Personal loans in BC
Getting loans is a common occurrence, especially when British Columbians want to make significant changes in their life. Some may want to improve their financial situation, while others may want to renovate parts of their house. Personal loans in BC are a great way to finance those goals, so staying informed about the options you have will help you make the best decision for your objectives.
What are personal loans?
To support larger financial goals like home renovation or tuition fees, residents in BC may need a personal loan. Normally, they are lump sums of money that can range from $100 to $50,000 with a repayment term that spreads between six months to five years. Within the agreed time frame, the borrower is expected to make regular payments along with interest.
You can find personal loans from traditional financial institutions, but they have requirements like a credit score above 660 points and an employment history that can be a challenge for some people to meet. Other funding sources are alternative lenders who lend based on factors other than credit scores or income histories.
Equipping yourself with information about different kinds of personal loans can help you make the right choice.
Types of personal loans in BC
If you live in British Columbia, you can choose from a few options.
Unlike home equity lines of credit which are secured against a property, personal lines of credit do not have any collateral as security so, they are unsecured like credit cards, which most British Columbian residents have. Although it may not be familiar to call them loans, credit cards allow you to borrow from the bank and repay what you borrow by the end of the month.
Lines of credit are an excellent option for day-to-day spending. Some banks or other institutions will offer credit cards that let you collect points to redeem later.
A common purpose of borrowing a personal loan is consolidating. The result is that the interest is comparatively lower and the payments more manageable. It is also a financial strategy for those who want to improve their credit score. Despite being categorized as a separate kind of loan, consolidation loans are not a distinct entity from personal loans. Their name refers to how the loan is used; they can be secured, unsecured, or a line of credit, and they can be obtained from most lenders.
If you find that the bank has turned you away and you would prefer not to tap into your savings, your goals do not have to end. With the right alternative lender, renovating your house is still attainable for any regular homeowner.
Other categorizations of loans
To increase the chances of getting approved for a loan, borrowers in BC may provide one of their assets to act as collateral in the loan. The asset reassures the lender that borrowers will fulfill the loan. In the context of personal loans, they can also be secured by an asset such as a vehicle or a piece of property.
The criteria for secured loans are often flexible. Depending on the lender, they may not need to see your credit score and may only need to know the equity value of your asset. The chances of getting approved are higher with secured loans, but even so, keeping good financial habits will improve your chances of loan approval.
The traditional personal loan is unsecured and is a common form of funding. The process usually involves applying for a loan from a lender and having your financial background examined.
Unsecured loans have their name because an asset does not secure them. They tend to have higher interest rates and might be challenging to qualify for, especially for people with less-than-ideal or no financial history in Canada.
Eligibility criteria for personal loans
- Age and citizenship— the minimum age to receive a loan is 18 years, and you must at least be a permanent resident in Canada.
- Credit score—not every lender will require a credit check. Typically, banks examine people’s financial history to determine loan eligibility and creditworthiness. The higher your credit score, the more likely you’ll be approved at the bank.
- Income and employment— traditional lenders will likely verify your income to ensure that you’re able to repay the loan. They usually prefer applicants with salaried jobs.
Traditional financial institutions will conduct background checks and, in doing so, may take some time before they give you the results of your application. Instead of banks, people in BC may refer to alternative lenders for a quicker application process and fewer financial examinations. Alternative lenders like Alpine Credits only consider the equity in your home.
The application process
Loan applications typically follow the same process, so personal loan applications follow the same procedure.
Assess your financial situation
By using the loan to make upgrades to your home, you enhance its overall appeal and functionality. For instance, a home with a kitchen or bathroom that’s been renovated recently will make the home more appealing to potential buyers. This in turn increases its market value.
Prepare the necessary documents
To have the application process go faster, have your documents ready. This could include anything from bank statements to your home appraisal document. Your lender will determine what else you’ll need to provide.
Choose a lender
You can research and choose a lender at the same time as your document preparation. The lender you choose should have criteria that you can meet, and that will give you what you need.
Make your home more comfortable
Afterwards, you can apply with the lender of your choice. Usually, their application forms are online so that you don’t have to travel and apply in person.
Wait for approval
Once you submit your application, the next step is to wait. At alternative lenders like Alpine Credits, the average wait time is between a few days to a week, but at the bank, you may have to wait for a few months.
Once you get approved, the money will be deposited directly into your account. While you have the flexibility to use the funds however you like, keep to your plan, and use the loan for its original intention. This will prevent the possibility of more financial burden and interest charges.
Repaying your personal loan
The repayment schedule for personal loans is typically monthly, but some lenders may give you the option to change the frequency. You can have a bi-weekly or weekly schedule; it can be opened or closed. Open loans will allow you to make extra payments without any penalties, but closed loans will require you to adhere to the original payment schedule as pre-payments come with a penalty.
Like with any loan, there might be an initial dip in your credit score. However, using a personal loan for consolidation will have the most prominent effect on your credit score. As you continue to regularly pay your loan, your credit score will steadily rise. Likewise, credit bureaus will see that you’re being responsible with your loans, which will reflect well on your credit report.
Recapping personal loans in BC
Lenders in British Columbia provide residents with personal loans that they can use towards their individual financial goals like home renovations, business investments, and loan consolidation. The loans are effective tools that can help you reach your goals. Personal goals can come in different forms to accommodate a different goal and financial situation.
Homeowners can get a personal loan by accessing the equity in their property through Alpine Credits. As an alternative lender, Alpine Credits only considers your home equity when it comes to loan approval. If you have at least 25% equity, you could be eligible for a home equity loan.
You can contact a member of the Financial Solutions Specialist to find out more about what opportunities home equity loans can provide for you.
Frequently asked questions
Alternative lenders have borrowing solutions for those who don’t meet the credit score requirements from banks. You can get a home equity loan for specific financial situations even if you have a low credit score.
If your personal loan is secured, the lender has a claim on the asset you secured the loan against. If your loan is unsecured, your credit score may be affected. It could result in lower credit scores and possible legal actions.
Some may charge a fee if you pay early, while others do not. If you’re unsure, be sure to talk with your lender for clarification.
A few common alternative options include mortgage refinancing and home equity loans. In this case, an applicant’s eligibility depends on the equity they have stored in their home.