual fee, low rate options for authorized and primary cardholders, and more.

12. Refresh Financial Secured Visa Credit Card

This secured Visa by Refresh Financial helps customers to improve their credit score and goes with a competitive interest rate and low annual fee. Virtually everyone gets approved, regardless of their rating. In addition to fast and easy approval, there are added benefits for users, among which free financial education and the opportunity to build savings. The financial intelligence training program offers short educational movies to teach customers how to set financial goals, build personal wealth, save for the future, and use credit cards responsibly. Responsible use is obviously the key to building or rebuilding credit. Wise money management is also essential to stay away from debt in the long run and build a financial safety net. Users also learn how credit works and how to create a personal brand.

Interest rate: 17.99 percent
Annual fee: $12.95

Top 6 Credit Cards for Bad Credit in Canada 2019

January 10, 2019 By Samantha 171 Comments

This post has been updated on January ^10th, 2019 to reflect recent developments in the Canadian financial and credit markets.

Accessing credit is never easy if you have anything but pristine credit score. The most common form of borrowing of course is a credit card, and there are many Canadian financial institutions that offer variety of cards targeted at different market segments. The bad credit credit card market in Canada is really under-served with many of the big players withdrawing their financial products including Peoples Trust who stopped offering their secured credit card, and Affirm financial who also no longer offer their credit cards for bad credit. Home Trust still offer a secured credit card, but they are very picky and getting one from them is not an easy task. Still there is hope for Canadian consumers with bad credit, as a new player called Refresh Financial has entered the secured/bad credit card marketplace. Refresh offer credit cards for borrowers with bad credit, and the good news is they do not do a credit check. The card is relatively easy to qualify for, however keep in mind that this is a secured card, and you will have to come up with the deposit to get one. As the credit conditions get tighter in Canada it will get harder to get a credit card if you have a poor credit, however don’t get discouraged – just check our list of card below and use it as a starting point in your quest for credit card.

There are different options for customers with poor credit, from payday loans and cash advances to secured lines and credit cards for bad credit.

Do You Need a Credit Card if You Already Have Bad Credit?

This depends on your lifestyle, financial literacy, and spending habits but a credit card can actually help build a healthy score. Timely payments allow users to rebuild credit. If you often make financial blunders and are knee-deep in debt, you may want to learn more about credit first.

Can You Get a Credit Card with Bad Credit?

Some lenders offer cards to borrowers with poor and average credit. They often offer cards with a lower limit and higher interest rates because they are considered to be high risk.

Does a Credit Card Help You Rebuild Bad Credit? Secured Credit Cards Explained

A credit card is a useful tool to reestablish credit unless you make late payments. Missed payments also affect your score. Avoid prepaid cards because payments are not reported to the major bureaus. Other cards, including secured and department store cards, help build credit. To get a secured card, clients are asked to make a deposit which is higher or equal to the card’s limit.

Types of Credit Cards for Bad Credit

Secured Credit Cards

Secured cards offer many benefits, and one is that it is easier to get approved compared to standard credit cards and unsecured loans. The reason is that financial establishments take no risk. Cardholders use their own money (the deposit made) to make purchases. Lenders will not return the deposit in case of default. They refund the deposit made when the customer decides to close the account. The payments are usually reflected in the borrower’s credit report. The limit normally varies from $200 – $500 to $5,000. Many issuers advertise low annual fees in the range of $10 – $30.

Low Interest Credit Cards

Low interest cards are offered by major unions, banks, finance companies, and online lending services. The main benefit for users is that they save on interest charges. Some issuers offer low interest cards to borrowers with less-than-perfect credit and feature perks such as gas rewards, cash back, payment alerts, and others. The credit line is usually lower, for example, $500 – $1,000, but some companies advertise opportunities for line increases provided that cardholders make timely payments. It is important to ask whether payments are reported to TransUnion or Equifax on a regular basis.

Guaranteed Credit Cards

Guaranteed approval cards by MasterCard and Visa are also offered to borrowers with less than perfect and tarnished credit. While some issuers advertise guaranteed or instant approval, they offer secured versions whereby the deposit serves as a guarantee of timely payments. They are available to consumers who need credit improvement and feature standard benefits such as price protection, travel assistance, baggage delay coverage, and others. Basically, issuers that offer guaranteed cards have more lenient or minimum requirements for approval. They may advertise no employment or credit checks and no application or processing fees.

Prepaid Credit Cards

Prepaid cards allow users to make purchases and payments but are not the best solution for rebuilding credit. Payments are usually not reported. Still this is one option for customers with bad credit and a history of consumer proposals, foreclosure, bankruptcy, and seriously delinquent accounts. There are different reload options, including in person, online, and through direct deposit. Some issuers advertise no-fee cash withdrawals. Prepaid cards also feature online bill pay options, balance alerts, free ATM withdrawals, business and payroll programs, refer-a-friend bonuses, and other benefits. Many issuers advertise no activation or application fees, free online banking, online statements, and free direct deposits.

