The process of qualifying for a loan from any lender can be very stressful for borrowers. Traditional lenders like banks Require customers to conform to strict credit and income requirements. While many Canadians have excellent credit scores, a significant percentage of the population doesn’t enjoy smooth borrowing from traditional lenders.
The demand for loans that are easy to qualify for has led to more people searching for “guaranteed loans Canada” on the web. Today, we will go over all you need to know about these types of loans and the correct borrowing procedure.
Guaranteed Approval Loans for Poor Credit Canada Explained
Let’s first begin by stating that there is no guaranteed loan! If there were guaranteed loans, it would be right to assume that the loan company would qualify you regardless of your credit or income situation. In reality, every lender has to carry out some background assessments to determine your ability to repay the loan.
Consider also that most of the personal loans are unsecured. You don’t have to pledge your personal assets to the lender. In case you can’t repay the loan, the loan company has to Sue you in court, and they have to pay legal fees. Some companies hire or sell the loan to a collection agency. It’s up to the collection agency to try and have the borrower’s wages garnished.
As you can see, there’s a lot at stake when a loan company offers you credit. They can’t accept everybody, or they would soon go out of business. Now, does this mean that you can’t get a loan with bad credit or poor credit? Not quite!
The customer’s previous history with debt may not hinder their ability to repay a new loan provided they have the right income amount to support the monthly repayments.
What causes people to search for Bad credit personal loans Canada guaranteed approval?
- Not qualifying for traditional personal loans: After undergoing a strict vetting process when applying for a bank loan, people who are not approved may look for lenders who promise guaranteed approval.
- Bad or poor credit: It doesn’t take a genius to figure out that bad or poor credit will be a borrowing impediment. That’s why you may begin your search by looking for lenders promising guaranteed approval.
- Not wanting to undergo a hard credit check: Most online lenders that promise guaranteed approval may not necessarily check your credit history by ordering reports from the major credit bureaus. They use the services of third-party consumer reporting agencies that are not used by major banks, employers, or the general public.
- Needing to be approved quickly: When you need money promptly because of an emergency, it’s in your best interest to get the cash in the shortest time. That may lead you to search for a lender offering guaranteed approval.
How to get a bad credit personal loan the right way
Well, getting a bad credit loan the right way requires that you first recognize that there are no guaranteed loans. You still have to meet some basic requirements. They are fairly consistent from one bad credit lender to another:
|Age||You must have attained the age of majority in your province (mostly 18 years +) Some lenders require at least 20 years|
|Credit score||Bad credit lenders consider borrowers with all credit types and look at other factors like income|
|Income amount||The income requirement is lower than for bank loans, for instance, $1,200 per month.|
|Residency||Not all lenders operate in all provinces|
|Legal status||Be a permanent resident or Canadian citizen|
|Employment||At least 2 or 3 months of prior employment with proof of receiving direct deposits|
|Bank account||Verifiable bank account|
|Extra requirements||Some lenders may need you to be free from wage garnishments or bankruptcy proceedings.|
Bad credit lenders may also approve self-employed applicants, people who have previously filed for bankruptcy, or those in collections.
Some lenders make an exception on the income source and accept borrowers who earn income from insurance payouts, CPP, student loans, welfare, disability, old age security, child benefits, etc.
While qualifications for bad credit loans in Canada may differ, they are collectively less restrictive than the qualifications required for bank loans.
Note that some bad credit loan companies may require that you use your items as collateral for the loan. Securing the loan may be necessary if you want to borrow a large sum that increases lending risk. It’s not also uncommon to encounter lenders who require borrowers to at least have equity in their homes before applying with them.
Which types of loans can I borrow with bad credit?
- Personal loans
Personal loans are tailored for individual use. The lender doesn’t specify the conditions on how you spend the money. Unlike payday loans, personal loans are repaid on a fixed repayment schedule and in equal payments. For instance, if you receive your paycheck on a biweekly basis, the lender may ask you to make repayments every two weeks.
Most loans for bad credit don’t have terms exceeding one year. For instance, terms of 3-12 months are typical.
How much can you borrow with a bad credit personal loan in Canada? It depends on the loan limits set by the lender. Some loan companies loan as low as $100, $250, or $500. The maximum amounts you may encounter include $1000, $7000, $1000, etc.
What about the interest rates? They are certainly higher for bad credit loans, but most loan companies don’t charge higher than 46.93%.
- Payday loans
Payday loans got their name from the fact that they are repaid when you receive your paycheck and in one lump payment. They don’t have recurring monthly payments like personal loans.
Payday loan lenders don’t base their approval decision on your credit history. That’s because they will usually deduct the outstanding loan amount from your paycheck by asking you to authorize automatic bill payments. Therefore, they are more concerned about your employment situation.
How can I start applying for guaranteed loans Canada
No loan is guaranteed, but loans that fall into this category have less restrictive approval requirements. If you meet these requirements, you’ll have a high chance of getting approved.
Loan Geeks Canada provides an intuitive platform that you can use to apply for bad credit loans. You can know the rates charged by lenders without affecting your scores.
The company has partnered with reputable loan companies. They use modern technology to evaluate and approve loan applicants on the spot. It’s even possible to get approved today and receive funds in your account through a direct deposit.