Store Credit Cards

A department store card is yet another option for borrowers with bad credit and offers plenty of added benefits. Cardholders benefit from perks such as promos and discounts, sales, savings on major or one-time purchases, coupons, and other benefits. Some department stores even advertise interest-free financing. Holders enjoy a zero introductory rate for a certain period, for example, six months. However, department store cards usually go with higher charges than secured and standard credit cards. While the rate is slightly higher, this is one option for applicants with a thin credit file and borrowers who need a credit boost.

Where Can You Find Credit Card Lenders for People with Bad Credit?

Major financial establishments such as RBC, BMO, and other big banks offer cards for bad credit.

Affirm MasterCard^®

This card is no longer available.

Affirm Financial Services specializes in providing credit solutions for Canadians who may have difficulty obtaining a credit card or loan from traditional financial institutions. Here are the most important Affirm MasterCard® features:

True credit – no security deposit required
Credit limit up to $3,000
Use it anywhere MasterCard® cards are accepted
Fixed interest rate – 29.99% for homeowners and 34.99% for non-homeowners
Reports to credit bureaus every month

This card is issued by Peoples Trust Company pursuant to license by MasterCard® International Incorporated. MasterCard® and MasterCard® Brand Mark are registered trademarks of MasterCard® International Incorporated.

No-Fee Scotiabank Value^® Visa Card

The Bank of Nova Scotia features the No-Fee Scotiabank Value Visa Card which is available to debt-ridden borrowers with credit problems. The bank offers benefits such as card protection, an introductory rate of 3.99 percent, and car rental discounts. Additional benefits include itemized transactions and supplementary cards. The introductory rate applies to balance transfers and cash advances, which makes it a great choice if you plan to transfer high-interest balances to a low-interest card. The low introductory rate helps borrowers to pay down existing balances faster and get rid of debt.

• Interest rate: 16.99 percent
• Annual fee: zero
• Credit limit: $500 or more

Refresh Financial Secured Visa

This secured card is a new product from Refresh Financial targeted at customers with low credit score or no credit. The card can be used to re-build credit score, and as it doesn’t require a credit check, it may be your best chance for getting a credit card. Here are the main Refresh secured credit card features.

Credit limit: $200 to $10,000
Purchase Interest rate: 17.99 percent
Annual fee: CAD $12.95

Peoples Trust Secured MasterCard^®

This card is no longer available.

Peoples Trust Secured MasterCard is ideal for those who are new to credit, consumers with credit problems, new immigrants, and students. Holders can use it just like a regular card to make hotel bookings and everyday purchases, car rentals, online purchases, and anything else. This card also allows consumers to make cash advances and build credit over time. Peoples Trust advertises almost guaranteed approval, regardless of credit profile.

Minimum deposit: $500
Interest rate: 12.99 percent
Monthly fee: CAD $5.80
Monthly fee (additional cards): CAD $2.95

Home Trust Secured Visa Card

The Home Trust Secured Visa Card is another option that requires a security deposit of at least $500. The limit is based on the deposit made and ranges from $500 to $10,000. There is a low-rate option that goes with an interest rate of 14.9 percent. The standard rate is 19.99 percent and there is no annual fee. The low-rate option goes with a fee of $59. This card is offered to consumers with bad credit and everyone gets approved. If you have less than perfect or poor credit, this card will help you to build or reestablish your credit history. You can use it to book a hotel room, make purchases online and by phone, pay bills, pay for gas, and more.

Apply Now 14.90% $59 annual fee or $5 per month Apply Now 19.99% No annual fee

BMO^® Preferred Rate MasterCard^®

The BMO Preferred Rate MasterCard is a card advertised with no annual fee and an interest rate of 17.5 percent. The card also features a long interest-free period of 21 days. While applicants with bad credit get approved, those with a history of bankruptcies do not qualify. If you have filed for bankruptcy over the last 7 years, your application will be declined. BMO also requires employment and income information. Customers are offered perks and benefits such as:

• Low-rate options (11.9 percent)
• Travel benefits
• Purchase protection
• Extended warranty
• Roadside assistance
• Medical protection
• Trip cancellation coverage

Capital One^® Guaranteed Secured MasterCard^®

The Capital One Guaranteed Secured MasterCard, for example, features guaranteed approval and a limit of $300 or higher. It is a good choice for customers with no credit and tarnished credit. The good thing about this card is that you can use it like a standard card – to make bookings, for car rentals, online purchases, in-store purchases, and more. Capital One features standard benefits such as emergency cash advances and card replacement and zero liability.

• Interest rate: 19.8 percent
• Annual fee: $59

TD Emerald Visa Card

The TD Emerald Visa Card is also a good choice for bad credit borrowers and goes with benefits such as:

• Low annual fee of $25
• Security and purchasing convenience
• Automotive benefits
• Travel benefits
• Medical insurance

Applicants are allowed to add up to three cardholders. The card goes with a competitive variable rate of 12.75 percent and is a great option for borrowers with bad credit, students, and newcomers to Canada. Cardholders are offered trip interruption coverage, trip cancellation insurance, car rental discounts, and other perks. TD Emerald Visa is also advertised as a balance transfer card for debt consolidation.

RBC Visa Classic Low Rate

The RBC Visa Classic Low Rate is yet another card with a low interest rate of 11.99 percent and an annual fee of $20. Additional cards are available at no added cost. This option is a great choice for those considering debt consolidation. Major benefits include free travelers checks, worldwide acceptance, easy application, and others. Optional travel insurance is also available to protect customers in case of loss of job or illness. Customers benefit from autopayment options, cash advances, and quick application processing. This card is also an excellent choice for debt consolidation. You can use it to make one-time or larger purchases.

What to Do Next?

Once you have been approved for a low rate, department store, or secured card, it is time to learn how to manage credit responsibly. This means timely and regular payments to avoid penalty fees and charges. Late and missing payments also affect your score and chances to get approved for low-cost unsecured loans, LOCs, and premium credit cards. Avoid using multiple cards because it is more difficult to keep track of due dates, payments, and other details. Check your financial statements regularly to track your spending and payments. Using online banking is a great way to view your statements, payment history, and transactions. Make sure you check your credit report for mistakes and omissions. Consumers are entitled to receive a free report once a year.

If you have other balances, try to pay down your auto, consumer, and other loan balances to boost your score. The goal is to maintain a debt to income ratio of 30 percent or lower. Paying down small balances on different cards helps improve your score. Pick one or two cards with affordable rates and use them for payments and purchases.

Keep in mind that credit cards are intended for regular, small purchases and unexpected expenses, for example, utility and medical bills, auto insurance, plumbing and electrical problems, car repairs, and others. You can use your card for grocery shopping, bill payment, trips to the ER, car maintenance, vehicle registration fees, and other small expenses. It makes no sense to buy big-ticket items on a credit card. It is better to use a low-cost unsecured loan instead. Otherwise, you will end up paying a huge balance, and your score may suffer as a result.

If you have poor credit and find it difficult to manage your finances, you may want to contact a credit counseling service. They offer financial education to teach borrowers how to manage debt responsibly. The goal is to gain financial stability and control and make sound credit and borrowing decisions. Specialists negotiate with creditors, help customers to calculate their debt to income ratio, sort out their finances, and more.

How Would Filing for Bankruptcy Affect Your Borrowing Power?

November 12, 2018 By Samantha Leave a Comment

Filing for bankruptcy can negatively affect your borrowing power because your credit score is likely to plummet. This depends on your credit profile, however. If you have fair or bad credit and multiple negative items listed, then you would expect a low to moderate drop. Borrowers with spotless or very good credit, however, see a significant drop.

What to Expect

It is a good idea to learn more about bankruptcy as to know what to expect. This is a last resort for borrowers who have exhausted all other options such as counseling, negotiation with creditors, debt consolidation. Consolidation loans, for example, are offered to borrowers to combine multiple debts and benefit from a single payment. It is a form of refinancing for borrowers with a lot of outstanding debt. Bankruptcy is a solution for people who owe more money than the total value of their assets. In fact, if you owe $1,000 or more and are unable to keep up with payments, you meet the criteria.

Bankruptcy is a solution for borrowers who have unsecured debts, including personal loans, vacation loans, credit cards, lines of credit, etc. Those having a lot of equity may not be allowed to keep their home. When it comes to personal belongings, there are certain exemptions to look into. The list includes things like retirement savings and pensions, heating fuel and food, and farm supplies, equipment, animals, and land. When filing for bankruptcy Canada based borrowers are also allowed to keep their vehicle, furniture, clothing, and health aids. Exemptions vary from province to province. In Alberta, for example, you are allowed to keep your social allowance, farm land, principal home, farm property, tools of trade, household appliances, and food. In Manitoba, you are also allowed to keep some life insurance policies, locked-in pension plans, religious items, etc. In any case, bank accounts are not exempt.

The Bankruptcy and Insolvency Act governs receiverships, commercial and consumer proposals, and bankruptcies. A bankruptcy trustee is appointed to represent the borrower’s estate. Once you have filed, you can expect to receive a discharge in about 9 months unless a court orders an extension.

Your Borrowing Power

After you have filed for bankruptcy, your borrowing power will be seriously affected because you are considered a high-risk customer. There are some things to do to improve your chances of getting approved for a loan or a credit card.

Get Your Discharge

The first step is to get your discharge in a timely manner. Once you do this, it is time to start rebuilding your credit.

Apply for a Secured Card

There are several options to look into, among which secured loans and secured credit cards. A secured credit card is easier to get even if you have a tarnished credit score. The reason is that your savings account serves as collateral, i.e. guarantee of repayment. This makes it less risky for financial institutions. Secured cards are offered to borrowers with a history of poor credit and limited credit exposure. The limit depends on the amount deposited and your score.

A Store Card

Another option is to apply for and open a department store card but interest rates tend to be significantly higher compared to other products. This can be a good solution if your department store offers generous discounts but there is more. A store card can help you to improve you score if you make occasional purchases (as opposed to many purchases). This will help you to lower your utilization rate. A low utilization rate proves to financial institutions that you are a low-risk borrower. Aim at a utilization rate of about 15 percent to help rebuild your credit score. This is provided that you make timely payments and use the line in a responsible manner. In fact, responsible use is the key to rebuilding credit. Late and missed payments show on your report and negatively affect your score. You don’t want this if you declared bankruptcy recently.

An Installment Loan

There are other things to do to boost your borrowing power, and one is to get an installment loan. If you made regular payments on your department store or secured card over the past couple of months, you may want to visit your local bank. Ask what they have on offer. If you get approved for a small installment loan, make regular payments. When it comes to the loan amount, it is always better to be on the safe side and start small. Borrowers with poor credit are usually offered very high interest rates, which adds to the cost of the loan. It is always good to have a credit mix, i.e. personal loans, credit cards, etc. A good mix means diversity and shows financial institutions that you can handle different types of credit. Be careful when applying. Multiple applications can have a negative effect on your score.

Develop Healthy Financial Habits to Deal with Debt

Finally, the most important thing is to develop healthy money and credit management habits to avoid debt and bankruptcy. If you are unsure where to start, you may want to contact a bankruptcy advisor or financial advisor to learn the basics. Your financial advisor will help you learn how to budget, save, and set long- and short-term financial goals. They will help you build a financial cushion (an emergency fund) for a rainy day and emergency situations. A financial advisor will also help you develop a personalized plan based on your individual circumstances. A personalized, step-by-step plan can help you a great deal in terms of rebuilding credit, when to start, what financial products to apply for, and more. When choosing an advisor, make sure you ask whether they offer free information, what services they offer, how much they charge, etc. Ask whether they have monthly or set-up fees.

Once you succeed in rebuilding credit, you will have plenty of choice when it comes to credit cards and loans with attractive terms, low than average rates, and incentives and perks.

Peoples Trust Credit Cards

August 21, 2015 By Samantha 2 Comments

A FDIC-insured company, Peoples Trust serves large private and institutional investors and individual customers. Peoples Trust is a Vancouver-based trust company that offers a selection of financial solutions and services, including prepaid and secured cards, mortgage servicing and origination, high-interest accounts, and mortgage backed securities. The full array of financial solutions also includes residential, construction, commercial, and multi-family mortgages and deposit services – e-savings, TFSAs, RRSPs, GICs, etc. The company specializes in mortgage syndication and offers loan advances, construction loans, and mortgages with terms of 5 to 25 years. Fixed rate loans of $50 million or higher are offered as well as flexible underwriting solutions. Both floating rate and fixed rate loans are offered. The company also offers mortgage administration, including renewal and discharge processing, assumption, property tax collection, and payment processing. Customers also benefit from services such as legal instructions and mortgage initiation, default and arrears management, CMHC reporting, property inspections, and annual statement monitoring. Peoples Trust is also affiliated with Edmonton and Calgary Apartment Associations, B.C. Care Providers Association, Canada Deposit Insurance Corporation, and others.

Peoples Trust Credit Card

This secured credit card allows customers with fair and tarnished scores to build or rebuild credit. The card can be used to pay for services and products and to make car rental and hotel reservations. Cash advances are also offered to help customers pay urgent expenses. This product is designed for newcomers to Canada, discharged bankrupts, and borrowers with no or limited credit history and bad credit issues. The deposit made is equal to the credit line offered. The minimum deposit is $500, and the good news is that cardholders earn interest. It is easy to apply online. Customers provide information such as occupation, years at current employment, yearly income, current employer, etc.

• Cash advance interest rate: 24.5 percent
• Purchase rate: 12.99 percent
• Penalty rate: 24.5 percent
• Annual fee: $69.60
• Supplementary cards: $35.40
• Grace period: 25 days

About Peoples Trust Credit

Peoples Trust was founded in 1985, and is now part of the group of Triple Five companies. The company is headquartered in Vancouver and maintains offices in Toronto, Calgary, and Vancouver. Peoples Trust specializes in long- and short-term investment solutions and offers online banking facilities. It is also involved in different community initiatives to support organizations and volunteer programs. Employees are offered a comprehensive benefits package, including dependent life insurance, employee assistance program, extended health care, provincial health benefits, and more. Staff is committed to offering superb quality client services and innovative financial solutions. A privately owned company, Peoples Trust offers professional, personalized services and administrative support and advice on CMHC insured and conventional mortgage loans.

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.

Can I Get a Mortgage with Bad Credit?

February 17, 2015 By Samantha 34 Comments

Different mortgage loans are offered to customers based on their income and credit profile, down payment, and other factors.

Is It Possible to Get a Mortgage with Bad Credit in Canada?

While many brick-and-mortar banks consider customers with poor credit to be high risk, there are lenders who are willing to extend loans to clients, regardless of their payment history. One option is to contact online bad credit mortgage lenders or finance services in your area. They generally look at factors such as income range, type of employment, and whether the applicant is a first time buyer. LOC11

How Do I Qualify for a Mortgage in Canada if I Don’t Have Good Credit?

There are secured loans that are specifically designed for borrowers with less-than-perfect credit. One of the most important factors that lenders look into is proof of sufficient income. Financial institutions want to make sure that borrowers earn enough to make timely payments. Obviously, many lenders also require a higher down payment because they deal with risky clients. Customers with stellar credit are often offered competitive terms, and the down payment can be as low as 5 – 10 percent. At the same time, borrowers with poor credit may have to put 15 – 20 percent down. The higher the down payment, the better the chances of getting approved for a mortgage loan. A reliable co-signer with a solid payment history may be required as well.

Be Realistic – Buy What You Can Afford

Since the down payment is a certain percentage of the property’s value, you may want to set a price range based on the maximum down payment you can afford. Your debt to income ratio is also an important consideration, and a high DTI shows that you may be unable to meet your monthly payments. Look at your housing expenses as well and factor in costs such as cooperative, condominium, or homeowners association fees, hazard insurance, property taxes, interest charges, and principal amount. Lenders also look at your total debt ratio. They factor in recurring payments such as alimony and child support, student and consumer installment loans, vehicle leases and loans, and credit cards.

Online Bad Credit Mortgage Lenders in Canada

Canadian Mortgage Finder – http://www.canadianmortgagefinder.com/
This is a good place to look for a bad credit mortgage if you can put at least 15 percent down. The terms offered depend on whether you are a repeat or new home buyer. There are different options available, including open, variable, fixed rate, and special mortgages. Rates vary based on the loan term and range from 2.89 percent on a 1-year mortgage to 4.49 percent on a 10-year loan. The rate on variable mortgages is set at 2.45 percent.

Family Lending – https://www.familylending.ca/lending/poor-credit.html
This is a lending service that specializes in bad credit mortgages and offers rates ranging from 2.3 percent for a variable rate mortgage to 4.39 percent for a 10-year closed loan. Fixed rate mortgages usually go with higher rates but give customers a sense of security. The interest rate is based on the loan type while amounts vary from less than $50,000 to $500,000 and higher. There is an option to get preapproved. Borrowers with poor credit are asked to provide proof of professional appraisal as well as proof of income.

Canada Lend – http://www.canadalend.com/Services/BadCredit.aspx
This is yet another loan provider that offers mortgages to borrowers with average and bad credit. Customers are offered fixed rate loans and terms range from 1 to 5 years. The rate on a 2-year mortgage can be as low as 2.49 percent while 3-year mortgages feature a slightly higher rate of 2.59 percent. Borrowers with different credit profiles qualify, even applicants who have consumer proposals, bankruptcies, and tarnished credit. Clients who are in a consumer proposal and those who are new to credit are also likely applicants. To apply for a loan, clients provide details such as their SIN, current mortgage balance, residential value and status, reason for loan and amount required, outstanding debts, type of employment, and income.

Mortgage Brokers in Canada

Mortgage brokers can be helpful in many ways as they help potential homebuyers to find competitive interest rates and terms. Brokers maintain contacts with different financial establishments and save customers valuable time and money. Some lenders work exclusively with brokers, and they have access to a large pool of borrowing solutions. There is a difference between financial establishments and mortgage brokers in that the later work as intermediaries between lenders and homebuyers. It is their job to determine which financial institution is the best choice based on the customer’s credit profile and loan purpose and requirements.

Is Canada in Danger of Subprime Lending?

Last year data shows that slightly over 2 percent of all mortgages in Canada are underwritten by subprime lenders, which isn’t a serious cause of concern. While the share market of unconventional lenders has increased substantially, defaults are unlikely to trigger a major financial crisis. Some experts warn that the Canadian housing market may be overvalued but there is no reason to worry about serious adverse shocks in the near future.

Conclusion

While many borrowers apply for mortgage loans with banks and credit unions, bad credit applicants are often turned down and look for alternative lenders and solutions. The good news is that there are bad credit mortgage lenders that offer fixed and variable rate solutions to clients with different credit profiles and payment histories. Subprime lenders offer loans with different repayment terms to high-risk borrowers. This is why many lenders require a substantial down payment and proof of income and regular employment. Subprime mortgages are also available to borrowers with a history of delinquencies, arrears, foreclosures, and defaults who have few other options left to finance the purchase of a home.

Should I Get a Payday Loan Online

February 4, 2015 By Samantha 2 Comments

People take out payday loans for a variety of reasons, but mostly to cover emergency expenses such as urgent home and vehicle repairs, household appliance repairs, electrical problems, outstanding bills and others. With rising prices and inflation, more and more Canadians are struggling to keep ends meet. Cash loans help borrowers pay bills and avoid late payment penalties and charges.

What Are Online Payday Loans?

A payday loan is a form of short-term financing repaid when the customer gets his next paycheck. Consumers are asked to write a post-dated check as a guarantee of timely repayment. Some lenders offer small loans with very high interest rates and terms varying from 2 weeks to 2 months. The easiest way to apply for an instant loan is online. Many providers advertise no credit check, online applications, and instant or quick approval. It takes days and even weeks to get approved for a regular loan, and banks usually require a solid credit history to get approved. This type of short-term loan is offered to individuals who need urgent cash. It is a last resort for debtors who have exhausted all other options for financing. On the downside, the high interest rate adds to the cost of borrowing, meaning that consumers pay a lot in fees and charges. Another problem is that this is a temporary solution and not a long-term solution to major financial problems. On the good side, short-term loans are convenient and easy to qualify for. There are established and reliable providers, from small establishments to franchise and large chain providers. Some providers actually operate much like brick-and-mortar banks. Many issuers offer handy tools such as status updates, account reminders, due date notifications, extension notifications, and others.

What You Need to Know When Applying for Payday Loans Online

Providers offer loans to individuals who are employed, have a checking account, and are of the age of majority. Proof of income is required as a guarantee of payment. Customers fill in their contact and personal information, including their mobile and home phone, time to call, time at current address, and whether they own or rent. Identity verification information may be required as well. With some providers, clients are asked if they are currently considering or filing for bankruptcy. Note that the due date and other details are included in the agreement. Late payment fees apply in case of failure to pay by the due date. Consumers who apply for an online payday loan write a check for the amount requested and sign an agreement. They also pay a fee for the service provided. Once the loan has been paid off, clients are free to reclaim the check. The fees, repayment terms, and rates vary by location.

What Is the Law in Canada Regarding Payday Loans?

Cash loans are legal in many Canadian provinces, and providers operate in accordance with provincial regulations regarding interest rates and fees. The maximum charges and fees vary by province but there are caps on the rates charged by providers. Manitoba has enforced restrictive caps, with lenders charging rates of up to 17 percent of the principal. In contrast, Nova Scotia set caps at 31 percent. Saskatchewan, Alberta, and British Columbia have set the maximum rate at 23 percent. Payday loans are prohibited by law in Quebec and Newfoundland. The cap is set at 25 percent in Prince Edward Island and Nova Scotia. Under federal law, the cap is at 60 percent meaning that the annual rates are limited to 60 percent. Bill C-26 was enforced to change the criminal interest rate and addresses loans by organized crime and predatory lenders. Basically, rates above 60 percent are criminal under section 347.1 of the Canadian Criminal Code. Borrowers are also protected under the Canadian Payday Loans Act which prohibits rollover loans and sets interest rate caps. In addition, the contract can be cancelled within two workdays without incurring penalty charges. In accordance with the Payday Loans Act, lenders are required to disclose information such as the interest charges (what you will pay), the term or length of the amount borrowed (number of days). These details must be present in the financing agreement. Providers must not accept or request payments by means of automatic deduction. Lenders are not allowed to contact acquaintances, neighbors, friends, and family members at any time. They are prohibited from using excessive pressure, threatening language, and other abusive and intimidating practices.

Canadian Payday Loan Providers

There are established Canadian fast loan providers such as Money Mart, Zippy Cash, Maple Loans, and others.

Maple Loans

Maple Loans offers short-term loans to applicants who meet the minimum income requirements and are Canadian residents. The interest rate and amount offered depend on the customer’s individual circumstances. Consumers are asked about their employment history, including pay frequency, length of employment, monthly net income and job title, next payday, and so on. Clients also fill in banking information such as type of account, bank account number, institution number and name, as well as transit number and time at bank.

Zippy Cash

This is another instant loan provider that advertises instant approval, online application, and cash conveniently and safely deposited into the customer’s bank account. The loan amounts vary from $500 to $1,500. A point system is used to determine the amount customers qualify for. Early repayment options are available, and there are no early prepayment penalties. Individuals who are unable to repay their loan are offered alternative repayment arrangements. Persons who fail to notify the provider may face collection procedures.

Money Mart

Money Mart offers loans to individuals in six provinces – Saskatchewan, Ontario, Nova Scotia, New Brunswick, British Columbia, and Alberta. The loan amounts vary from $120 to $1,500. The interest rates vary by province. For example, borrowers pay $17 per $100 in Manitoba, $23 per $100 in British Columbia, $21 per $100 in New Brunswick, and $25 per $100 in Nova Scotia. Customers can apply for one loan at a time. Only consumers with a valid photo ID, active phone number, proof of steady income, and valid checking account qualify for a financing.

Dollars Direct

Dollars Direct also offers cash loans of up to $500 to new clients and up to $1,500 to regular and returning customers. Borrowers enjoy quick application and approval, and funds are deposited into their bank account. Financing is offered to residents of British Columbia, Saskatchewan, Ontario, and Alberta. Two payroll methods are accepted, by check and through direct deposit. Applicants who are employed and are of legal age meet the criteria. The rate offered varies by province. The term varies from 8 days to 40 days and the due date is usually the next payday. Early prepayment options are available, and no penalties or fees apply. There are different payment options, through the customer’s bank account, by wire transfer, prepaid card, credit card, pre-authorized withdrawal, money order, and personal check.

Wonga

Operating in Ontario, Alberta, and British Columbia, Wonga is a reputable short-term loan provider that advertises instant decision making, secure application, and no hidden charges. The rate offered varies by province, for example, borrowers in Alberta pay $23 per $100. The loan term varies from 1 to 45 days, and consumers can borrow up to $400. Customers benefit from an easy-to-use online calculator that shows the total amount to pay. For example, if you borrow $300 over a 14-day period, you will pay a total of $330, including interest rates and fees, and if you borrow $400, you will pay $492 in 45 days. To apply for a loan, clients specify their marital and housing status, gender, and employment status (on benefits, retired, homemaker, temporary employment, full-time, etc.)

Criticism

Unfortunately, some lenders are dishonest and unscrupulous and use illegitimate practices so it pays to check who you are dealing with. One of the main criticisms is that payday lenders use predatory practices and target low-income individuals, families, and communities, immigrants, and the elderly. Lenders target the working poor, single parents, and people who desperately need cash. Loan sharks are also said to target vulnerable students and minorities and persons with poor financial literacy. Another problem is that loan sharks use harassment and other illegal and abusive practices such as blackmail, threats of violence, and aggressive and abusive collection practices. Predatory lenders use threats of court and law enforcement action and make abusive calls at any time of the day. Deceptive advertising is yet another problem. The outrageous interest rate offered by some providers is also a major concern. Some issuers offer loans with triple-digit and even four-digit interest rates. Some payday lenders repeatedly attempt to collect their dues and borrowers incur insufficient funds fees. While unsecured loans are easy to get if you are employed and have a bank account, borrowers often fall into a debt spiral, especially if they are already in a financial jam. Ease of access is a source of concern, and debt-ridden individuals are often tempted to use quick cash to solve their financial problems. Some payday lenders fail to disclose their annual interest rates and finance charges and use vague wording and complex financial terminology. Fortunately, in their majority, the lenders are reputable and accredited and offer clear guidelines and information on eligibility, criteria, rates, fees, and other details. One of the reasons is that many providers depend on repeat borrowers to make profits.

Getting out of Debt: Get a Chance with Debt Consolidation Loans

December 10, 2014 By Samantha 2 Comments

A consolidation loan helps combine multiple high-interest accounts and obtain a fixed or lower interest rate. This is one way to make payments affordable, pay down excessive debt, and reestablish your credit history.

How to Tell if You Have Bad Credit?

Having a low score affects your purchasing power and access to credit. People with poor credit find it difficult to get a job, rent a house or apartment, and meet unexpected expenses. There are some red flags and warning signs that you have made poor financial and credit decisions. If you have multiple card accounts, excessive credit card debt, and missing or late loan or card payments, you probably have less than perfect or poor credit. Getting calls from collection agencies and accounts closed by issuers are other signs that you are knee-deep in debt and need help. There are other warning signs that you need to look into different repair options, for example, having too little or too much credit and having your card and loan applications denied. Obviously, your score is the best indicator of credit problems. A FICO score below 620 means that you have poor credit.

Finding a Debt Consolidation Loan with Bad Credit

Many people check with their local banks first, especially if they are existing customers. Banks have stringent criteria for approval, however, and you may see your application turned down. Some finance companies specialize in consolidation loans for customers with tarnished credit and allow borrowers to combine payday and consumer loans into a low-cost payback solution with a single monthly payment. Look for loans with no early prepayment penalties or hidden charges.

What is the Best Way to Consolidate Debt with Bad Credit

There are different lenders that offer bad credit debt consolidation loans – payday loan providers, credit unions, and banks. The best option for customers with poor credit is probably a reputable consolidation service that charges no upfront fees and advertises generous interest savings. Credit unions are usually more lenient than other financial establishments, banks in this number. Reputable companies offer a range of options, and customers are allowed to consolidate between $2,000 and $10,000 in unsecured credit. Some providers require stable income and have minimum income requirements. If you have student loans, the best way to get out of debt is to apply for a student consolidation loan. There are two options – fixed rates and capped variable rates with terms of 5 to 15 years. Some providers also advertise loans with 20-year terms. Customers who opt for automatic payments enjoy interest rate reduction. Some issuers also offer interest rate discounts to existing customers who have checking accounts or existing loan balances. And some financial institutions even offer loan deferral options.

Are Debt Consolidation Loans Bad for Your Credit

In fact, debt consolidation loans help customers to reestablish credit. They go with lower rates and affordable monthly payments, making it easier to catch up on payments. The fact that customers have only one monthly payment means that it is easy to keep track of and avoid missed payments which affect your credit. Timely payments will boost your score and will widen the range of financial options available through mainstream financial establishments. At the same time, missing loan payments may ruin your score, leaving you with few options available, most of which carrying high interest rates. As a rule, debt consolidation has a positive effect on your score because it simplifies payments, and customers can opt for automatic payments. It is a good idea to close some existing accounts so that you avoid piling up debt again.

What are Your Chances of Getting a Debt Consolidation Loan?

Many people are unsure how to qualify for debt consolidation loan if they have a bad credit. The chances of getting a loan depend on your overall stability, employment history, and earnings. Some issuers are willing to work with customers with less than perfect credit provided that they are able to meet their payments. Finance companies often require proof of income and proof of employment such as recent pay stubs. Some issuers also look at your debt to income ratio. Your disposable income must be at least 15 percent of your gross monthly income. Your chances of getting approved for an unsecured debt consolidation loan are low if you are switching jobs often. Some financial institutions offer debt consolidation loans for bad credit to customers who have home equity. Finally, your chances of getting a loan also depend on how much you owe to different creditors.

Advantages of Debt Consolidation Loans

There are plenty of benefits for debt-ridden borrowers, one being that customers are able to eliminate debt without incurring additional charges. Budgeting and financial planning are also made easier given that customers have only one payment to make. Multiple monthly payments take a huge amount of effort and mental energy to deal with. Customers benefit from easier debt management, and payments are spread over a longer repayment term. Another benefit for borrowers is the fact that customers are allowed to consolidate different types of accounts, including credit card balances, student loans, and other unsecured debts. A further benefit is that customers can choose from several types of loans and programs, including balance transfers, and home equity loans. Unsecured loans feature shorter repayment terms and are safe for customers as they don’t risk a valuable asset. Secured loans go with lower interest rates, longer repayment terms, and affordable monthly payments. With home equity loans, borrowers benefit from the fact that interest is usually tax deductible.

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Disadvantages of Debt Consolidation Loans

While convenience and lower rates are major advantages, there are some issues and downsides. One of the downsides for borrowers is that a longer repayment term adds to the cost of borrowing. Customers pay more toward interest when payments are made over a longer period. A secured loan carries a risk in that customers risk losing their home, vehicle, or other asset in case of default. There are other risks as well. Retirement funds, life insurance policies, and other assets may be available for use only after loan repayment. Another issue is that financial institutions are less willing to offer unsecured short term loans to customers with poor credit. Those who are willing to work with customers with bad credit usually offer higher-than-average interest rates. The only option may be a secured loan with a competitive rate. In any case, stay away from providers that feature points, charge costly penalties, and advertise low introductory rates that skyrocket after the initial period. Finally, there are unscrupulous loan providers that assess outrageous charges and rates and try to take advantage of your financial worries. Avoid companies that offer help with bankruptcy, settlement, and debt management because these methods work differently. Also avoid issuers that offer credit insurance because it makes borrowing a costly endeavor.